Annual Report and Accounts 2006 - Optos

Revolutionising eye care
helping save sight and save lives
Optos plc
Annual Report and Accounts 2006

Who we are:
Optos plc is a leading and rapidly growing medical technology
company.
What we do:
Optos designs, develops, manufactures and markets devices that
image the retina, the light-sensitive area at the back of the eye.
Optos’ platform technology is the Panoramic200 Scanning Laser
Ophthalmoscope device – known as the P200. In a quarter of a
second, the P200 device produces a high-resolution image of up
to 200 degrees or approximately 82% of the retina in a single capture.
The image – branded the optomap® Retinal Exam – provides
healthcare practitioners with clinically useful information that
facilitates the early detection of disorders and diseases evidenced
in the retina, such as glaucoma, diabetic retinopathy and age-related
macular degeneration. Retinal imaging can also indicate evidence
of non-eye or systemic diseases such as diabetes, hypertension
and certain cancers. Optos’ technology provides an unequalled
combination of wide-field retinal imaging, speed and convenience
for both practitioner and patient, and can help save sight and save
lives.
Optos estimates that it is targeting a recurring US$2 billion market
opportunity.
Where we operate:
Optos plc is headquartered in Dunfermline, Scotland, with
operations in North America and Europe, currently the United States,
Canada, the UK and Germany.
Contents
Highlights 01
The History of Optos 02
A Closer Look at Optos 04
optomap® Retinal Exam 06
Chairman’s Statement 08
Operational and Financial Review 10
Board of Directors 18
Corporate Governance 20
Corporate Social Responsibility 24
Directors’ Remuneration Report 25
Directors’ Report 32
Statement of Directors’ Responsibilities 34
Independent Auditors’ Report 35
Consolidated Income Statement 36
Consolidated Balance Sheet 37
Consolidated Statement of Changes in Equity 38
Consolidated Cash Flow Statement 39
Notes to the Consolidated Financial Statements 40
Independent Auditors’ Report (Company) 64
Company Balance Sheet 65
Notes to the Company Financial Statements 66
Glossary of Terms 74

Highlights
Year ended Year ended
30 Sept 2006 30 Sept 2005 Change
$m $m %
Revenue 67.7 48.4 40%
Operating profit before share-based payments 6.5 4.5 46%
Operating profit after share-based payments 4.3 3.3 32%
Loss before tax (1.1) (2.6)
Profit/(loss) after tax 10.8 (2.2)
Cash flow from operating activities 26.7 16.8 59%
EPS (basic) $0.18 $(0.05)
40%
increase in revenue to $67.7 million
46%
increase in operating profit before
share-based payments
58%
reduction in loss before tax
to $1.1 million for the year
“Our operational progress is firmly reflected in our
financial performance and I am very pleased to
report a strong set of results, with revenues up
40% to $67.7 million for the year.”
Dr John Padfield, Chairman
Revenue $m
06
05
04 29.8
03 14.3
Installed base of P200 devices
06
05
04 1,368
03 657
Number of optomap® Retinal Exams
06
05
04 1.6m
48.4
2,009
2.5m
67.7
2,593
3.4m
Solid financial performance
> 40% increase in revenue
to $67.7 million
> 58% reduction in loss before
tax to $1.1 million for the year
> $1.5 million profit before tax in
the second half of the year
> Lower borrowing margin for
vendor financing agreed
Strong operational progress on
key performance indicators
> 29% increase in installed
base of P200 devices to 2,593,
up from 2,009 in 2005
> 34% increase in retinal exams
to 3.4 million, up from
2.5 million in 2005
> 89% contract renewal rate,
consistent with 2005 renewal rate
Excellent performance
in North America
> 41% increase in revenue
to $64.7 million, up from
$46.0 million in 2005
> 29% increase in installed
base of P200 devices to 2,475,
up from 1,925 in 2005
> National Accounts Group
established to target corporate
optical retail chains, with
encouraging initial success
within LensCrafters Inc., Pearle
Vision and OptiCare Eye
Health & Vision Centers Inc.
European operations
performing to plan
> 24% increase in revenue
to $3.0 million, up from
$2.4 million in 2005
> 40% increase in installed
base of P200 devices to
118, up from 84 in 2005
> 15% increase in UK installed
base to 77, up from 67 in 2005
> 141% increase in German installed
base to 41, up from 17 in 2005
> Strengthened German market
infrastructure with new office and
appointment of Managing Director
03 0.8m
Optos plc Annual Report & Accounts 2006

The History of Optos
from foundation to flotation
1992 - 2006
Optos was founded by Douglas Anderson
after his then five-year-old son went blind
in one eye when a retinal detachment was
detected too late.
Although his son was having regular eye exams,
routine exams were uncomfortable, especially for
a child, which made it impossible for the doctor to
conduct a complete exam and view the entire retina.
Anderson set out to commercialise a patient-friendly
retinal exam that encompassed a digital wide-field
image of the retina in a single capture, without the
need for dilation. Leading up to the Company’s initial
public offering in February 2006, Optos had raised
approximately $54 million in equity, primarily from
a group of long-standing and highly supportive
Scottish-based investors.
1992
Douglas Anderson (right) and son.
2001
> $1.8 million in revenue
> 79 – installed base of P200 devices
> 0.1 million optomap® Retinal Exams performed
2002
> $5.4 million in revenue
> 278 – installed base
of P200 devices
> 0.3 million optomap®
Retinal Exams performed
1998
> Clinical trials began
1999
> The Panoramic200 Scanning Laser
Ophthalmoscope (P200) received
FDA 510k clearance to market in
the USA and European CE marking
2000
> USA/UK – commercial launch
> First optomap® Retinal Exam performed
> $0.3 million in revenue
> 22 – installed base of P200 devices
2003
> Canada – commercial launch
> $14.3 million in revenue
> $15.2 million in
operating losses
> 657 – installed base
of P200 devices
> 0.8 million optomap®
Retinal Exams performed
> UK Tech Track 100
– Fastest Growing
Technology Company
Optos plc Annual Report & Accounts 2006

2004
> Germany – commercial launch
> $29.8 million in revenue
> 1,368 – installed base
of P200 devices
> 1.6 million optomap® Retinal
Exams performed
The Royal Academy of Engineering
recipients include Rolls Royce, IBM,
BP and CSR. In addition to Optos
plc, the 2006 finalists also included
Airbus UK, Brinker Technology
Ltd and Davy Process Technology
Limited.
2005
>
>
>
>
>
European CE marking for
the P200MA device
$48.4 million in revenue
$2.0 million in operating profit
2,009 – installed base
of P200 devices
2.5 million optomap® Retinal
Exams performed
2006
David Cairns, Chief Technology Officer;
Alastair Atkinson, Global Product
Director; and Douglas Anderson,
Founder, with the MacRobert Award
that was presented to them by
HRH Prince Phillip at Buckingham
Palace in June 2006.
The MacRobert Award recognises
the important role of engineers
and engineering in wealth creation,
national prosperity and international
prestige. It is awarded annually by
The Royal Academy Engineering
for demonstrated excellence
in innovation, contribution to
community and proven commercial
success. Previous MacRobert Award
“Optos is a worthy winner and
embodies the true spirit of the
MacRobert Award. Beginning
with a brilliant innovatory
concept, Optos has developed a
revolutionary diagnostic device by
dint of eight years determination,
creativity and perseverance in
solving the formidable technical
problems they met on the way,”
said Dr Robin Paul, Chairman of the
judging panel for the MacRobert
Award. “In the years to come, many
people will owe their sight to the
timely use of this outstanding
example of clinical engineering.”
World Economic Forum
2006
>
>
>
>
>
>
>
>
>
>
>
>
Admission to the Official List
and to trading on the London
Stock Exchange Main Market
FDA 510k clearance to market
for the P200MA device
$67.7 million in revenue
$6.5 million in operating profit
(before share-based payments)
$1.5 million EBT positive in H2’06
$26.7 million cash flow
from operations
Losses before tax reduced by 58%
to $1.1 million for the full year
2,593 – installed base of P200 devices
3.4 million optomap® Retinal
Exams performed
World Economic Forum – 2006
Technology Pioneer
2006 MacRobert Award for
Innovation in Engineering from
The Royal Academy of Engineering
Scottish Deals and Dealmakers
2006 Flotation of the Year Award
In December 2005, the World
Economic Forum named Optos as
one of 10 companies worldwide
as a Technology Pioneer for 2006
in the Biotechnology and Health
category. A total of 97 companies
were nominated in the fields of
Biotechnology and Health, Energy
and Information Technology. To
be selected, the World Economic
Forum states that a company
must be innovative, its technology
proven, have the potential for
long-term impact on business
and society, show signs of being
a market leader and demonstrate
visionary leadership.
“The creative innovations
produced by our Technology
Pioneers hold the promise of
significantly affecting the way
business and society operate”, said
Peter Torreele, Managing Director
of the World Economic Forum.
“As a global knowledge hub,
we see the Technology Pioneer
community as key contributors to
this dialogue and to the mission of
the World Economic Forum.”
Optos plc Annual Report & Accounts 2006

A Closer Look at Optos
where we are, what we do and how we do it
Strategy: Optos is focused on four strategic goals.
1 2
clarifying
Deepening Penetration in Existing Markets
The Company intends to increase market penetration in its
existing markets by winning new customers and increasing
the number of installed P200 devices within these markets,
and by increasing the use of the P200 devices and the total
number of optomap® Retinal Exams performed within
the existing customer base. Optos intends to continue
to both attract new customers through highly targeted
marketing campaigns and provide value-added service to
its customers.
Enter into New Markets
Optos intends to expand into new, targeted geographical
markets in which it believes that the fundamentals for
growth are most favourable and provide for significant
commercial potential. The Company currently operates in
North America and Europe with operations in the United
States, Canada, the UK and Germany. Pre-market evaluation
is under way in France and Spain. Japan has also been
identified as holding significant potential, and the Company
has prepared a regulatory submission for filing and is
details on timing and entry to market.
Competitive Strengths:
Product Differentiation
Our Markets
have very different characteristics
“An optomap® Retinal
Exam can be captured
in a quarter of a second
and does not require
pupil dilation.”
Optos’ P200 device is its proprietary medical
technology device, which generates the optomap®
Retinal Exam. Unlike conventional ways of looking at
the retina, the P200 device provides a high-resolution
ultra wide-field digital image that encompasses
200 degrees or approximately 82% of the retina in a
single capture. This enables the practitioner to view
a substantial portion of the retina all at once and
facilitate the early detection of disease from the centre
to the periphery of the retina. These diseases include
age-related macular degeneration, diabetes, glaucoma,
hypertension and certain cancers. An optomap® Retinal
Exam can be captured in a quarter of a second and
does not require pupil dilation, whereas conventional
retinal imaging methods take longer, are more
invasive and less patient-friendly. The P200 device has
regulatory clearance to market in North America and
in Europe. Optos believes that the optomap® Retinal
Exam offers healthcare practitioners added diagnostic
capabilities, increased medical understanding and
enhanced clinical value.
North America
Annual number of eye exams
Total numbers of practices
Number of addressable practices¹
Market characteristics
103m
31,000
20,000
In the United States there
is an established culture
of preventative care and
patient payment at point of
service. Comprehensive eye
examinations are provided
by either an optometrist or
ophthalmologist and include
an examination of the retina.
The Company has determined
that the United States holds the
greatest market potential.
8m
2,000
1,300
The Canadian market is
similar to that of the United
States in that there is a strong
emphasis on and awareness
of the benefits of preventative
care and wellness screening.
Acceptance levels for patient
payment at point of service
vary in Canada. As in the
United States, in Canada an
eye examination is also carried
out by either an optometrist
or ophthalmologist.
¹ Addressable market defined as practices with potential of at least 100 optomap® Retinal Exams per month.
² Corresponds to private practices and does not include NHS/public health bodies.
Optos plc Annual Report & Accounts 2006

3.4m
optomap® Retinal Exams in 2006
$67.7m
Global revenues in 2006
3 4
training
Broaden Product Offering
Optos continues to invest in research and development in order
to strengthen and expand upon its existing product range,
and to provide practitioners with more advanced diagnostic
and disease management capabilities in the secondary and
medical care market. The Company’s core product – optomap®
Retinal Exam – is used in preventative or primary care and is
generally paid for by the patient at point of service and is not
reimbursable. Optos’ two newer products – optomap® plus
Medical Retinal Exam and optomap® fa Medical Procedure
are aimed at the secondary care and medical markets and are
intended to be reimbursable procedures covered by insurance
or other third-party providers.
Maintain Customer Satisfaction
Optos believes that the strength of its relationships
with practitioners impacts the level of revenue of each
installed device and increases the likelihood of the
practitioners extending their contracts beyond the initial
three-year term. Increased use of the P200 device will
be driven through improved technology platforms, the
introduction of new products and by offering updated
programmes to practitioners and their staff.
Competitive Strengths:
Customer Relationships
“The Company believes
that its ongoing, service-
driven relationship with
healthcare practitioners
is a key strength to
achieving and growing
higher revenues.”
21m
6,500
400²
Routine eye examinations in
the UK tend to be carried out in
a retail setting by ophthalmic
opticians who tend to focus
more on retail sales and
refraction than preventative
care. Accordingly, the Company
estimates that there are a lower
number of practitioners within
the private sector than in
other countries in which Optos
operates.
28m
3,500
2,500²
The Company believes that the
German market is one of the
most advanced preventative
healthcare markets in Europe.
The eyecare market consists
entirely of ophthalmologists,
largely operating in private
practice. Ophthalmologists
conduct primary and
secondary level healthcare.
Europe
Annual number of eye exams
Total numbers of practices
Number of addressable practices¹
Market characteristics
The Company believes that its ongoing, service-driven
relationship with healthcare practitioners is a key
strength to achieving and growing higher revenues.
The Company enters into long-term agreements
with its customers, who in turn are encouraged to
offer the optomap® Retinal Exam to their patients as
part of every comprehensive eye examination. The
practices benefit from increased revenue through
selling the optomap® Retinal Exam to patients yet
incur no capital outlay. As part of its aim to increase
the number of optomap® Retinal Exams performed,
Optos provides the appropriate clinical, educational
and marketing resources to the practitioners, as well
as ongoing technical assistance. Optos also uses its
software facilities to monitor daily usage of the P200
device by practitioners to optimise adoption rates in
their practices. This software also facilitates the review
of the optomap® Retinal Exam and enables the images
to be permanently recorded and documented, thereby
assisting disease monitoring and patient education.
Optos plc Annual Report & Accounts 2006

optomap® Retinal Exam
a closer look at our products
The Company’s core product is the optomap® Retinal Exam,
which is produced by the P200 device and is used in primary
level eyecare for the screening of eye and non-eye diseases
and disorders. optomap® plus Medical Retinal Exam is also
performed using the P200 and is used in secondary level care,
using additional capabilities in the image capture and review
process to facilitate diagnosis and documentation of previously
detected pathology. optomap® fa Medical Procedure offers
retinal specialists advanced diagnostic, monitoring and treatment
capabilities for particular eye disorders, including diabetic
retinopathy and age-related macular degeneration.
Our USP
Examination of the retina forms
part of a comprehensive eye
examination. In capturing 200
degrees or approximately 82% of
the retina in a single capture, Optos
believes that its technology plays a
leading role in assisting with the early
detection and diagnosis of both eye
and non-eye diseases, in tracking
and monitoring the development of
diseases and optimising treatment
plans through ongoing evaluation.
This enables healthcare practitioners
to deliver a higher standard of care
to their patients, improve patient
outcomes and ensure that the
patient’s experience of having a
retinal examination is positive and
educational.
~5% 82%
Conventional Examination
Optos’ P200
P200 device and the optomap® Retinal Exam
Technology
The patented scanning laser system
developed by Optos generates
a digital wide-field (200 degree
internal angle) image of the retina.
Optos’ P200 device uses this unique
imaging system to create a ‘virtual
scanning point’ inside the patient’s
eye, and has the following features
which are not offered in their entirety
by conventional methods of retinal
examination:
• wide-field – approximately 82%
of the patient’s retina is captured
in a single image;
• rapid image capture – image capture
takes a quarter of a second once the
patient is positioned relative to the
device;
• dilation not necessary – the device
is designed to be able to take an
image through a 2mm aperture, and
therefore the decision to dilate is one
taken by the practitioner as opposed
to a necessity mandated by the
instrument requirements; and
• unaffected by most cataracts
– the P200 device employs two
independent low-power laser
sources which operate at discrete
wavelengths and are diffracted less
than white light, thereby enabling
more successful imaging through
cataracts than with white light,
which tends to scatter when it tries
to penetrate the cataract.
The scanning laser system combines
the two low-powered lasers into a
single beam that is then projected
onto the patient’s retina and
manipulated through a 200-degree
scan angle. Light reflected from the
retina is then returned through the
scanning system and is converted to
electrical impulses by highly sensitive
photo-diodes. These impulses are in
turn digitised and formatted to create
the image.
The scanning laser system is managed
by Optos’ proprietary software
application suite. Optos has developed
‘‘Capture Software’’ which enables
the operation of the P200, including
the facilitation of patient imaging.
Optos plc Annual Report & Accounts 2006

Image of a healthy eye taken by the P200 device
European Service Centre, Dunfermline, Scotland
Our Sales Model Explained
Additionally, Optos has developed
‘‘Viewing Software’’ which enables
the optomap® Retinal Exam to be
extensively reviewed, manipulated,
measured and annotated in the
presence of the patient, thus
enhancing the practitioner’s
information and the patient’s
education.
Optos has also developed reporting
software which provides the
practitioner with information on how
well the device is being utilised, as well
as providing Optos with information
enabling preventative maintenance
to be performed on the device if
necessary. Patient demographic
data and disease information can be
recorded during every optomap®
Retinal Exam, and is capable of being
collated into a useable database.
The Company regularly updates this
software in order to improve the ease
of use of the device and to increase
the quantity and quality of information
which the practitioner can obtain
when reviewing the optomap®
Retinal Exam image.
Practitioners typically enter into
initial minimum three-year term,
pay-per-patient agreements with the
Company. These agreements enable
the practitioners to use the P200
device in their practices and offer
the optomap® Retinal Exam to their
patients. Optos receives revenues
from the sale of the optomap®
Retinal Exam by the practitioner to
the patient, subject to a minimum
monthly payment over the life of
the agreement, and benefits from
a recurring revenue model. The
Company provides each practice
with ongoing clinical, educational
and marketing resources, as well
as technical assistance, to support
the practitioner in increasing
patient throughput and maximising
optomap® Retinal Exam adoption.
As a result, practices benefit from
an increase in their revenue whilst
incurring no capital outlay and low
operating expenses.
Optos plc Annual Report & Accounts 2006

Chairman’s Statement
Dr John M Padfield
“While our financial results and
key performance indicators are
important, they represent only
part of the story. The other part
is how we are differentiating
ourselves.”
2006 was a momentous year
for Optos plc. There were many
highlights. Perhaps most notable
was our successful flotation and
trading on the main market of the
London Stock Exchange in February
2006. Our public offering provided a
natural opportunity to reflect on the
substantial progress we have made
in introducing our revolutionary ultra
wide-field scanning laser technology
to the market and commercialising the
optomap® Retinal Exam in primary eye
and health care. It also enabled us to
look forward to new opportunities in
disease management in the secondary
and medical care market, and to
new geographies where we believe
that there is significant commercial
potential.
A strengthened balance sheet
provided us with the resources to
invest in growing the business and
the confidence to make a number
of commitments. At the time of our
initial public offering, we said that
we would deepen our penetration
in our existing markets, broaden
our product offering, enter into new
markets and maintain the highest
levels of customer satisfaction. With a
dedicated focus on delivering on our
plan and making strategic decisions
that will build for the future, we have
delivered on all of these fronts. Our
operational progress is firmly reflected
in our financial performance and I am
very pleased to report a strong set of
results for the financial year ended 30
September 2006.
Revenue was $67.7 million, up by 40%
over the previous year of $48.4 million.
Operating profit before share-based
payments increased by 46% to $6.5
million, up from $4.5 million last year.
Operating profit after share-based
payments increased by 32% from
Optos plc Annual Report & Accounts 2006

$3.3 million to $4.3 million. Losses
before tax were reduced by 58% to
$1.1 million for the full year; however,
the second half of the year showed
the Group making the transition
into profits with a profit before tax
of $1.5 million. Driving the growth
was an increase in our installed base
of P200 devices by 584, bringing the
total number of the installed base to
2,593, up from 2,009 at the end of the
same period last year. 2,475 of these
devices are located in our core North
American market. During the year, 3.4
million retinal exams were performed
in our existing markets, an increase
of 34% over the previous financial
year. Contract renewals remain a key
revenue driver and continued at a
strong rate for the full year at 89%,
which is in line with the rate reported
at our half year.
While our financial results and key
performance indicators are important,
they represent only part of the
story. The other part is how we are
differentiating ourselves. By offering
our customers enhanced diagnostic,
monitoring and treatment capabilities,
we can help them deliver a higher
standard of care to their patients.
We do this through sustainable
initiatives that help healthcare
practitioners improve patient
outcomes and by working to ensure
that the patient’s experience of having
a retinal examination is positive and
educational.
We implemented a number of
initiatives during the year aimed at
strengthening our existing business
and our platform for future growth,
including:
• Offering educational workshops
through our Optos Academy
programme and our Retinal
Exam Annual Protocol (“REAP”) to
primary care practitioners to drive
compliance levels in offering the
optomap® Retinal Exam as part
of every annual comprehensive
patient examination.
• Establishing a National Accounts
Group to focus exclusively on the
opportunity within the corporate
optical and eyecare chain and
institutional customer segments.
• Introducing a new programme
called Partner Visit Protocol (“PVP”)
to our existing North American
customer base to enhance the
in-practice selling process of the
optomap® Retinal Exam and
increase revenue per site.
• Strengthening our infrastructure
in Germany by opening a new
office and recruiting staff with solid
experience and contacts within
the German ophthalmic market,
continuing with our pre-market
evaluation in France and Spain,
and completing our regulatory
submission for Japan.
• Consolidating our European
distribution and service centre
by co-locating it with our
manufacturing capability in a new
facility in Scotland.
• Integrating our optomap® plus
Medical Retinal Exam into our
existing customer base, which
allows the practitioner to clearly
distinguish between the retinal
health check and monitoring
known retinal conditions, where
the interpretation, reporting and
documentation of pathology
is more stringent and leads to
reimbursement.
• Installing our new P200MA device
in select retinal and medical
specialist locations in the United
States and Germany, and beginning
clinical trials to demonstrate the
clinical efficacy of our optomap® fa
Medical Procedure.
We believe that these initiatives will
provide us with an enhanced market
focus and streamlined decisionmaking
as we grow our installed
base of devices and integrate our
technology and products deeper
into primary care optometry, and
broaden our offering to reach into the
secondary and medical care markets.
Our employees understand that
continuous improvement and
innovation and putting the customer
first are imperatives and that working
to drive shareholder value is an
expectation. On behalf of the Board
of Directors, I would like to thank all
of our employees for demonstrating
exceptional commitment during
the public offering process and for
their part in successfully managing
our growth during a year of change.
Their knowledge, expertise and
commitment are our most valued
asset and resource.
We strengthened the Board during
the financial year by securing the
services of two experienced new
Directors. Barry Rose joined the Board
in December 2005. He serves as
the Company’s senior independent
Director and chairs the Audit
Committee. Dr David Guyer joined
the Board in May 2006 and chairs the
Medical Advisory Board. The Board
also recognises the contributions
of Barry Sealey, Michael Rutterford,
Ann Gloag and David Cairns, who
stepped down from the Board before
the public offering, and of Stephane
Sallmard, who left the Company
at the close of the financial year. In
December 2006 we appointed Tom
Butts as our Chief Executive Officer.
Tom comes to Optos with a proven
ability in leading top-performing
teams and driving shareholder value.
He has both an exceptionally strong
grasp and understanding of the global
healthcare marketplace, and extensive
operating experience across North
America and Europe.
Over the last year, the Board has
paid particular attention to ensuring
the integrity of internal controls
and processes, the effectiveness
of compliance with external
40%
Increase in revenues.
$67.7 million compared to
$48.4 million in the previous year.
32%
Increase in operating profit
after share-based payments.
$3.3 million to $4.3 million.
requirements and the leadership
required to enable the Company to
maximise its opportunities. The Board
is highly engaged and vigilant, and
I would like to express my thanks to
each member for their dedication and
contribution.
Diseases at the back of the eye
represent a potentially large and
growing market. Earlier and better
detection is assuming greater
importance in eye and health care.
We believe that our patented scanning
laser technology delivers superior
retinal imaging and our operational
expertise drives product quality.
This offers healthcare practitioners
enhanced diagnostic and clinical
value. Looking ahead, we are building
a significantly stronger commercial
platform and are differentiating
ourselves in the medical devices and
healthcare services sectors. We expect
our success to continue in 2007, and
beyond.
Dr John M Padfield
Chairman
Douglas Anderson, Founder,
and HRH Prince Phillip,
Buckingham Palace, June 2006
Stephen Pemberton,
Senior Design Draughtsman
Optos plc Annual Report & Accounts 2006

Operational and Financial Review
Allan Watson, Chief Financial Officer
“North America remains the
largest opportunity for the
Company, and our excellent
progress continued during the
year with revenues up by 41%
to $64.7 million.”
Overview
Optos had an extremely good year
in 2006. The proceeds from our
initial public offering facilitated
our successful growth strategy. We
improved our operational efficiencies
and delivered solid financial results.
Revenue was $67.7 million, up by 40%
over the previous year. Our contract
renewal rate was 89%. Losses before
tax were reduced by 58% to $1.1
million for the full year, however, the
second half of the year showed the
Group making the transition into profit
before tax of $1.5 million. This success
is down to all of our employees, now
232 strong. I would like to thank them
because our accomplishments in 2006
are a testament to their dedicated
efforts.
Increased Penetration
in Existing Markets
During the year, we deepened our
penetration levels in all of our existing
markets, with particularly strong
returns in the primary care segment
in North America. We increased the
installed base of P200 devices by 584
during the year. This brings the total
number of the installed base to 2,593,
up from 2,009 at the end of the same
period last year. 2,475 of these devices
are located in our core North American
market. During the year, 3.4 million
Retinal Exams were performed in our
existing markets, up from 2.5 million
in the 2005 financial year, an increase
of 34%. We believe that this continued
uptake demonstrates the confidence
healthcare practitioners have in our
technology and the optomap® Retinal
Exam, and is aligned directly with their
commitment to delivering state-ofthe-art,
efficient and thorough patient
care. Critical in attracting more and
more healthcare practices to enter
into a contract with us and install the
P200 device has been our success at
demonstrating to the practitioner
that the optomap® Retinal Exam is
a very effective and efficient tool for
improving their ability to detect and
diagnose disease at an earlier stage.
41%
Increase in revenues in North America.
$59.3 million generated in the United
States and $5.4 million in Canada.
2,475
Total installed base in North America.
Up by 29% from 1,925 at the end
of our last financial year.
10
Optos plc Annual Report & Accounts 2006

“When Ann came to see me, we carried out
a routine eye test and almost everything
appeared to be as it should, and she had no
symptoms that would suggest there were
any problems whatsoever. However, when I
examined her eyes using the optomap® Retinal
Exam, I immediately noticed an irregularity.”
Patrick Round, First Optic Opticians
Case Study 1: Brecon, UK
Early detection of a retinal hole saved Ann’s sight.
Ann Griffiths, a 58 year-old volunteer worker, was due for a regular eye
test. She arranged to have a standard test at First Optic Opticians on
Bethel Square with Patrick Round. Her eyes appeared to be in good
health. However, when she had the optomap® Retinal Exam a previously
undetected problem was discovered.
“When Ann came to see me, we carried out a routine eye test and almost
everything appeared to be as it should and she had no symptoms that
would suggest there were any problems whatsoever. However, when I
examined her eyes using the optomap® Retinal Exam, I immediately noticed
an irregularity,” said Mr Round.
The optomap® Retinal Exam revealed that Ann had a small hole in the retina
of her right eye, which could potentially lead to a complete loss of vision
and therefore required urgent surgery. First Optic immediately referred her
to the Eye Hospital in Hereford and arranged for an appointment that day in
order to have her eye investigated.
Ann said, “When the problem was discovered I was worried at first but then
I was just so relieved that it had been picked up before it led to something
more serious. Patrick showed me the optomap® Retinal Exam scan of my
eye and it was clear that there was a small hole which even I could see and
so I was keen to have it treated as soon as possible. I went straight to the
hospital where I had laser treatment and remarkably I was allowed home
the same day.”
Optos plc Annual Report & Accounts 2006 11

“The optomap® Retinal Exam
has helped me build my practice
as well as my confidence as a
practitioner.”
Jacqueline Campisi, O.D., Connnecticut, USA
Case Study 2: Connnecticut, USA
Early detection of central nervous system Lyme disease symptoms.
An asymptomatic 6 year old child presented at Dr Campisi’s office for a
back-to-school eye exam. In the course of her comprehensive examination,
Dr Campisi compared last year’s optomap® Retinal Exam images to this year
and noticed swollen optic nerves on the current year’s optomap® Retinal
Exam images. Dr Campisi referred the child to a paediatric ophthalmologist
and paediatric neurologist at Children’s Hospital for a complete work-up.
A CAT scan and Lumbar puncture were performed and the child was
admitted. The child was diagnosed with papillitis aseptic meningitis due
to Lyme disease which caused the bilateral swelling of the brain and optic
nerves.
Most patients are light sensitive and reflexively shut their eyes when the
practitioner attempts examination with an ophthalmoscope. It is particularly
difficult to achieve patient compliance with a young child and a dilated
manual exam would have been extremely difficult to perform. With the
optomap® Retinal Exam, however, ultra wide-field images are quickly and
non-invasively captured, enabling the patient, patient’s family and the
doctor to interactively review the images. Because Dr Campisi recommends
an annual optomap® Retinal Exam for every patient, she was able to
immediately compare last year’s images to this year by placing them side
by side in v2 software, which highlighted the swollen nerves.
Dr Campisi remained in touch with the child’s parents and physicians
during the recovery period and requested that the child return for another
optomap® Retinal Exam, visual fields test and refraction in 3 to 6 months.
Dr Campisi and the child’s parents credit the optomap® Retinal Exam with
the early detection of Lyme disease symptoms and perhaps more acute
complications from the disease later on.
12
Optos plc Annual Report & Accounts 2006

Operational and Financial Review
continued
North America
North America remains the largest
opportunity for the Company, and our
excellent progress continued during
the year. Revenues in North America
grew by 41% to $64.7 million, with
$59.3 million generated in the United
States and $5.4 million in Canada.
Primary care optometry remains our
core customer target segment in
North America, where we estimate
that there are approximately 21,300
addressable practices, of which 20,000
are located in the United States. An
addressable practice is one that is
sufficiently clinically focused and large
enough to commercially integrate the
P200 device and the optomap® Retinal
Exam. During the year, we installed
508 new devices in the United States
and closed the year with an installed
base of 2,324 P200 devices. In Canada,
our installed base grew by 42 to 151.
Our total installed base in North
America at the year end stood at 2,475,
up by 29% from 1,925 at the end of our
last financial year, and representing
12% of the estimated addressable
market.
During the year, we extended our
collaboration with electronic medical
records providers and produced
digital animations to promote the
optomap® Retinal Exam. We also
worked in partnership with Johnson
& Johnson, Marco, Officemate and
Eyemaginations on an exhibit that
demonstrated to practitioners
ways of delivering the optimum
patient experience during an eye
health examination. These initiatives
were well received at the major
optometric and ophthalmic meetings
and exhibitions during the year,
including the American Academy
of Ophthalmology, the American
Optometric Association, the South
Eastern Congress of Optometry, Vision
Source and Vision Expo East and West.
At each of these, we secured new
customer contracts and extended the
contract life of many of our existing
customers.
We continued to operate our Optos
Academy programme, which has
proven popular with practitioners
and practice staff at major exhibition
events. These educational workshops
are designed to provide attendees
with updates on topics such as
disease trends in primary eyecare,
reimbursement guidelines and using
our Retinal Exam Annual Protocol
(“REAP”) to drive compliance levels,
and targeted ophthalmoscopy,
which is a programme we launched
to explain to practitioners how they
can use the optomap® Retinal Exam
as the first step in every annual
comprehensive examination. We
believe that this type of educational
support, combined with the clinical
and financial benefits of having our
P200 device installed in the practice,
provides practitioners with compelling
reasons to offer the optomap® Retinal
Exam to all their patients.
“Revenues in Europe grew by 24%
to $3.0 million, with $2.3 million
generated by our UK business and
$0.7 million in Germany. ”
Bruce Doney, Senior Embedded Software/
FPGA Engineer; Fiona Macpherson,
Principal Engineer; and, Richard Moore,
Senior Development Engineer.
Our existing customer base in North
America is comprised primarily of
independently owned and operated
eyecare practices. This customer group
remains a priority, and the addressable
market within this segment continues
to hold significant potential. We
have also determined that there are
commercial opportunities within
the corporate optical and eyecare
chain customer segment. We have
stepped up our efforts to capture new
business from within this segment. A
National Accounts Group under the
leadership of a Senior Sales Director
has been established, with the
remit to secure additional business
from within the eye-health focused
corporate optometric chains, practices
with multiple locations and military
establishments.
We signed an agreement with
LensCrafters Inc., a leading US-based
optical retail chain, where 60 of the
optometric practices connected with
the 1,200 retail locations owned by
LensCrafters and its affiliates installed
our P200 device. In the latter part of
the year, a test-marketing television
advertising campaign was launched
in the Jacksonville, Florida area by
Pearle Vision, a LensCrafters affiliate.
This direct consumer campaign
focused on presenting the Pearle
Vision practitioner as a trusted eye
healthcare provider, and has led
to increased adoption rates of the
optomap® Retinal Exam. We believe
that the agreement with LensCrafters
Inc. provides us with a valuable
commercial platform to generate
additional business from within
LensCrafters and its affiliates. During
the year, OptiCare Eye Health & Vision
Centers Inc. installed the P200 device
in each of its 18 eyecare practices in
the state of Connecticut.
Seven of the sixteen schools of
optometry now use the P200 device
and include the optomap® Retinal
Exam as part of the curriculum and
educational training programme.
Our aim is to have our P200 device in
every such institution to ensure that
all students entering the profession
have had extensive exposure to our
P200 device and the optomap®
Retinal Exam during their training and
before being admitted to practice.
In the seven existing locations, our
device is being used to facilitate
patient care and to assist students in
the recognition of retinal conditions
and abnormalities. We also advocate
that the schools of optometry use
the optomap® Retinal Exam as a
reliable confirmation of findings
24%
Increase in revenues in Europe.
With $2.3 million generated by our UK
business and $0.7 million in Germany.
118
Total installed base in Europe.
Up by 40% from 84 at the same
time last year.
when teaching the use of other
methods of examining the retina using
conventional manual instrumentation.
This is achieved by first looking at
the optomap® Retinal Exam and
then directing the student to find
the condition using, for example, a
Binocular Indirect Ophthalmoscope.
This approach – which we have
named Targeted Ophthalmoscopy
– is recommended in all of our private
practice and corporate locations as
well as in the university setting.
The United States is our largest country
market and we believe offers the most
potential for us to significantly grow
our business. Accordingly, during the
year, we put in place a number of
initiatives designed to capitalise on the
US opportunity. In the latter part of the
financial year, we implemented a new
programme known as Partner Visit
Protocol (“PVP”), which is designed to
increase practice revenue by enabling
our Customer Focus Teams to work
more closely with our customers to
integrate the optomap® Retinal Exam
deeper into their practices. Customers
have welcomed this initiative and we
are seeing improved revenue per site
in those practices where PVP has been
fully implemented.
Optos plc Annual Report & Accounts 2006 13

practitioner in maximising patient
Operational and Financial Review
15%
adoption rates of the optomap®
continued Retinal Exam. Developing a closer
working relationship with National
Health Service (“NHS”) bodies
continues to form part of our
approach to the UK market and,
during the year, development work
was undertaken within the Primary
Care Trust (“PCT”) network. Our aim
is to assist in establishing Primary Eye
Care Centres for triaging and patient
management.
The commercial and operational
teams have been strengthened to
provide us with an improved market
focus, and streamlined decisionmaking
for growing our installed
base and integrating the optomap®
Retinal Exam into both our existing
and prospective customer practices.
We reorganised the structure of our
US organisation into two separate
east and west geographic regions.
These are now led respectively by
a Vice-President and supported by
Regional Sales and Clinical Managers
tasked with maximising the sales and
clinical effectiveness throughout each
region. We opened a new Distribution
and Service Centre (“DSC”) close to our
Marlborough, Massachusetts office
during the year. This facility provides
the space, capability and capacity to
support the continued expansion of
our business in North America.
Europe
Revenues in Europe grew by 24%
to $3.0 million, with $2.3 million
generated by our UK business
and $0.7 million in Germany. The
European marketplace has very
different characteristics than its North
American counterpart. In the UK, the
vast majority of eye examinations
are carried out in a retail setting
by ophthalmic opticians who tend
to focus heavily on retail sales and
refraction rather than on preventative
care. Accordingly, we have estimated
that there is a smaller addressable
market of approximately 400 practices.
The market in Germany is comprised
entirely of ophthalmologists operating
in private practice, who carry out
primary as well as secondary care. We
estimate that the addressable market
in Germany stands at approximately
2,500 practices. Our total installed base
in Europe at the close of the financial
year was 118, up by 40% from 84 at the
same time last year, representing over
3% penetration of the addressable
market.
In the UK, our focus is on contracting
with and retaining top-tier optician
practices, and, during the year,
our activities were geared to this
defined customer segment. The
optomap® Retinal Exam is marketed
and recommended to all patients
as a health-screening examination
requiring patient payment at the
point of service. We improved our
penetration rate during the year, with
our installed base growing by 15% to
77, up from 67 at the same time last
year. We continued to participate in
continuing education conferences,
and during the year, developed and
offered a clinical conference series,
held in four locations throughout the
UK (London, Glasgow, Birmingham
and Manchester), with a focus on
acquiring new customers. In our
existing customer base, we provided
ongoing clinical, educational and
marketing resources, as well as
technical assistance to support the
“At the time of our initial public
offering, we identified France,
Spain and Japan as holding
favourable fundamentals for
geographic expansion. ”
Laser sources for the
P200 MA device
In Germany, we entered our second
full year of operation and we made
good progress in establishing Optos
as a known and credible provider
in the eye and health care market.
We installed 24 P200 devices during
the year, bringing the total installed
base to 41, an increase of 141% over
the previous year. A key operating
objective during the year was to
strengthen our infrastructure. To
this end, we opened an office in
Mannheim and recruited staff with
established contacts in the German
ophthalmic market. We now have in
place a resident Managing Director
who is responsible for the day-to-day
operation in Germany, and additional
sales and service-focused personnel
who have the know-how to deliver
on our aggressive objectives in this
market.
Our sales and marketing efforts also
grew in quantity and quality during
the year. We had an effective presence
at the three major national exhibitions:
Deutsche Ophthalmologische
Gesellschaft (“DOG”), Kongress der
Deutschen Ophthalmochirurgen
(“DOC”), and Augenärztliche
Akademie Deutschland (“AAD”). We
also participated in joint Optospharmaceutical
marketing events and
initiated a local doctor-led customer
awareness series, aimed at increasing
awareness of our P200 device and
the benefits of the optomap® Retinal
Exam. Satisfied customers are an
excellent source for referrals and new
customer leads. To ensure we continue
to be responsive to the needs of our
customers, we conducted our first
User Meeting and launched a quarterly
communications programme where
doctors receive a range of materials,
including German patient marketing
collateral, recent clinical research from
our German research site – Ludwig-
Maximilians-Universitätj (“LMU”) – and
a broad range of templates to assist in
their individual efforts to integrate the
optomap® Retinal Exam deeper into
their practice. Penetration in Germany
stood at 2% of the addressable market
at the close of the financial year, up
from less than 1% at the same time
last year.
Increase in installed bases in the UK.
A total of 77, up from 67 at the same
time last year.
141%
Increase in installed bases in Germany.
A total of 41, up from 17 at the same
time last year.
During the year, we designed,
commissioned and built our European
Service Centre to support our
expansion plans in Europe in both our
existing and targeted new markets.
This facility provides additional
manufacturing and distribution
capacity. We now manufacture
three modules of our P200 device
and provide distribution facilities to
mainland Europe and the UK. This has
enabled our manufacturing team to
make significant progress in improving
the quality of our output. We have
brought in-house the manufacture
of assemblies, which was previously
outsourced, resulting in reduced costs
and improved reliability.
We have also taken the opportunity
of training the Technical Operations
team in continuous improvement,
workplace organisation and lean
manufacturing techniques to support
the continuing development of our
capabilities. Our expanded materials
control team have established the
processes supporting expansion into
Europe. These new processes have
also driven up inventory accuracy
and have had a positive effect on
the quality of our planning and
schedule adherence in shipping to
our customers.
14
Optos plc Annual Report & Accounts 2006

“He is very lucky – if the
melanoma had been
discovered six months later,
he would most probably have
lost his eye.”
Dr Reinhold Reimer, Elmshorn, Germany
Case Study 3: Elmshorn, Germany
Early detection of a melanoma with the optomap® Retinal Exam.
In May 2005, a 60 year-old man presented to Dr Reimer in Elmshorn,
Germany for a regular eye exam. The patient had no known prior
complications and had no signs or evidence of decreased visual acuity.
After the optomap® Retinal Exam, the situation was very different.
The optomap® Retinal Exam showed an abnormality which
Dr Reimer diagnosed as a melanoma, which was then confirmed by
fluorescein angiography and sonography. Treatment with transpupil
thermocoagulation was successful. In this patient case the melanoma
was situated in the mid-periphery and therefore would have been
difficult to detect with a routine eye examination.
“The prevalence of melanoma is increasing due to the decrease of the
ozone barrier and the increase of UV-lighting,” said Dr Reimer. “They are
difficult to diagnose with traditional methods as they often lie in the middle
and outer periphery. Thus a patient-friendly procedure like the optomap®
Retinal Exam which does not require pupil dilation and which can take a
wide-field image of the retina in a single capture is a great tool in detecting
disease earlier.”
“The two lasers in the P200 enable me to say whether the lesion lies
exclusively in the retina or the choroid. I can then make a certain
differentiation between a naevus and melanoma and appropriately
determine next steps - this is a great advantage of the procedure,” said
Dr Reimer. “He is very lucky - if the melanoma had been discovered six
months later, he would most probably have lost his eye.”
Optos plc Annual Report & Accounts 2006 15

Operational and Financial Review
continued
New Markets
At the time of our initial public
offering, we identified France, Spain
and Japan as holding favourable
fundamentals for geographic
expansion.
The markets in France and
Spain are made up primarily of
ophthalmologists. As in Germany,
these practitioners operate in private
practice and carry out both primary
and secondary care. Market evaluation
to confirm the attractiveness of the
fundamentals continued during
the year. We have test-marketed at
the two largest respective national
exhibitions in these country markets:
Société Française d’Ophtalmologie
(“SFO”) held in Paris, France, in May
2006, and at Sociedad Española de
Oftalmología (“SEO”) in La Coruna,
Spain, in September 2006. A number
of devices have also been placed in
ophthalmic practices in both markets
to test the suitability of our business
model and patient willingness to pay
for the optomap® Retinal Exam at
point of service. We are assessing the
results from our market evaluations
to determine the merits of full
commercial launch.
Japan is the second-largest market in
the world for ophthalmic equipment
after the United States. Our market
research has continued and a full
regulatory filing has been prepared for
submission. We expect to initiate premarket
evaluation in the 2007 financial
year similar to that which has been
carried out in the targeted European
expansion markets.
Broadening the Product Offering
Our core product is the optomap®
Retinal Exam, which is used in
preventative or primary eye and
healthcare, and is non-reimbursable
by insurance or other third-party
providers. During the year, we
continued to invest in research and
development in order to strengthen
and expand upon our core product
offering and provide practitioners
with more advanced diagnostic
capabilities within the reimbursable,
secondary eye and health care market.
We have two new products in this
area designed to add strengthened
dimensions to our product line;
o optomap® plus Medical Retinal
Exam allows the practitioner to
clearly distinguish between the
retinal health check offered by
the optomap® Retinal Exam and
the monitoring of a known retinal
condition, where the interpretation,
reporting and documentation of
the pathology is more stringent and
leads to reimbursement; and,
o optomap® fa Medical Procedure is
generated by the P200MA device,
which received European CE
marking and US FDA 510k clearance
to market earlier this year, and
provides retinal specialists with
advanced diagnostic, monitoring
and treatment capabilities for
particular eye disorders, including
diabetic retinopathy and agerelated
macular degeneration.
Our new v2.3 software will offer
a number of new features to
enhance the reviewing capabilities
of patient images. We expect this
new software will help improve
patient education and strengthen
the relationship between the patient
and the practitioner. The product
development team also localised our
software to support our strategy of
expanding into new geographical
markets. Software has been translated
into German, French, Spanish, US
Spanish and Canadian French.
The intellectual property represented
by our technology platform is
comprehensively protected through
a portfolio of patents and know-how.
Recently, we have strengthened and
extended this position through a
licence agreement with the University
of Rochester (NY) for the use of
adaptive optics in retinal imaging.
Adaptive optics may allow for the
direct observation of the impact
and effectiveness of emerging
pharmaceutical therapies for the
leading causes of blindness and
certain, major systemic diseases.
As we strengthen our product offering,
our hardware must meet more
exacting standards of performance
and support improved imaging
resolution and consistency. The
components that make up our device
are manufactured to very demanding
tolerances. During the year, we
continued to work closely with our
existing suppliers and identified
some new suppliers to manufacture
components that meet the standards
our new products require. This is a
continuing development project
that requires a precise and careful
approach consistent with meeting
the standards defined by Good
Manufacturing Practice.
40%
Increase in revenues.
$67.7 million compared to
$48.4 million in the previous year.
$10.8m
Profit after taxation.
Compared to a loss in the previous
year of $2.2 million.
In addition, we have found, developed
and qualified US-based suppliers who
have the demonstrated capability to
service our local needs for the North
American installed base. As part of our
drive to reduce procurement costs, we
have realised the benefits of a longterm
programme to source optical
components through a local longterm
supplier who has operations
in China. This programme has been
highly successful in reducing costs and
improving quality. We are continuing
to develop this sourcing route and
with a wider scope of supply.
Maintaining Customer Satisfaction
What we offer assists healthcare
practitioners in detecting disease,
saves time, enhances the experience
their patients have while having a
comprehensive eye examination
and builds practice revenue. An 89%
contract renewal rate for the full year
confirmed our continued progress on
this strategic objective.
“During the year, we continued
to work closely with existing
suppliers and also identified some
new suppliers to manufacture
components that meet the
exacting standards of our
products.”
Ailsa McKelvie,
Software Engineer
16
Optos plc Annual Report & Accounts 2006

Operational and Financial Review
continued
Financial Review
Revenues
Revenues increased by 40% from
$48.4 million in 2005 to $67.7 million
in 2006. Growth was seen in all areas
of the business, with the majority
of the increase generated in North
America, where revenues grew by
41% to $64.7 million.
Gross Margins
Gross margins strengthened from
65.0% to 65.6%, reflecting a modest
increase in operating margins.
Operating Costs and Operating Profits
The business continued to invest in its
field and administrative infrastructure,
in both North America and Europe.
Average headcount grew by 24% from
173 to 214. Investment in field-related
expenditures increased by 42% to
$13.7 million, and in administrative
expenses by 37% to $24.2 million.
Operating profit before share-based
payments increased by 46% from
$4.5 million to $6.5 million. Sharebased
payments increased from
$1.2 million to $2.2 million, largely
driven by the initial public offering
in February which accelerated the
vesting of certain stock awards
and increased the fair value of the
Company’s stock. Operating profit
after share-based payments increased
by 32% from $3.3 million to $4.3 million.
Loss on Ordinary Activities Before Tax
Finance income increased from
$0.1 million to $1.1 million due to
interest received on the proceeds
from the initial public offering in
February. Finance costs comprised
mainly interest arising on the
Company’s vendor financing
arrangements, although approximately
half of the increase versus the previous
year is due to the IAS32 requirement
to impute interest on loan notes repaid
at the time of the initial public
offering. Loss on ordinary activities
before tax was reduced by 58% from
$2.6 million to $1.1 million. At the halfyear,
unaudited results reported a loss
before tax of $2.6 million, indicating
that the Group generated a profit
before tax of $1.5 million in the second
half of the year. We recently negotiated
a lower borrowing margin for our
vendor financing arrangements,
which is consistent with our ongoing
commitment to reducing costs and
improving operational efficiencies
across the business. We believe this
also reflects an additional level of
confidence the providers have in our
business model.
Taxation
The Group recognised a deferred tax
asset of $11.9 million in the period,
relating to the value of historical tax
losses incurred by its US subsidiary,
Optos Inc. This recognition took place
after a review of the prospects for
that subsidiary and the judgement
of the Board that the historical losses
that have arisen in that subsidiary
now meet the recognition criteria
as laid out under IAS12. Historical
losses for the Company and its two
other overseas subsidiaries were not
deemed to meet the recognition
criteria of IAS12, and remain
unrecognised.
Profit/(Loss) for the Financial Year
The Group recorded a profit for the
financial year after taxation of $10.8
million versus a loss in the previous
year of $2.2 million. This profit
reflected both reduced losses on
ordinary activities driven by revenue
growth described previously, as well as
the recognition of historical deferred
tax assets in its US subsidiary.
Cash Flow
Cash flow from operating activities
increased 59% from $16.8 million
to $26.7 million. This was driven by
the increased scale and operating
profitability of the business. Cash flow
used in investing activities decreased
Aidan Walsh, New Product
Project Manager
“By deepening our penetration in our
existing markets, moving into new
markets, strengthening our product
offering and always maintaining high
levels of customer satisfaction, we
aim to profitably grow revenues and
generate value for our shareholders.”
from $37.1 million to $33.4 million.
Under IFRS standards, this includes
the capital costs of new P200 devices
installed with customers, as well as
the value of major stock and spares
items previously classified under
UK GAAP as inventory. Net cash
flows from financing activities were
heavily influenced by the initial public
offering, admission to the Official List
and trading on the London Stock
Exchange in February 2006, and were
$48.0 million. Other items within this
category relate principally to the net
cash movements from the Group’s
vendor financing arrangements,
which reduced significantly from
$10.0 million to $(1.1) million. Net cash
increased by $41.3 million during the
year, with the cash balance at the end
of the year finishing at $36.2 million
versus a net overdraft of $4.7 million
for the prior year.
Balance Sheet
The Group balance sheet strengthened
considerably during the year, primarily
due to the impact of the initial public
offering in February 2006. Total
Net Assets closed the financial
year at $51.3 million compared to
net liabilities of $21.0 million at the
end of the same period last year.
Non-Current Assets increased from
$72.1 million to $97.4 million. This
increase is due in part to increases
in property, plant and equipment. In
addition, the Group recognised an
increase in the intangible asset value
attributed to product development
work as specified under IAS38. The
Group created a provision of $11.9
million in respect of deferred tax
assets as specified under IAS12. Total
current assets increased considerably
due to the cash raised through the
initial public offering in February.
Total liabilities reduced due to the
repayment of the bank overdraft and
conversion of loan stock instruments
at the time of the initial public offering
in February 2006. Financial liabilities
arising under finance leases increased
from $76.1 million to $81.2 million.
Total shareholders’ funds increased
from $(21.0) million to $51.3 million.
Outlook
Revenue growth is one of the primary
drivers of shareholder value creation.
North America will remain our core
market and principal focus. Further
penetration will be driven by new
placements within the independently
owned and operated eyecare practice
sector and within the corporate
retail chain network. We expect to
realise additional revenue from our
optomap® plus Medical Retinal Exam
as we fully integrate this product into
our existing and prospective customer
base and from our optomap® fa
Medical Procedure. We expect
continued growth in Canada and in
our European markets. By deepening
our penetration in our existing
markets, moving into new markets,
strengthening our product offering
and always maintaining high levels
of customer satisfaction, we aim to
profitably grow revenues and generate
value for our shareholders.
Allan Watson
Chief Financial Officer
18 December 2006
Optos plc Annual Report & Accounts 2006 17

Board of Directors
Dr John Malcolm Padfield (59)
Non-Executive Chairman
John Padfield joined the Company as a non-executive Director in November
2005 and was appointed Chairman of the Board in January 2006. Dr Padfield has
been an executive Director and non-executive Director of a number of public
and private companies in Europe, the United States and Japan, and is currently
Chairman of NextPharma Technologies Holdings Ltd, Cambridge Laboratories
Ltd and The WellChild Trust. From 1999 to 2002, he was Chief Executive Officer
of Amersham Health and a Director of Amersham plc, and from 1994 to 1999
he was Chief Executive Officer of Chiroscience Group plc. His experience
includes 28 years’ working in the pharmaceutical, biotechnology and diagnostic
imaging industries, including Glaxo Manufacturing Services between 1990 and
1994 and Glaxo Group Research between 1979 and 1990. Dr Padfield holds a
Doctor of Philosophy and a Bachelor of Pharmacy degree from the University of
Nottingham.
Douglas Crombie Anderson (55)
Executive Director
Douglas Anderson founded the Company in 1992 and is an executive Director.
Mr Anderson is the Chairman of Crombie Anderson Associates Ltd., a multidisciplinary
design consulting firm specialising in technology-based product
development, and is the former Director of Creos International plc. He has held
previous positions with Fortronic Limited and Aberglen Industrial Design, a
division of Aberglen Holdings Limited. Mr Anderson holds a Higher National
Diploma in Industrial Design (Engineering) from Napier University in Edinburgh
and is a member of The Association for Research in Vision and Ophthalmology
(ARVO), Bethesda.
Allan Mark Watson (39)
Executive Director and Chief Financial Officer
Allan Watson is Chief Financial Officer and Company Secretary. Mr Watson joined
the Company in December 2003 and is responsible for the overall financial
management and direction of the Company. Between late 2000 and 2003, Mr
Watson was part of the senior management team at uDate.com Inc, a US publicly
listed internet business. Between 1998 and 2000, Mr Watson was a member of
the corporate finance team at Williams Holdings plc, working on transactions in
Europe, North America, South America and in Africa. Previously, between 1990
and 1998, he was with Reckitt & Colman plc in various financial roles throughout
the UK and in France. Mr Watson is a professionally qualified accountant, member
of the Chartered Institute of Management Accountants and also holds an
honours B.Sc. in Pharmacy from the Robert Gordon University in Aberdeen.
Ian Herbert Stevens (43)
Executive Director and General Manager North America
Ian Stevens joined the Company in 1998 as Chief Financial Officer and Director
of Operations, before his appointment as General Manager of Optos Inc. North
America, where he has responsibility for the United States and Canada. Mr
Stevens began his career as an accountant to the Queen’s Flight of Aircraft in the
UK. In 1991, Mr Stevens then joined KPMG in the UK before being transferred to
the Czech Republic in 1995 as a Manager in Corporate Finance. He later returned
to the UK and worked with PricewaterhouseCoopers in Edinburgh in a similar
role. Mr Stevens holds a Master’s degree in Economics from the University of
Edinburgh and is a professionally qualified accountant.
18
Optos plc Annual Report & Accounts 2006

Patrick Robin David Paul (60)
Non-Executive Director
Patrick Paul has served as a Director since 1996, and has over 25 years of
experience in the medical device industry gained in North America and in
Europe. In 1975, Mr Paul co-founded Support Systems International SA, and he
later became the Chairman and Chief Executive Officer of Support Systems
International Inc., which became the holding company of the Support System
group, before its eventual sale to Hillenbrand Industries, Inc. He is Chairman of
the Tissue Science Laboratories plc and of Vertical Asset Management Limited
and a fellow of the Institute of Chartered Accountants in England and Wales.
Mr Paul has a degree in Engineering from the University of Southampton and
is a chartered accountant.
Anne Margaret Glover CBE (52)
Non-Executive Director
Anne Glover has been a Director since 1996. Ms Glover is co-founder and Chief
Executive of Amadeus Capital Partners Limited, a UK-based venture capital
fund. Her background in venture capital includes positions with Apax Partners &
Company Ventures and later Calderstone Capital. Previously, she served as Chief
Operating Officer with the Virtuality Group plc, and has worked with Cummins
Engine and Bain & Co in Boston. Ms Glover holds an MA in Metallurgy and
Materials Science from Clare College, Cambridge and a Master’s in Public and
Private Management from Yale School of Management.
David Robert Guyer, M.D. (46)
Non-Executive Director
David Guyer joined the Company as a non-executive Director in May 2006.
Dr Guyer is a Consultant to management and the board of OSI Pharmaceuticals
(NASDAQ: OSIP), where he provides specialist input in ophthalmology and
retinal disease, and is a Venture Partner of SV Life Sciences Advisers LLC (SVLS).
Previously, he was Executive Vice-President of OSI Pharmaceuticals and Chief
Executive Officer of (OSI) Eyetech, the biopharmaceutical business unit of OSI that
specialised in the development and commercialisation of novel therapeutics to
treat diseases of the eye, which he co-founded prior to its acquisition by OSI.
Dr Guyer is an internationally recognised authority on macular diseases,
particularly the use of anti-angiogenic drugs for the treatment of AMD and
Diabetic Macular Edema (DME). He received his M.D. from the Johns Hopkins
University School of Medicine and his undergraduate degree from Yale College.
Barry Michael Rose (61)
Non-Executive Director
Barry Rose joined the Company as a non-executive Director in December 2005,
and serves as the Senior Independent Director to the Board. Mr Rose was Chief
Executive of Scottish Provident UK from 1993 to 2001. Prior to this appointment
he was head of Investments at Scottish Provident Institution, backed up by more
than 27 years’ investment experience. Mr Rose is also a non-executive Director
of Liverpool Victoria Friendly Society, Wolfson Microelectronics plc and Baillie
Gifford Shin Nippon plc. Mr Rose has an Honours degree in Mathematics from
Manchester University.
Thomas William Butts (46) not pictured
Executive Director and Chief Executive Officer
Thomas Butts joined the Company as Chief Executive Officer and executive
director in December 2006 and is responsible for the overall management and
direction of the Company. He has over twenty years of progressively senior
international-level experience within the healthcare sector. Most recently he
was the President and Chief Operating Officer of IDX Systems Corporation, a
public healthcare information technology company, which under his leadership
achieved significant growth before being acquired by GE Healthcare in 2006.
Prior to joining IDX in 2002 Mr Butts spent 17 years with GE Healthcare, where
he held a number of leadership positions in sales and marketing. Mr Butts
has extensive business development and integration experience and led the
acquisition and integration of OEC Medical Systems for GE. As Vice-President
of OEC Medical Systems, Mr. Butts led the integration and globalisation of the
vascular and surgical businesses of GE Healthcare and OEC. Mr. Butts also held
the position of General Manager X-ray for GE Healthcare Europe Division. Mr Butts
holds a degree in Business Administration from Western New England College
Optos plc Annual Report & Accounts 2006 19

Corporate Governance
The Combined Code
The principal duty of the board of directors (the “Board”) and management of
the Company is to ensure that the Company is well-managed in the interests
of its shareholders. Following the admission of the Company to the Official List
of the Financial Services Authority (the “Official List”) and to trading on the
London Stock Exchange plc’s market for listed securities in February 2006,
the Company raised its compliance levels in accordance with the Combined
Code on Corporate Governance published in July 2003 (the “Combined Code”).
The Board is committed to ensuring that high standards of corporate governance
are maintained and that the Company manages its business and affairs to the
extent they are deemed appropriate, the principles and provisions set out in
the Combined Code. The Board is also committed to improve and strengthen
its corporate governance practices to assure shareholders that the Company
operates in their best interests.
The statement below describes how the directors of the Company (“the Directors”)
have applied the principles of corporate governance and the extent to which the
principles and provisions of the Combined Code have been complied with since
the Company’s admission to the Official List in February 2006.
Statement of Compliance
The Company, since its admission to the Official List, has complied with the
provisions set out in the Combined Code except to the extent set out below,
for which an explanation for non-compliance is provided.
The Board
The Combined Code provides that the board of directors of a UK public company
should include a balance of executive and non-executive directors, with
independent non-executive directors, excluding the Chairman, comprising at
least one half of the board. The Company does not have sufficient independent
non-executive directors within the meaning of the Combined Code, but the
Combined Code does provide that smaller companies (which would include
the Company) should have at least two independent non-executive directors,
excluding the Chairman. Accordingly, the Company is compliant within the
meaning and spirit of this part of the Combined Code. The Board is committed
to reviewing its membership on a regular basis.
The Board currently comprises the Chairman (who is non-executive), four executive
Directors, two ‘independent’ non-executive Directors (within the meaning of the
Combined Code) and two other non-executive Directors. The Board considers all
non-executive Directors to be independent in character and judgement. Under the
provisions of the Combined Code, relative to non-executive director independence,
Barry Rose and Dr David Guyer are deemed independent. Patrick Paul and
Anne Glover are presumed not independent because they have both served
on the Board for more than nine years since first elected and have, or have had,
within the last three years, a material business relationship with the Company either
directly, or as a partner, shareholder, Director or senior employee of a body that has
such a relationship with the Company.
The Board considers all Directors bring independent judgement to bear
on matters of strategy, resources, performance and standards of conduct.
The Chairman ensures that Board discussions are conducted taking all views
into account so that no one individual Director or small group of Directors
dominates the proceedings of the Board.
The Board meets on a regular basis to discuss and agree matters which are
specifically reserved to it for review and decision. Frequent contact between
designated Board meeting dates is carried out by the Directors as and when
required to discuss and agree matters arising relative to furthering the business
of the Company.
Functions of the Board
The principal functions of the Board are:
• review and approval of the financial objectives, major business strategies and
plans, and major corporate actions;
• review of the adequacy of the Company’s systems for compliance with all
applicable laws and regulations, for safeguarding the Company’s assets and for
managing the major risks it faces;
• approval and monitoring progress of the annual plan and budget, including
proposed capital expenditure;
• raising new capital and confirming major financing;
• approval of annual and interim accounts;
• establishment and operation of share option and long-term incentive schemes;
• selection and evaluation of the Chairman and Chief Executive Officer;
• determining compensation for the senior management team;
• periodic review of management succession plans; and,
• selection and recommendation to shareholders for election of appropriate
candidates for service on the Board.
The Board delegates to the senior management team decisions; including:
• implementation of the strategies and policies of the Company and the
subsidiaries (the “Group”) as determined by the Board;
• monitoring the operating and financial results against budgets; and,
• managing and controlling the allocation of capital, human and technical resources.
The Board regularly receives detailed financial and operational information in
order for it to monitor the performance of key areas of the business.
Committees of the Board
The Combined Code requires that all the members of the audit committee and
remuneration committee and a majority of the members of the nomination
committee should be independent non-executive directors. Due to its relative
small size, the Company is not compliant with these requirements, as it does not
have sufficient independent non-executive Directors within the meaning of the
Combined Code.
No-one other than the chairman of the relevant committee and the members of
the relevant committee are entitled to be present at meetings of either the audit,
remuneration or nomination committee meetings unless specifically invited to attend.
Since the admission to the Official List, the Directors have adopted updated terms
of reference for each of the audit, remuneration and nomination committees.
The written terms of reference for the committees can be accessed and
downloaded from the Company’s website and are also available on request.
Audit Committee
The audit committee is appointed by the Board and has responsibility to assist
the Board in its oversight responsibilities for the planning and review of the
Group’s annual report and accounts and half-yearly reports, and the involvement
of the Group’s auditors in that process. The audit committee is chaired by
Barry Rose and its other members are Anne Glover, Dr John Padfield and
Patrick Paul. It will normally meet not less than three times a year. The audit
committee is comprised exclusively of non-executive Directors.
The audit committee focuses, in particular, on compliance with legal requirements,
accounting standards and the Listing Rules, and on ensuring that an effective system
of internal financial control is maintained. The audit committee also maintains
the responsibility for recommending the appointment, terms of reference and
remuneration of the Company’s external auditors, reviewing the independence and
effectiveness of the external auditors and establishing the policy on the use of the
external auditors on non-audit services. The ultimate responsibility for reviewing
and approving the annual report and accounts and the half-yearly reports remains
with the Board after receiving a recommendation from the audit committee.
The Chairman of the audit committee reports the outcome of meetings to the
Board and the Board receives minutes of all audit committee meetings.
20
Optos plc Annual Report & Accounts 2006

Corporate Governance
continued
During the year, the audit committee developed a formal ‘policy on the use of
external auditors for non-audit services’ which aims to monitor the non-audit
services provided to the Group by its external auditors. This policy should ensure
that non-audit work is only undertaken by the external auditors when they are
most suited to undertake it. Any non-audit work involving expenditure of more
than $50,000 must be assigned to tender. The amounts paid to the external
auditors during the year for audit and other services are set out in Note 4 to the
Financial Statements on page 48. The Board has considered the amount of
non-audit work carried out by Ernst & Young LLP and is satisfied that this work does
not compromise the independence of Ernst & Young LLP as auditors of the Group.
In fulfilling its role, the audit committee met on two occasions since admission to
the Official List and to trading on the main market of the London Stock Exchange.
Other Directors and certain individuals were invited to attend when required and
when relevant to the audit committee’s proceedings. At appropriate times,
Ernst & Young LLP, the Company’s external auditors, attended the audit committee
meetings, notably to present and discuss the results of the 2005 year-end audit and
the review of the Company’s interim results for the period ended 31 March 2006.
During the financial year ended 30 September 2006, the business discussed and
considered by the audit committee included:
• monitoring the Company’s adoption of International Financial Reporting
Standards (“IFRS”);
• review of the interim review process and findings;
• scope of interim financials reporting;
• review of financials and Notes to the accounts;
• review of audit committee terms of reference;
• review of external and internal audit requirements and process;
• asset management;
• transfer pricing;
• research and development;
• materiality;
• fees for audit and non-audit purposes;
• risk management.
Remuneration Committee
The remuneration committee is chaired by Dr John Padfield who, as Chairman of
the Board, fulfilled the independence criteria as set out in the Combined Code at
the time of his appointment. Given the Company’s size and recent public listing,
the Board considers it essential that the Chairman of the Board is instrumental in
setting remuneration policy. The Board, excluding the Chairman, determines the
remuneration of the Chairman and the terms of reference of his appointment.
The other members of the remuneration committee are Anne Glover, Patrick Paul
and Barry Rose. It will normally meet not less than twice a year. The remuneration
committee is composed, exclusively, of non-executive Directors.
The remuneration committee has responsibility for: making recommendations to
the Board on the Company’s policy on the remuneration of executive Directors
and certain members of the senior management team; the implementation
and operation of share incentive schemes, and, for the determination, within
agreed terms of reference, of specific remuneration packages for each of the
executive Directors, including pension rights, contracts of employment and any
compensation payments.
In fulfilling its role, the remuneration committee met on three occasions since
admission to the Official List and to trading on the main market of the
London Stock Exchange. In accordance with the remuneration committee’s
terms of reference, the Chief Executive Officer was invited to and participated
in some of its discussions. No Director has any part in any discussion about
his or her remuneration.
Nomination Committee
The nomination committee is chaired by Dr John Padfield and its other members
are Anne Glover, Dr David Guyer, Patrick Paul and Barry Rose. All members of the
nomination committee are non-executive Directors.
The nomination committee considers the composition of the Board,
retirements and appointments of additional and replacement Directors,
and makes appropriate recommendations having regard to the overall balance
and structure of the Board. The nomination committee regularly reviews the
balance and structure of the Board and where appropriate recommends changes
to the Board. It is responsible for nominating candidates for appointment to
the Board having regard to the overall skills and composition of the Board.
This procedure was carried out in relation to the appointments referred to under
the heading ‘Board Appointments and Resignations’ below. The nomination
committee has used external search consultants to identify suitably qualified
candidates for the non-executive positions appointed during the year.
In fulfilling its role, the nomination committee met on one occasion since admission
to the Official List and to trading on the main market of the London Stock Exchange.
Senior Independent Director
The Combined Code recommends that the Board should appoint one of its
independent non-executive Directors to be the Senior Independent Director
(“SID”). The SID is available to shareholders if they have concerns that have not
been resolved through the normal channels, or for which contact through the
normal channels is inappropriate. In addition, the SID must develop a balanced
understanding of the concerns of shareholders by attending sufficient of the
regular meetings between management and the major shareholders.
Barry Rose is the SID for the Company. A meeting in the 2006 financial year of
the Company’s non-executive Directors under the leadership of the SID without
the presence of the Chairman or executive Directors did not take place. The
SID determined that changes to strengthen the balance and structure of the
Board leading up to and following the Company’s initial public offering did not
provide sufficient time or constitute sufficient basis to conduct a fair and accurate
performance evaluation of the Chairman. Such a meeting will take place in the
2007 financial year.
Chairman and Chief Executive Officer
No one individual has unfettered powers of decision. The offices of Chairman
and Chief Executive Officer are held separately. The Chairman is responsible for
the leadership of the Board and the Chief Executive Officer has the executive
responsibility for the running of the business. There is clear division of
responsibility between the Chairman and the Chief Executive Officer which
has been agreed and is regularly reviewed by the Board.
Board Appointments and Resignations
Dr John Padfield joined the Company as non-executive Director on 17 November
2005 and was appointed Chairman of the Board on 1 January 2006. The Board is
satisfied that Dr Padfield remains free from any relationship with the executive
management of the Company which could materially interfere with the exercise
of his independent judgement. Dr Padfield fulfilled the criteria for independence
as set out in the Combined Code at the time of his appointment as Chairman.
The Chairman is highly respected for his wealth of experience working in the
healthcare sector and for his impartial and professional approach to his role.
Dr Padfield has been an executive Director and non-executive Director of a
number of public and private companies in Europe, the United States and Japan,
and is currently Chairman of NextPharma Technologies Holdings Ltd, Cambridge
Laboratories Ltd and The WellChild Trust.
Optos plc Annual Report & Accounts 2006 21

Corporate Governance
continued
Barry Rose joined the Company as non-executive Director on 21 December 2005.
Dr David Guyer joined the Company as non-executive Director on 5 May 2006.
Michael Rutterford and Ann Gloag resigned as non-executive Directors on
21 December 2005. David Cairns resigned as an executive Director on
21 December 2005. Mr Cairns retains his position as Chief Technology Officer
of the Company. Barry Sealey resigned as non-executive Chairman on
31 December 2005 and as a non-executive Director on 27 January 2006.
Stephane Sallmard resigned as an executive Director on 30 September 2006.
Mr Sallmard concurrently resigned his position as Chief Executive Officer.
Thomas Butts joined the Company and the Board as Chief Executive Officer
on 18 December 2006. Mr Butts comes to Optos with a proven ability in
leading top-performing teams and driving shareholder value. He has both
an exceptionally strong grasp and understanding of the global healthcare
marketplace, and extensive operating experience across North America
and Europe.
Role of Non-Executive Directors
Each of the Company’s non-executive Directors has a significant input into the
business. Each contributes to and constructively challenges the development of the
Company’s strategy, scrutinises the performance of management, is required to be
satisfied that the financial information is accurate and that the policies and procedures
governing risk management are robust and effective. The non-executive Directors
have the responsibility of ensuring that the actions proposed by the executive
Directors are critically probed and examined, and discussed in detail.
The Company’s non-executive Directors have exposure to and are available to
major shareholders. The independent contributions that the non-executive
Directors bring to the Board are considered by the Company to be a major strength.
The Board considers that all of the non-executive Directors are independent of
management and, with the exception of two of the four non-executive Directors
excluding the Chairman, free from any business or other relationship which
could materially interfere with the exercise of independent judgement within
the meaning of the Combined Code.
Attendance at Meetings
Below is a table showing the number of Board and committee meetings held
from 15 February 2006, which represents the date of admission to the Official List
and to trading on the main market of the London Stock Exchange, to the financial
year ended 30 September 2006.
Full Audit Remuneration Nomination
Members Board Committee Committee Committee
Meetings 4 2 3 1
Douglas Anderson 4 – – –
Anne Glover 4 2 3 1
Dr David Guyer (3) 3 – – 1
Dr John Padfield (1) 4 2 3 1
Patrick Paul 4 2 3 1
Barry Rose (2) 4 2 3 1
Ian Stevens 4 – – –
Allan Watson 4 – – –
Stephane Sallmard (4) 4 – – –
(1) Joined the Board on 17 November 2005 and appointed Chairman with effect
from 1 January 2006.
(2) Joined the Board on 21 December 2005.
(3) Joined the Board on 5 May 2006.
(4) Resigned from the Board on 30 September 2006.
Executive Directors are in regular contact with one another and participate in
meetings as part of the Company’s senior management team in addition to any
Board meetings. The non-executive Directors met as a group on two occasions
during the year without the presence of any of the executive Directors. They did
not meet during the year without the Chairman.
The Board receives a regular flow of information to enable it to discharge its
duties effectively, including monthly management accounts detailing current
and forecast trading results and treasury position. It also receives an analysis
of the shareholder register on a monthly basis. Board papers are generally
distributed not less than seven days in advance to allow the Directors to
prepare fully for meetings. Minutes of Board meetings are distributed as soon as
practically possible following the meeting. Minutes of committee meetings are
circulated to all Directors. The Board is kept informed of developments within
the Company through regular updates and presentations by the members of the
senior management team covering their respective departments.
In those instances when a Director has been unable to attend Board or committee
meetings, his or her comments on the papers to be considered at that meeting
have been relayed in advance to the relevant Chairman.
Performance Evaluation
The Combined Code provides that the Board should undertake a formal and
rigorous annual evaluation of its own performance and that of its committees
and individual Directors. Individual evaluation should aim to show whether each
Director continues to contribute effectively and to demonstrate commitment to
the role, including commitment of time for Board and committee meetings and
any other duties.
The Chairman is aware that it is his responsibility to select an effective process
to assess the performance of the Board, its committees and individual members
and to report and act on its outcome. The Board did not carry out a performance
evaluation at the end of the 2006 financial year. The Chairman considered that the
changes to strengthen the balance and structure of the Board leading up to and
following the Company’s initial public offering did not provide sufficient time or
constitute sufficient basis to conduct a fair and accurate performance evaluation
of the full Board, its committees or individual members.
The Chairman will initiate a performance evaluation process for the 2007
financial year, which will be used constructively as a mechanism to improve the
effectiveness of the Board and the committees. The performance evaluation will
aim to maximise strengths and tackle apparent weaknesses. The results of the full
evaluation of the Board and the committees will be shared with the Board as a
whole, but the results of individual assessments will remain confidential between
the Chairman and the Director concerned.
Accountability and Audit
While all Directors have a duty to act in the interests of the Company, the audit
committee has a particular role, acting independently from the executive, to
ensure that the interests of shareholders are properly protected in relation to
financial reporting and internal control.
Internal Control
The Board is responsible for the Company’s system of internal control and
for reviewing its effectiveness. Its system is designed to manage rather than
eliminate the risk of failure relative to achieving business objectives and can only
provide reasonable and not absolute assurance against material misstatement
or loss. Monitoring of internal control has been delegated by the Board to the
Chief Executive Officer. The audit committee determined that, due to the current
size of the Group, an internal audit function was not required for the year ended
30 September 2006. This will be reviewed annually by the audit committee.
The audit committee’s role in this area is confined to a high-level review of the
arrangements for internal financial and overall business risk management control.
The Board’s agenda includes a regular item for consideration of risk and control.
The Board receives regular reports thereon from the senior management team
and the audit committee.
22
Optos plc Annual Report & Accounts 2006

Corporate Governance
continued
Control
An established and appropriate control environment has been established by
the Board through the following systems and procedures:
• manuals of policies and procedures applicable to all material aspects of the
business and organisation
• budgetary control system which includes monitoring actual performance
against predetermined plans; and,
• appointment of suitably qualified and experienced staff to fulfil their allotted
responsibilities.
The Board confirms that it has reviewed and satisfied itself with the effectiveness
of the systems and procedures of material controls for the period under review.
Risk Management
The above procedures are designed to serve as ongoing processes for
identifying, evaluating and managing the significant risks faced by the Company.
A Group Risk and Control Framework is prepared, taking into account the
significant risks identified by the individual units together with other Group-wide
risks. The Group Risk and Control Framework has been considered and adopted
by the Board, which holds ultimate responsibility for the management of risk.
The members of the senior management team assess the effectiveness of the
internal control environment and procedures within their respective units and
report to the Chief Executive Officer. They are responsible for the operation
of key internal controls. The process covers the areas of most significant risk to
the Company. External audit risk assessment and planning is in place. The audit
committee considers and determines relevant action in respect of any control
issues raised by either the Chief Executive Officer or the external auditors.
The Board has monitored the effectiveness of the Group’s system of internal
control during the year. In particular, the Board has reviewed and regularly
monitored progress against the Company’s Risk and Control Framework.
Communication with Shareholders
The Company has historically maintained an open and regular policy of
dialogue with shareholders to ensure that the objectives of the Company
are communicated and understood. Following the initial public offering,
the Chief Executive Officer and Chief Financial Officer at a minimum make
twice yearly presentations to shareholders following the Company’s interim
and preliminary results announcements. This is followed by road-show
presentations in one-on-one investor and shareholder meetings where issues
of concern and business progress and performance can be addressed and
discussed. During the last financial year, the Chief Executive Officer and Chief
Financial Officer and other members of the senior management team held a
number of additional one-on-one and group investor and shareholder meetings
and presented at a number of investor conferences. After these meetings the
views of the investors and shareholders are reported to and discussed by the rest
of the Board. During the year the Company issued trading updates in advance of
its interim and preliminary results announcements. The Company is aware of the
provisions set out in the proposed EU Transparency Directive and will meet these
financial reporting requirements as set out in the new legislation. The Board
receives regular reports on the investor and shareholder meetings including all
relevant feedback. The Chairman is available to shareholders throughout the year.
The Company also has named its director of communications as investor and
shareholder contact who is available to shareholders throughout the year. The
Company enables shareholders and the general public to access press releases
and general information on the Company on its http://www.optos.com web site.
Going Concern
The Directors’, having reviewed the Group’s and the Company’s budgets for the
next financial year and other longer-term plans, are satisfied that the Group and
the Company have adequate resources to continue in operational existence for
the foreseeable future and therefore it is appropriate to continue to adopt the
going concern basis in preparing the accounts.
The Board considers it has reviewed and satisfied itself of the efficacy of the
Group’s internal controls, which the Board has determined as being suitable
and satisfactory for a Company of its size. The Board can therefore confirm
that there is an ongoing process for identifying, evaluating and managing the
Group’s significant risks, that such process has been in place for the year ended
30 September 2006 and up to the date of the approval of the Annual Report and
Accounts, that it is regularly reviewed by the Board and that it accords with the
internal control guidance for Directors relative to the Combined Code.
Optos plc Annual Report & Accounts 2006 23

Corporate Social Responsibility
Optos aims to operate to high standards in all its activities, employ skilled and
responsible people and strive to build trusted relationships within the markets
where it does business. The safety and reliability of the Company’s scanning laser
technology and the efficacy and quality of the images the P200 device produces
are of benefit in health and eye care, providing practitioners with added clinical
value in the earlier detection of both eye and systemic disease, and improving
patient education and management.
Optos is committed to being a socially responsible company and accepts that
its responsibilities in this context extend to all stakeholders, including, but not
limited to, its shareholders, employees, customers, suppliers, financers and the
environment in which it operates. Particular attention and adherence is paid to
the legislative and regulatory requirements within each county in which Optos
operates. Optos has a clear policy on health and safety, and is committed to
delivering excellent performance in these areas through measurement of its
operations in safety management and protection of health, both internally and
externally. Optos is proud of its culture in which staff feel responsible and assume
responsibility for making a difference in delivering high standards within the
organisation and to customers.
The Company also partners with its customers to offer the optomap® Retinal
Exam during national diabetes month and at selected health fairs. The Company
also participates in careers days at local schools, and supports summer student
placements. Optos also works with the Special Olympics, providing the
optomap® Retinal Exam for the Special Olympics Opening Eyes programme,
which is a joint effort between the Special Olympics and Lions Club International.
24
Optos plc Annual Report & Accounts 2006

Directors’ Remuneration Report
INTRODUCTION
All matters relating to executive remuneration are determined by the remuneration committee, a committee of the Board.
A resolution to approve the report will be proposed at the annual general meeting of the Company at which the financial statements for the year ended
30 September 2006 will be approved. Certain items in the remuneration report are required to be audited and are identified as such against the relevant heading.
REMUNERATION COMMITTEE
The Board considers that the Chairman of the Board should be a member of the remuneration committee as it is essential that the Chairman be involved in the work
of the remuneration committee and, in particular, the setting of the executive Directors’ remuneration. Since January 2006, the remuneration committee has consisted
of the following non-executive directors – Dr John Padfield, Barry Rose, Anne Glover and Patrick Paul. The remuneration committee is required to meet at least twice a
year and at such other times as the Chairman of the remuneration committee shall require.
The remuneration committee is responsible for determining the remuneration of the executive Directors and the senior management team together with their terms
and conditions of employment. It is also responsible for considering management recommendations for remuneration and employment terms of the Company’s staff,
including, for example, incentive arrangements for bonus payments and grant of share options.
No members of the remuneration committee have any personal financial interest (other than as shareholders), conflicts of interest arising from cross-directorships or
day-to-day involvement in running the business. The remuneration committee makes recommendations to the Board, and other Directors attend meetings when
invited by the remuneration committee. No Director plays a part in any discussion about his or her own remuneration.
REMUNERATION POLICY
The remuneration committee has established a policy on the remuneration of executive Directors and the Board has established a policy for non-executive Directors
for the current and subsequent years. The remuneration committee’s decisions are made on the basis of rewarding individuals for the nature of the jobs they undertake
and their performance according to defined objectives to deliver the Company’s strategy. Proper regard is given to the need to attract and retain high-quality,
well-motivated staff at all levels, and to the remuneration being paid by similar companies.
The remuneration policy is reviewed annually by the remuneration committee.
POLICY FOR EXECUTIVE DIRECTORS’ REMUNERATION
During the financial year ended 30 September 2006, the remuneration committee appointed New Bridge Street Consultants LLP to provide further advice on
structuring executive Directors’ remuneration packages, together with a report on the proposals for a Long-Term Incentive Plan (“LTIP”).
For the next financial year, the executive Directors will receive a combination of basic salary, management incentive scheme (as described below), pension and benefits
in kind. The basic salary is the only pensionable part of the remuneration package.
The remuneration committee gives consideration to several components In respect of the executive Directors’ remuneration, which together comprise the total
remuneration package. These consist of the following:
• Basic salary is determined by the remuneration committee at the beginning of each year and when an individual changes position or responsibility. In deciding
appropriate levels, the remuneration committee considers the position in the Company, personal and Company performance, and relies on objective research
which gives up-to-date information on a comparable group of companies. Basic salaries were reviewed in September 2005, with increases taking effect from
1 October 2005 and further increases on 15 February 2006. The basic salaries were last reviewed in September 2006, with increases taking effect from 1 October
2006. The next review will take place in September 2007.
• Quarterly Performance Incentives are paid, provided that objectives established by the remuneration committee are met for each financial year. For 2006,
the objectives put emphasis on net installs, revenue per site of existing customers and control of expenditure.
• Benefits in Kind, which comprise Company car allowance, private health insurance, life insurance and Company sick pay. Where a Director is on international
assignment, the additional benefits provided are housing allowance, school fees and specified family travel.
• Pension Contribution. The Company operates a contracted-out defined contribution scheme for executive Directors whereby the Company contributes 10% of a
Director’s gross salary. Prior to February 2006, the Company contribution was 7%.
The Company has operated discretionary share option arrangements. The discretionary options have been granted pursuant to four different types of option
agreement. Most terms of those option agreements are identical. However, the terms on which options vest differ between the types of agreement. The four types of
vesting are as follows:
• Time-based vesting over the three years commencing on the date on which the option was granted. One third of the options vest on grant and the remaining
two-thirds vest over the following 36 months on a monthly basis.
• Time-based vesting over three years as described above but with full acceleration of vesting on the admission of the Company’s shares to trading on certain stock
exchanges, including the London Stock Exchange.
• Time-based vesting by reference to the flotation of the Company. Under this form of option agreement, one third of the shares under option vest on the admission
of the Company’s shares to trading on certain stock exchanges, including the London Stock Exchange. The remaining two-thirds then vest in two tranches – on the
date six months after admission and on the date 12 months after admission.
• Vesting as to one third immediately, with the remaining two-thirds vesting subject to satisfaction of performance targets. Such targets are based on the Company
achieving two successive quarters of positive operating profit and two successive quarters of positive earnings over the period from grant to 31 March 2006 and
31 March 2007 respectively. These performance periods were accelerated by 12 months due to the IPO and the conditions have been achieved.
In addition to the above, two further vesting arrangements have been utilised in respect of two separate grants. The first grant is subject to time-based vesting with
one third of the option vesting on the first, second and third anniversaries of the date of grant. The second grant is subject to performance-based vesting, with the
option vesting over four quarters dependent on the North American business attaining certain performance levels.
Optos plc Annual Report & Accounts 2006 25

Directors’ Remuneration Report
continued
All option agreements contain provisions for the full acceleration of the option on a change in the control of the Company. Option holders who cease to be employees
of the Group are entitled to exercise their vested options in full for a period of either one month or six months following cessation of employment, depending on the
reasons for that cessation. All agreements contain provisions enabling the adjustment of the number of shares subject to option and the exercise price in the event of
capitalisation issue, sub-division or consolidation of ordinary shares. All options are to be settled by way of equity with a maximum term of 10 years.
In addition, the Company operated a share save scheme under which options were granted in 2002 and mature in 2007.
Shareholder approval for a new share-based LTIP and a discretionary share option scheme will be sought at the annual general meeting to be held on 31 January 2007
(summaries of the principal features of the LTIP and the discretionary share option scheme will be outlined in the appendix to the notice of annual general meeting).
Thomas Butts’ Share Award
In order to facilitate the recruitment and retention of Mr Butts, the new CEO, the Company has entered into a one-off arrangement with Mr Butts under which he has
been granted on 18 December 2006 a share award to acquire up to 2,200,000 ordinary shares in the capital of the Company at an exercise price of 200p per ordinary
share, the mid-market closing price on the date of grant. The Company has agreed with Mr Butts to submit for approval at the Annual General Meeting to be held on
31 January 2007 a proposal to replace this award with an award to acquire up to 1,350,000 ordinary shares in the capital of the Company at an exercise price of 2p per
ordinary share, and with certain curtailments of the exercise period.
The remuneration committee of the Company considers the recruitment of a new CEO to constitute unusual and exceptional circumstances. The selection and
appropriate incentivisation of a new CEO is critical to the development of the Company and to the delivery of shareholder value.
Set out below is a summary of the arrangement in connection with Mr Butts’ award. Only Mr Butts participates in this arrangement and no part of the benefit from this
award is pensionable.
Exercise of Award
The exercise of this award by Mr Butts is dependent on meeting certain performance targets.
The award will vest and become exercisable in three tranches following the end of the calendar years 2007, 2008 and 2009. The vesting of each tranche is subject
to the Company achieving significant year on year increases to key performance indicators, namely increasing revenues, operating profit and net cash in-flows.
These indicators are considered by the remuneration committee to be critical to the Company’s future success. The Board or the remuneration committee, at the
relevant times, will determine, by reference to available financial information, whether or not those targets are achieved. In addition, the ability to exercise the award is
weighted towards the 2009 calendar year, such that in excess of 50% of the award is subject to the requirement that Mr Butts be employed as of 1 January 2010 (absent
the conditions described below).
Normally, Mr Butts will only be able to exercise the award whilst he is employed by the Company. If he ceases employment with the Group as a result of certain
specified reasons, including death, disability, termination of Mr Butts’ employment by the Company without cause or Mr Butts resigning in certain circumstances,
such as where his salary or bonuses are reduced (other than where there is an across-the-board reduction applicable to all of the Company’s senior executives),
Mr Butts is relocated a significant distance away from the Company’s current US headquarters, or, if there is a material adverse change to Mr Butts’ position or a
material diminution of his duties and responsibilities, the award will be exercisable (to the extent vested) for a period of three months (extended to one year for death
or disability) following termination of employment. To the extent the award is not exercised by the expiry of that period, or if Mr Butts leaves employment with the
Company for any other reason, the award will lapse. If Mr Butts left part-way through a year for a specified reason, then the remuneration committee may determine,
taking into account progress towards the targets and prorated to reflect time served, that a further part of the award shall vest.
To the extent the award has not lapsed or been exercised, the award will lapse 10 years after its grant.
Change of Control
The award may be exercised to the extent vested in the event of a change of control of the Company. The remuneration committee may decide that the whole or such
further part of the award as they determine shall vest in these circumstances.
Adjustments
The award may be adjusted following a capitalisation, rights issue, open offer sub-division, consolidation or reduction in the capital of the Company, or any other
variation of ordinary share capital, or if the Company is the subject of a demerger.
Amendments
The Company and Mr Butts may amend the terms of this award but will not alter, to Mr Butts’ advantage, terms relating to Mr Butts’ maximum entitlement or the
adjustment of the award on a variation of share capital unless such amendments are approved by shareholders or are minor amendments to benefit administration
of the arrangement, to take into account a change in legislation or to obtain or maintain favourable tax treatment for Mr Butts, the Company or any Group company.
26
Optos plc Annual Report & Accounts 2006

Directors’ Remuneration Report
continued
SERVICE CONTRACTS
The Company has entered into service contracts with each of its executive Directors, none of which is for a fixed term. It is the remuneration committee’s policy to
offer service contracts for an indefinite term subject to termination on a maximum of one year’s notice or an equivalent severance payment. Save for Mr Butts who
has a US-style service agreement, each of the executive Directors’ service contracts can be terminated by the Director giving not less than six months’ written notice
of termination or by the Company giving the Director not less than 12 months’ written notice of termination. The dates of the executed contracts for each executive
Director are as follows:
Allan Watson 9 February 2006
Douglas Anderson 9 February 2006
Ian Stevens 6 October 2006
Thomas Butts 15 December 2006
Save in relation to Mr Butts, the Company has the right, in its absolute discretion, to terminate each of the service contracts at any time by making a payment in lieu of
the notice period comprising basic salary, car allowance (if applicable), bonuses (based upon the bonus paid during the previous financial year), benefits and pension
contributions.
Mr Butts is a US citizen and the Company has agreed to provide him with a service contract which is consistent with market practice in the United States and is
governed by the laws of the Commonwealth of Massachusetts. The Company has the right, in its absolute discretion, to terminate Mr Butts’ service contract at any time
without “Cause” by giving him two months’ written notice or making a payment in lieu of notice equal to his salary for the notice period. In addition and in exchange
for the execution by Mr Butts of a release of claims against the Company, Mr Butts is entitled to a severance package comprised of one year of salary,
bonus (based on the bonus paid during the previous financial year) and medical benefits. The severance package will be reduced by the amount of any payments
Mr Butts receives in lieu of his notice period. If Mr Butts resigns in certain circumstances, he is also entitled to receive the severance package referred to above.
Mr Stevens’ international assignment to the United States ended on 30 September 2006. The Company has agreed that it will endeavour to find Mr Stevens a new role
working for the Company in the United Kingdom which is similar to the position he held in the United Kingdom prior to his international assignment and acceptable
to Mr Stevens. In the event that the Company fail to find such a position by 30 June 2007 (or, if earlier, three months after the date on which the Company appoints
a permanent chief executive officer), then either party will be entitled to terminate Mr Stevens’ service contract. In such an event, Mr Stevens will be entitled to a
severance payment which will comprise: (a) a pro rata bonus for the current financial year (in proportion to those pro rata performance targets which have been
met as at the termination date); (b) 12 months’ basic salary, car allowance and pension contributions; (c) a bonus of 50% of his basic salary (but, in the event that the
pro rata performance targets were not met as at the termination date, then such bonus will be reduced proportionately); and (d) £3,500 in lieu of 12 months’
contractual benefits. Mr Stevens will also be entitled to exercise his share options for a period of two years following the termination date.
There are no other provisions for early termination of the service contracts.
NON-EXECUTIVE DIRECTORS
The Company’s policy is to establish and maintain a body of non-executive Directors with a breadth of skills and experience that is relevant to the Company’s business.
In this context, it is the Board’s policy for the non-executive Directors to be paid a level of fee that reflects market conditions and is sufficient to attract individuals with
appropriate knowledge and experience. The Board seeks to pay the market rate to reflect the time taken to carry out the role of non-executive Director and reviews
the rates annually.
The Company has entered into a letter of appointment with each of the current non-executive Directors. Each letter of appointment is for a fixed three-year term,
provided that either party may terminate the appointment at any time during the term of appointment by giving three months’ notice of termination and the
appointment may be terminated any time in accordance with the articles of association of the Company or the Companies Act 1985. The dates of the letters of
appointment and the expiry dates are:
Non-executive Director Date of Letter of Appointment Expiry Date
Dr John Padfield 11 January 2006 30 December 2008
Anne Glover 27 January 2006 26 January 2009
Patrick Paul 27 January 2006 26 January 2009
Barry Rose 27 January 2006 26 January 2009
Dr David Guyer 5 May 2006 26 January 2009
Optos plc Annual Report & Accounts 2006 27

Directors’ Remuneration Report
continued
DIRECTORS’ INTERESTS
The beneficial and non-beneficial interests of the Directors in the ordinary shares of £0.02 each in the capital of the Company (“Ordinary Shares”) are set out below:
At 30 Sep 2006 At 1 Oct 2005
or at date of appointment
Number of
Number of
Ordinary Share Ordinary Share
Shares Options Shares (7) Options (8)
Dr John Padfield 175,000 – 175,000 –
Allan Watson – 401,000 – 301,000
Douglas Anderson (1) 2,095,939 126,000 2,452,089 202,000
Ian Stevens (2) 21,500 595,000 19,500 551,000
Anne Glover (3) 13,381,929 – 8,743,448 –
Patrick Paul (4) 5,037,410 – 4,489,867 168,000
Barry Rose 15,000 – 5,000 –
Dr David Guyer – – – –
(1) of these ordinary shares: 157,750 are held in the name of Mr Anderson and 1,938,189 (being an amount proportional to Mr Anderson’s holding of 55.25% of the share
capital of such company) are held in the name of Crombie Anderson Associates Limited.
(2) of these ordinary shares: 18,200 are held in the name of Mr Stevens; and 3,300 are held in the name of Alison Stevens, Mr Stevens’ wife, in her own name.
(3) of these ordinary shares: 127,176 are held in the name of Ms Glover; and 13,254,753 are held in the names of seven Amadeus funds (as further detailed in (5) below)
of which Ms Glover is a director and/or limited partner.
(4) of these ordinary shares: 4,657,867 are held in the name of Mr Paul and 379,543 are held in the name of Chester Investments Limited (a company in which Mr Paul
holds 100% of the share capital).
(5) The interests of Amadeus are held amongst the following funds:
Amadeus I: 2,897,727 ordinary shares
Amadeus I Affiliates Fund LP: 152,512 ordinary shares
Amadeus II A: 4,592,031 ordinary shares
Amadeus II B: 3,061,354 ordinary shares
Amadeus II C: 2,142,948 ordinary shares
Amadeus II Affiliates LP: 102,045 ordinary shares
Amadeus II D GmbH & Co. KG: 306,136 ordinary shares
(6) Mr Anderson, a Director of the Company, is a director and majority shareholder in Crombie Anderson Associates Limited, and Ms Glover and Mr Paul, Directors of
the Company, both hold minority shareholder interests in Crombie Anderson Associates Limited.
(7) The number of ordinary shares have been calculated after the consolidation which took place on 27 January 2006, where two ordinary shares of £0.01 each were
consolidated into one ordinary share of £0.02 each.
(8) The number of share options have been calculated after the consolidation which took place on 27 January 2006, where two ordinary shares of £0.01 each were
consolidated into one ordinary share of £0.02 each.
As at 7 December 2006, there have been no changes in the above shareholdings since 30 September 2006.
DIRECTORS’ REMUNERATION (AUDITED)
The remuneration in respect of qualifying services of each person who served as a Director during the year ended 30 September 2006 was as shown below.
Note that these amounts are expressed in US dollars, the Group’s reporting currency, though all Directors were paid in pounds sterling, except for Ian Stevens.
The average exchange rate used in the year ended 30 September 2006 was $1.80 to £1 (2005: $1.85 to £1).
Year to 2006 Year to 2005
Compensation Year to Year to Pension Pension
Salary and Fees Bonus Benefits for Loss of Office Sep 06 Sep 05 Contributions Contributions
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Chairman
Dr John Padfield (9) 80 – – – 80 – – –
Non-Executive Directors
Anne Glover (3) 38 – – – 38 22 – –
Patrick Paul 29 – – – 29 – – –
Barry Rose (4) 36 – – – 36 – – –
Dr David Guyer (5) 38 – – 38 – – –
Barry Sealey (6) – – – – – – – –
Michael Rutterford (7) – – – – – – – –
Ann Gloag (8) – – – – – – – –
28
Optos plc Annual Report & Accounts 2006

Directors’ Remuneration Report
continued
Year to 2006 Year to 2005
Compensation Year to Year to Pension Pension
Salary and Fees Bonus Benefits for Loss of Office Sep 06 Sep 05 Contributions Contributions
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Executive directors
Stephane Sallmard (1) 340 234 27 643 1,244 393 25 39
Allan Watson 220 180 12 – 412 191 20 11
Ian Stevens 233 104 104 – 441 378 20 15
Douglas Anderson 212 52 2 – 266 238 11 7
David Cairns (2) 38 – 2 – 40 170 2 11
Total 1,264 570 147 643 2,624 1,392 78 83
Notes to the table:
(1) Stephane Sallmard resigned on 30 September 2006.
(2) David Cairns resigned on 21 December 2005.
(3) Anne Glover’s fees are paid to Amadeus Capital Partners .
(4) Barry Rose was appointed on 21 December 2005.
(5) David Guyer was appointed on 5 May 2006.
(6) Barry Sealey resigned as Chairman of the Board on 31 December 2005 and from the Board on 27 January 2006.
(7) Michael Rutterford resigned on 21 December 2005.
(8) Ann Gloag resigned on 21 December 2005.
(9) Dr John Padfield was appointed to the Board on the 17 November 2005.
Barry Sealey, Michael Rutterford and Ann Gloag did not receive any fees as non-executive Directors.
FUTURE NON-EXECUTIVE DIRECTORS’ REMUNERATION
The current non-executive Directors will receive £25,000 per annum for carrying out their duties. Dr David Guyer will receive an additional £25,000 as Chairman of the
Medical Advisory Board.
Dr Padfield, as Chairman of the Company, will receive £50,000 per annum for acting as Chairman and being a Director.
Long-Term Incentive Plans
The Group believes there is benefit to be gained from aligning executive Directors’ interests (and other employee interests) with those of shareholders by means of
share-based, long-term incentives.
Shareholder approval for a new share-based LTIP and a discretionary share option scheme will be sought at the annual general meeting to be held on 31 January 2007
(summaries of the principal features of the LTIP and the discretionary share option scheme will be outlined in the appendix to the notice of annual general meeting).
SHARE OPTIONS GRANTED TO DIRECTORS (AUDITED)
Details of share options of those Directors who served during the financial year ended 30 September 2006 are set out in the table below. No amounts were payable for
the award of the share options.
At 30 Sep 06
Earliest Date
At 1 Oct Granted Lapsed Exercised or Date Ceased Exercise Date from which
2005 (6) During Year (6) During Year During Year to be a Director Price of Grant Exercisable Expiry Date
Stephane Sallmard (1) 500,000 – – – 500,000 £0.80 01 Oct 2001 01 Oct 2001 14 May 2007
125,000 – – – 125,000 £1.00 01 Oct 2002 01 Oct 2002 14 May 2007
1,000 – – – 1,000 £1.00 22 Mar 2001 01 Oct 2004 14 May 2007
625,000 – – – 625,000 £1.00 21 Sep 2005 21 Sep 2005 14 May 2007
1,251,000 1,251,000
Allan Watson 150,000 – – – 150,000 £1.00 01 Dec 2003 01 Dec 2003 30 Nov 2013
1,000 – – – 1,000 £1.00 01 Oct 2004 01 Oct 2004 30 Sep 2014
150,000 – – – 150,000 £1.00 21 Sep 2005 21 Sep 2005 20 Sep 2015
– 100,000 – – 100,000 £1.00 09 Dec 2005 09 Dec 2006 08 Dec 2015
301,000 100,000 401,000
Optos plc Annual Report & Accounts 2006 29

Directors’ Remuneration Report
continued
At 30 Sep 06 Earliest Date
At 1 Oct Granted Lapsed Exercised or Date Ceased Exercise Date from which
2005 (6) During Year (6) During Year During Year to be a Director Price of Grant Exercisable Expiry Date
Douglas Anderson 176,000 – – 176,000 – £0.046 15 Apr 1996 15 Apr 1999 14 Apr 2006
1,000 – – – 1,000 £1.00 01 Oct 2004 01 Oct 2004 30 Sep 2014
25,000 – – – 25,000 £1.00 21 Sep 2005 21 Sep 2005 20 Sep 2015
– 100,000 – – 100,000 £1.00 09 Dec 2005 09 Dec 2006 08 Dec 2015
202,000 100,000 176,000 126,000
Ian Stevens 50,000 – – – 50,000 £1.00 03 Mar 1999 03 Mar 1999 02 Mar 2009
50,000 – – – 50,000 £1.30 01 Mar 2000 01 Mar 2000 28 Feb 2010
100,000 – – – 100,000 £1.45 01 Sep 2000 01 Sep 2000 31 Aug 2010
50,000 – – – 50,000 £0.80 01 Oct 2001 01 Oct 2001 30 Sep 2011
50,000 – – – 50,000 £1.00 01 Oct 2002 01 Oct 2002 30 Sep 2012
100,000 – – – 100,000 £1.00 01 Jul 2003 01 Jul 2003 30 Jun 2013
1,000 – – – 1,000 £1.00 01 Oct 2004 01 Oct 2004 30 Sep 2014
100,000 – – – 100,000 £1.00 21 Sep 2005 21 Sep 2005 20 Sep 2015
50,000 – 6,000 – 44000 £1.00 21 Sep 2005 21 Sep 2005 20 Sep 2015
– 50,000 – – 50,000 £1.00 09 Dec 2005 09 Dec 2006 08 Dec 2015
551,000 50,000 6,000 595,000
David Cairns (2) 100,000 – – – 100,000 £0.42 17 Nov 1997 17 Nov 1997 16 Nov 2007
40,000 – – – 40,000 £1.30 1 Mar 2000 1 Mar 2000 28 Feb 2010
50,000 – – – 50,000 £0.80 1 Oct 2001 1 Oct 2001 30 Sep 2011
37,500 – – – 37,500 £1.00 1 Oct 2002 1 Oct 2002 30 Sep 2012
1,000 – – – 1,000 £1.00 1 Oct 2004 1 Oct 2004 30 Sep 2014
25,000 – – – 25,000 £1.00 21 Sep 2005 21 Sep 2005 20 Sep 2015
253,500 253,500
Patrick Paul 100,000 – – 100,000 – £0.409 10 Mar 1997 10 Mar 1997 15 Nov 2006
16,000 – – 16,000 – £1.00 28 Sep 1998 28 Sep 1998 15 Nov 2006
12,000 – – 12,000 – £1.30 1 Mar 2000 1 Mar 2000 15 Nov 2006
16,000 – – 16,000 – £0.80 31 Jan 2002 31 Jan 2002 15 Nov 2006
16,000 – – 16,000 – £1.00 18 Feb 2004 18 Feb 2004 15 Nov 2006
8,000 – – 8,000 – £1.00 21 Sep 2005 21 Sep 2005 15 Nov 2006
168,000 168,000
Barry Sealey (3) 100,000 – – – 100,000 £0.41 10 Mar 1997 10 Mar 1997 15 Nov 2006
24,000 – – – 24,000 £1.00 28 Sep 1998 28 Sep 1998 15 Nov 2006
18,000 – – – 18,000 £1.30 1 Mar 2000 1 Mar 2000 15 Nov 2006
24,000 – – – 24,000 £0.80 31 Jan 2002 31 Jan 2002 15 Nov 2006
24,000 – – – 24,000 £1.00 18 Feb 2004 18 Feb 2004 15 Nov 2006
12,000 – – – 12,000 £1.00 21 Sep 2005 21 Sep 2005 15 Nov 2006
202,000 202,000
Michael Rutterford (4) 100,000 – – – 100,000 £0.41 10 Mar 1997 10 Mar 1997 15 Nov 2006
16,000 – – – 16,000 £1.00 28 Sep 1998 28 Sep 1998 15 Nov 2006
12,000 – – – 12,000 £1.30 1 Mar 2000 1 Mar 2000 15 Nov 2006
16,000 – – – 16,000 £0.80 31 Jan 2002 31 Jan 2002 15 Nov 2006
16,000 – – – 16,000 £1.00 18 Feb 2004 18 Feb 2004 15 Nov 2006
8,000 – – – 8,000 £1.00 21 Sep 2005 21 Sep 2005 15 Nov 2006
168,000 168,000
Ann Gloag (5) 8,000 – – – 8,000 £0.80 31 Jan 2002 31 Jan 2002 15 Nov 2006
16,000 – – – 16,000 £1.00 18 Feb 2004 18 Feb 2004 15 Nov 2006
8,000 – – – 8,000 £1.00 21 Sep 2005 21 Sep 2005 15 Nov 2006
32,000 32,000
(1) ceased to be a Director on 30 September 2006
(2) ceased to be a Director on 21 December 2005
(3) ceased to be a Director on 27 January 2006
(4) ceased to be a Director on 21 December 2005
(5) ceased to be a Director on 21 December 2005
(6) The number of share options has been calculated after the consolidation which took place on 27 January 2006, where two ordinary shares of £0.01 each were
consolidated into one ordinary share of £0.02 each.
30
Optos plc Annual Report & Accounts 2006

Directors’ Remuneration Report
continued
Awards granted to five executives on 21 September 2005 contained performance conditions. The awards stipulated vesting as to one third immediately with the
remaining two-thirds vesting subject to satisfaction of performance targets. Such targets are based on the Company achieving two successive quarters of positive
operating profit and two successive quarters of positive earnings over the period from grant to 31 March 2006 and 31 March 2007 respectively. These performance
periods were accelerated by 12 months due to the IPO and the conditions have been achieved.
An award of 50,000 options granted to Ian Stevens on 21 September 2005 contained performance conditions. The award stipulated vesting over four quarters
dependent on the North American business attaining certain performance levels. Such targets are based on the Company budget for the year ended 30 September
2006 and relate to targets for net installs, overhead expenditure and revenue per site. The conditions have been achieved.
The outstanding options to a number of non-executive Directors expired nine months after admission to the Official List and trading on the main market of the
London Stock Exchange.
The options numbers listed above exclude options reserved under the share save scheme which commenced in April 2002. Stephane Sallmard has a potential 20,688
options priced at £1.00 and exercisable between April 2007 and September 2007. Ian Stevens has a potential 12,413 options priced at £1.00 and exercisable between
April 2007 and September 2007.
Aggregate gains made by Directors on the exercise of share options amounted to $979,837 (2005: $nil).
The market price of the shares at 30 September 2006 was £1.85 and the highest and lowest market prices from flotation to 30 September 2006 were £2.84 to £1.62.
PERFORMANCE GRAPH
The following graph shows the Company’s performance measured by the total shareholder return, compared with the performance of the FTSE Small Cap and the
FTSE All Share and Healthcare Equipment and Services (rebased) indices. The Board believes these comparisons are the most relevant for a Company of Optos’ size.
110
100
90
80
70
60
Mar Apr May Jun Jul Aug Sep
Optos PLC
FTSE Small Cap – Price index
Health FTSE All Share H/C EQ & SVS £ – Price Index
Source: Datastream
Dr John Padfield
Chairman of the Remuneration Committee
Signed and approved for and on behalf of the Board
18 December 2006
Optos plc Annual Report & Accounts 2006 31

Directors’ Report
The Directors present their report and the audited financial statements for the year ended 30 September 2006.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The Group is principally engaged in the design, development, manufacture and marketing of retinal imaging devices. The Directors’ Report should be read in
conjunction with the Chairman’s Statement and the Operational and Financial Review, which together contain details of the principal activities of the Group, a review
of the business during the year and an indication of expected progress.
A description of the principal risks and uncertainties facing the Group can be found in Note 22 of the financial statements.
FINANCIAL RESULTS AND DIVIDEND
The Group’s consolidated net profit for the year after taxation was $10.8 million (2005: loss of $2.2 million). The Directors do not recommend the payment of a dividend
for the current year. The profit for the year has been transferred to the reserves.
RESEARCH AND DEVELOPMENT
The Group continues to invest in research and development. Details of activities on research and development are set out in the Operating and Financial Review.
SHARE CAPITAL
Following the annual general meeting of the Company held on 27 January 2006, the members voted to consolidate each ordinary share of £0.01 in the Company on
a 2:1 basis, consolidating two ordinary shares of £0.01 each into one ordinary share of £0.02. The members then voted to increase the share capital of the Company by
£600,000 to £1,800,000 by the creation of an additional 30 million ordinary shares.
As at 1 October 2005, the Company had 46.1 million ordinary shares of £0.02 outstanding. On 15 February 2006, the Company issued 19.2 million ordinary shares of
£0.02 in respect of new capital raised during the IPO, loan stock conversion and through the exercise of various options and warrants. In addition to this, during the
year ended 30 September 2006, 0.7 million ordinary shares were issued to staff exercising options and 0.2 million ordinary shares were issued to third parties. As at
30 September 2006, the Company had 66,178,338 ordinary shares in issue.
Details of the options outstanding under each of the Company’s share option schemes at the end of the year are set out in Note 20 to the Group financial statements
SUBSTANTIAL INTERESTS
As at 7 December 2006, the Company had been notified, in accordance with Sections 198 to 208 of the Companies Act 1985, of the following interests in the
Company’s ordinary share capital:
Shares Number of Ordinary Shares Percentage of Issued Ordinary Shares
Fidelity Investments 1,877,300 2.8%
The Goldman Sachs Group Inc 2,976,522 4.5%
MPC Investors Ltd 2,175,400 3.3%
DIRECTORS
Details of the current Directors are set out on pages 18 and 19.
Details of Board appointments and resignations are set out on pages 21 and 22.
DIRECTORS’ INTERESTS
Details of Directors’ interests are set out on pages 28 to 31.
MATERIAL CONTRACTS
None of the Directors had any material interest in any contract of significance with the Company and its subsidiaries other than their service contracts.
NEW INCENTIVE SCHEMES
Shareholder approval for a new share-based LTIP and a discretionary share option scheme will be sought at the annual general meeting to be held on 31 January 2007
(summaries of the principal features of the LTIP and the discretionary share option scheme will be outlined in the appendix to the notice of annual general meeting).
CREDITOR PAYMENT POLICY
Optos’ policy for all suppliers is to fix terms of payment when agreeing the terms of the credit account, to ensure that the supplier is aware of the terms, and to abide
by the agreed terms of payment. Trade payables are paid on the 20th of the month following the month of invoice, equivalent to an average of 35 days.
Other payables are non-interest bearing and have an average term of between 30 and 60 days.
QUALIFYING THIRD-PARTY INDEMNITY
Since 27 January 2006, a qualifying third-party indemnity provision has been in force pursuant to the Company’s current articles of association.
32
Optos plc Annual Report & Accounts 2006

Directors’ Report
continued
FINANCIAL INSTRUMENTS
The Group’s financial risk management objectives and policies are discussed in Note 22.
DIRECTORS’ STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
In accordance with the Companies (Audit, Investigations and Community Enterprise) Act 2004, the Directors declare that they are not aware of any relevant audit
information of which the Company’s auditors are unaware. The Directors have taken all steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 31 January 2007.
AUDITORS
A resolution to reappoint Ernst & Young LLP as auditors will be put to the forthcoming Annual General Meeting.
By order of the Board
Allan Watson
Director
18 December 2006
Optos plc Annual Report & Accounts 2006 33

Statement of Directors’ Responsibilities
In respect of the consolidated financial statements, the Directors are responsible for:
• ensuring the maintenance of proper accounting records which disclose with reasonable accuracy the financial position of the Group at any time and from which
financial statements can be prepared to comply with the Companies Act 1985 and Article 4 of the IAS Regulation;
• preparing financial statements for each financial period, which give a true and fair view, in accordance with IFRS as adopted for use in the European Union, of the
state of affairs of the Group as at the end of the financial period and of the profit or loss for that period;
• ensuring the operation of systems of internal control and for taking reasonable steps to safeguard the assets of the Group and for preventing and detecting fraud
and other irregularities.
In respect of the Company financial statements, the Directors are:
• responsible for ensuring the maintenance of proper accounting records which disclose with reasonable accuracy the financial position of the Company at any time
and from which financial statements can be prepared to comply with the Companies Act 1985;
• required by law to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Company as at the end of the
financial period and of the profit or loss for that period;
• responsible also for ensuring the operation of systems of internal control and for taking reasonable steps to safeguard the assets of the Company and for preventing
and detecting fraud and other irregularities.
The Directors have elected to prepare the parent financial statements in accordance with applicable United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
The financial statements for the year ended 30 September 2006 are included in the annual report for 2006, which is published in hard-copy printed form and made
available on the website. The Directors are responsible for the maintenance and integrity of the annual report on the website, in accordance with UK legislation governing
the preparation and dissemination of financial statements. Access to the website is available from outside the UK, where comparable legislation may be different.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration Report and the Corporate
Governance Statement that comply with that law and those regulations.
34
Optos plc Annual Report & Accounts 2006

Independent Auditors’ Report
to the members of Optos plc
We have audited the Group financial statements of Optos plc for the year ended 30 September 2006, which comprise the Consolidated Income Statement, the
Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity and the Consolidated Cash Flow Statement and the related Notes 1 to 23. These Group
financial statements have been prepared under the accounting policies set out therein.
We have reported separately on the parent company financial statements of Optos plc for the year ended 30 September 2006 and on the information in the Directors’
Remuneration Report, that is described as having been audited.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so
that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
The Directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and International
Financial Reporting Standards (IFRS) as adopted by the European Union as set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the Group financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing
(UK and Ireland).
We report to you our opinion as to whether the Group financial statements give a true and fair view, the Group financial statements have been properly prepared in
accordance with the Companies Act 1985 and Article 4 of the IAS Regulations. We also report to you whether the information given in the Directors’ report is consistent
with the financial statements. The information given in the Directors’ report includes that specific information presented in the Operational and Financial Review that is
cross-referred from the Business Review section of the Directors’ Report.
In addition, we report to you if, in our opinion, we have not received all the information and explanations we require for our audit, or if information specified by law
regarding Directors’ remuneration and other transactions is not disclosed.
We review whether the Corporate Governance Statement reflects the Company’s compliance with the nine provisions of the 2003 FRC Combined Code specified for
our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board’s statements on
internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and consider whether it is consistent with the audited Group financial statements. The other information
comprises only the Highlights, the History of Optos, A Closer Look at Optos, optomap® Retinal Exam, the Chairman’s Statement, the Operational and Financial Review,
Board of Directors, Corporate Governance, Corporate Social Responsibility, the unaudited part of the Directors’ Remuneration Report and the Directors’ Report. We
consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial statements. Our
responsibilities do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the Group financial statements. It also includes an assessment of the significant
estimates and judgements made by the Directors in the preparation of the Group financial statements, and of whether the accounting policies are appropriate to the
Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the Group financial statements are free from material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the Group financial statements.
Opinion
In our opinion :
• the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group’s affairs as at
30 September 2006 and of its profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation; and
• the information given in the Directors’ Report is consistent with the Group financial statements.
Ernst & Young LLP
Registered Auditor
Glasgow
18 December 2006
Optos plc Annual Report & Accounts 2006 35

Consolidated Income Statement
For the year ended 30 September 2006
2006 2005
Notes $’000 $’000
Revenue 4 67,720 48,399
Cost of sales (23,304) (16,956)
Gross profit 44,416 31,443
Other income – 321
Selling and distribution costs (13,714) (9,689)
Administrative expenses (24,216) (17,622)
Operating profit before share-based payments 6,486 4,453
Share-based payments 20 (2,163) (1,170)
Operating profit after share-based payments 4,323 3,283
Finance revenue 5 1,118 78
Finance costs 5 (6,541) (5,954)
Loss from continuing operations before taxation 4 (1,100) (2,593)
Income tax credit 7 11,907 396
Net profit/(loss) for the year
attributable to equity holders of the parent 10,807 (2,197)
Profit/(loss) per ordinary share
Basic 8 18.5c (4.8)c
Diluted 8 17.6c (4.8)c
36
Optos plc Annual Report & Accounts 2006

Consolidated Balance Sheet
As at 30 September 2006
2006 2005
Notes $’000 $’000
Non-current assets
Property, plant and equipment 9 77,643 66,355
Intangible assets 10 7,844 5,735
Deferred tax asset 7 11,907 –
Total non-current assets 97,394 72,090
Current assets
Inventories 11 3,693 2,708
Trade and other receivables 12 7,362 4,887
Cash and cash equivalents 13 36,152 2,163
Total current assets 47,207 9,758
Current liabilities
Trade and other payables 14 (10,252) (7,806)
Financial liabilities 15 (40,940) (38,440)
Provisions 17 (114) (281)
Total current liabilities (51,306) (46,527)
Total assets less current liabilities 93,295 35,321
Non-current liabilities
Financial liabilities 15 (40,220) (55,073)
Provisions 17 (1,025) (562)
Government grants 18 (714) (714)
Total non-current liabilities (41,959) (56,349)
Net assets/(liabilities) 51,336 (21,028)
Equity attributable to equity holders of the parent
Issued capital 2,361 1,665
Share premium 111,375 52,472
Retained earnings (62,271) (75,136)
Other reserves (129) (29)
Total equity 51,336 (21,028)
Approved by the Board of Directors on 18 December 2006 and signed on its behalf by:
Allan Watson
Director
Optos plc Annual Report & Accounts 2006 37

Consolidated Statement of Changes in Equity
For the year ended 30 September 2006
Share Share Equity Retained
Capital Premium Reserve Earnings Other Total
$’000 $’000 $’000 $’000 $’000 $’000
At 1 October 2004 1,663 52,417 – (74,510) 686 (19,744)
Exchange differences on foreign operations – – – – (29) (29)
Loss for the year – – – (2,197) – (2,197)
Total income and expenses for year – – – (2,197) (29) (2,226)
1,663 52,417 – (76,707) 657 (21,970)
Reserve transfer – – – 686 (686) –
Issue of ordinary share capital 2 55 – – – 57
Share-based payments – – – 885 – 885
At 30 September 2005 1,665 52,472 – (75,136) (29) (21,028)
Implementation of IAS32/39 – – 2,744 (1,305) – 1,439
At 1 October 2005 1,665 52,472 2,744 (76,441) (29) (19,589)
Exchange differences on foreign operations – – – – (100) (100)
Profit for the year – – – 10,807 – 10,807
Total income and expenses for year – – – 10,807 (100) 10,707
1,665 52,472 2,744 (65,634) (129) (8,882)
Conversion of loan 217 10,213 (2,744) 1,543 – 9,229
Issue of ordinary share capital 479 54,295 – – – 54,774
Cost of issue of ordinary share capital – (5,605) – – – (5,605)
Share-based payments – – – 1,820 – 1,820
At 30 September 2006 2,361 111,375 – (62,271) (129) 51,336
Share Premium
Share premium comprises the difference between the net proceeds and nominal value on issue of the Company’s equity share capital.
Other Reserves
Other reserves comprise:
Special Reserve
This reserve was used to record a reduction in capital during the year ended 30 September 1997. The special reserve was created following the cancellation of the
share premium account as at 30 September 1997 of £1,112,000, against which was applied the debit balance on the profit and loss account at that time of £733,000.
As no debts or claims against Optos at 30 September 1997 remain, the balance on special reserves of $686,000 has been reclassified to the profit and loss account.
Foreign Exchange Reserve
This reserve includes all cumulative differences on the translation of the Group’s net investment in foreign operations. 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 1 October 2004. As a result, in the event of the
subsequent disposal of a foreign operation, any gain or loss on disposal will include cumulative translation differences arising only on or after 1 October 2004.
38
Optos plc Annual Report & Accounts 2006

Consolidated Cash Flow Statement
For the year ended 30 September 2006
2006 2005
Notes $’000 $’000
Cash flows from operating activities
Operating profit after share-based payments 4,323 3,283
Adjustments for:
Depreciation and amortisation 21,273 14,689
Loss on disposal 756 –
Share-based payments 1,820 1,170
Increase in trade and other receivables (2,475) (1,063)
Increase in inventories (985) (447)
Increase/(decrease) in trade payables 1,651 (1,837)
Government grant receipt – 316
Increase in provisions 296 285
Research and development tax credit – 396
Net cash inflows from operating activities 26,659 16,792
Cash flows used in investing activities
Interest received 1,118 78
Purchases of property, plant and equipment (PPE) (32,015) (34,448)
Expenditure on intangible assets (2,463) (2,777)
Net cash flows used in investing activities (33,360) (37,147)
Cash flows from financing activities
Proceeds from finance leases 45,240 40,771
Payment of finance leases (40,163) (25,385)
Proceeds from share issues 49,169 57
Interest paid (6,287) (5,390)
Net cash flows from financing activities 47,959 10,053
Net increase/(decrease) in cash and cash equivalents 41,258 (10,302)
Effect of exchange on cash & cash equivalents (416) (497)
Cash and cash equivalents at beginning of period (4,690) 6,109
Cash and cash equivalents at end of period 13 36,152 (4,690)
Optos plc Annual Report & Accounts 2006 39

Notes to the Consolidated Financial Statements
For the year ended 30 September 2006
1 AUTHORISATION OF FINANCIAL STATEMENTS & STATEMENTS OF COMPLIANCE
The consolidated financial statements of Optos plc for the year ended 30 September 2006 were approved and authorised for issue by the Directors on 18 December
2006. Optos plc is a limited company incorporated in Scotland and is listed on the London Stock Exchange.
The consolidated financial statements of Optos plc have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the
European Union and applied in accordance with the provisions of the Companies Act 1985. These are the first annual financial statements of the Group prepared in
accordance with IFRS, and IFRS 1 has been applied.
2 ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to the years
presented, unless otherwise stated.
a) Basis of Preparation
In June 2002, the European Union (“EU”) adopted Regulations which require that the consolidated accounts of listed companies in the EU should, from 2005,
be presented in accordance with EU-adopted International Financial Reporting Standards and International Accounting Standards (“IAS”).
For the year ended 30 September 2006, Optos plc (“the Group”) has adopted IFRS for the first time.
The financial statements have been prepared in accordance with the accounting policies based on International Financial Reporting Standards (“IFRS”) and IFRIC
interpretations endorsed by the European Union (“EU”) and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments. The 2005 comparative
information has, as permitted by the exemption in IFRS 1, not been prepared in accordance with IAS 32, ‘Financial Instruments: Disclosure and Presentation’, and IAS 39,
‘Financial Instruments: Recognition and Measurement’. Instead, IAS 32 and IAS 39 have been implemented with effect from 1 October 2005.
The Group’s consolidated financial statements were prepared in accordance with UK GAAP until 30 September 2005. UK GAAP differs in some areas from IFRS.
In preparing the Group’s 2006 consolidated financial statements, management has amended certain accounting, valuation and consolidation methods applied in
the UK GAAP financial statements to comply with IFRS. The comparative figures in respect of 2005 have been restated to reflect these adjustments.
Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS are provided in Note 23.
The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand ($’000), except when otherwise indicated.
b) Basis of consolidation
The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.
c) Foreign currency translation
The consolidated financial statements are presented in US dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines
its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign
currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss, with the exception of differences
on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net
investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
The functional currency of the foreign operations Optos Canada Inc. and Optos Gmbh, is the Canadian dollar and Euro respectively. As at the reporting date, the assets
and liabilities of these subsidiaries are translated into the presentation currency of Optos plc (the US dollar) at the rate of exchange ruling at the balance sheet date and,
their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to
a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in the income statement. The Company’s share capital and share premium account are denominated in £ sterling and are translated at the historical rates of
exchange.
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 1 October
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 1 October 2004.
40
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
d) Property, plant and equipment
Property, plant and equipment is stated at cost, excluding the costs of the day-to-day servicing, less accumulated depreciation and accumulated impairment in value.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost less estimated residual values based on prices prevailing at the
balance sheet date of each asset evenly over its expected useful, life as follows:
Leasehold improvements
P200 equipment
Other plant & equipment
10 years
5 years
3 to 10 years
P200 equipment refers to retinal examination equipment located at healthcare professional sites and being used on a pay-per-examination basis, and significant
component parts and major spares. P200 equipment is depreciated upon activation at the relevant healthcare professional site.
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be
recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income
statement in the year the asset is derecognised.
The assets’ residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year end.
e) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the
lease at the fair value or, if lower, at the present value of the minimum lease payments or, in respect of P200 equipment, at the cost of manufacture. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group
will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
Upon placement of P200 equipment at a healthcare professional site, the Group enters into a financing agreement with third-party providers of vendor finance
involving the sale of P200 equipment, with legal title being transferred back at the end of the period. As the significant risks and rewards of ownership are retained by
the Group, the proceeds received from the third-party providers of vendor finance are recorded as fixed-rate obligations which are repayable by instalments and are
secured over the related P200 assets.
f) Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss. Internally generated intangible assets, excluding capitalised
development costs, are not capitalised, and expenditure is charged against profits in the year in which the expenditure is incurred.
Research and development costs
Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably
be regarded as assured. Following the initial recognition of the development expenditure, the cost model is applied, requiring the asset to be carried at cost less any
accumulated amortisation and accumulated impairment losses. Any expenditure carried forward is amortised over the period of expected future revenues from the
related project.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indication of impairment
arises during the reporting year.
Computer software
Computer software that is not integral to an item of property, plant and equipment is recognised separately as an intangible asset. Amortisation is provided on a
straight-line basis so as to charge the cost of the software to the income statement over its expected useful life, which is in the range three to five years.
g) Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication of impairment exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s,
or cash-generating unit’s, fair value less costs to sell, and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are
recognised in the income statement in those expense categories consistent with the function of the impaired asset.
Optos plc Annual Report & Accounts 2006 41

Notes to the Consolidated Financial Statements
continued
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in
the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal, the depreciation charge is adjusted in
future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
h) Inventories
Inventories primarily comprise spares components related to P200 equipment. Inventories are valued at the lower of cost and net realisable value. Costs incurred in
bringing each product to its present location and condition are accounted for as follows:
• Raw materials spares & consumables – purchase cost on a first-in, first-out basis;
• Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
i) Trade and other receivables
Trade receivables, which generally have 30-90 days’ terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
Provision is made when there is objective evidence that the Group will not be able to collect the debts. Balances are written off when the probability of recovery is
assessed as being remote.
j) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
k) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
l) Income taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax is recognised for all taxable temporary differences, except:
• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
• Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses
can be utilised.
The carrying amount of deferred income tax assets will be reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each
balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Otherwise, income tax is recognised in the income
statement.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred
taxes are related to the same taxable entity and the same taxation authority.
Revenues, expenses and assets are recognised net of the amount of sales tax, except:
• where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of
the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
42
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
m) Share-based payment transactions
Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as
consideration for equity instruments (“equity-settled transactions”).
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised as an
expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. In valuing equity-settled transactions,
no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (“market conditions”), if applicable.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s
best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in
cumulative expense recognised as at the beginning and end of that period.
Where the terms of an equity-settled award are modified, or a new award is designated as replacing a cancelled or settled award, the cost based on the original
award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for
the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award,
both as measured on the date of modification. No reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income statement for
the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any
excess over fair value being treated as an expense in the income statement.
The Group has taken advantage of the transitional provisions of IFRS 2 in respect of equity-settled awards, and has applied IFRS 2 only to equity-settled awards granted
after 7 November 2002 that had not vested on 1 January 2005.
n) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received excluding discounts, rebates, VAT and other sales tax or duties. The following specific recognition criteria must
also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch.
Rendering of services
Revenue from the provision of retinal examinations to the healthcare sector is recognised once the service has been provided. Such examinations are undertaken by
healthcare professionals who generally enter into “pay-per-patient” agreements.
Revenue is recognised on a pay-per-examination basis, usually with a minimum monthly usage level being agreed with the local healthcare professional.
Interest income
Revenue is recognised as interest accrues on cash deposits.
o) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
p) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.
When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is
intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement
over the expected useful life of the relevant assets.
q) Post-employment benefits
Post employment benefits comprise pension benefits provided to employees throughout the world.
The Company operates a defined contribution pension scheme. The assets of the scheme are invested and managed independently of the finances of the Company.
The contributions payable are recognised in the income statement in the period in which they become payable.
r) Exceptional items
The Group presents as exceptional items on the face of the income statement, those material items of income and expense which, because of the nature and
expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance
in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.
Optos plc Annual Report & Accounts 2006 43

Notes to the Consolidated Financial Statements
continued
s) Financial instruments
Prospective adoption of IAS32 and IAS39
As permitted by IFRS1, the Group has elected to apply IAS32 “Financial Instruments: Disclosure and Presentation” and IAS39 “Financial Instruments: Recognition and
Measurement” prospectively from 1 October 2005. As a result, the relevant comparative information for the year ended 30 September 2005 and as at 30 September
2005 does not reflect the impact of these standards and is accounted for in accordance with UK GAAP.
Derivative financial instruments
Optos has used derivative financial instruments, principally forward currency contracts, to reduce its exposure to exchange rate movements. Under UK GAAP,
such derivative contracts are not recognised as assets and liabilities on the balance sheet, and gains or losses arising on them are not recognised until the hedged
item has itself been recognised in the financial statements.
From 1 October 2005, derivative financial instruments are recognised as assets and liabilities measured at their fair value at the balance sheet date. Changes in fair
values will be recognised in the income statement and this is likely to cause volatility in situations where the carrying value of the hedged item is either not adjusted
to reflect fair value changes arising from the hedged risk, or is so adjusted but that adjustment is not recognised in the income statement. However, under certain
conditions specified within IAS39, hedge accounting may be used to mitigate income statement volatility. The Group had no outstanding contracts at 30 September
2005 and had no contracts during the year to 30 September 2006.
Compound financial instruments
Optos had in issue secured loan notes 2006 and unsecured loan notes 2007, both of which were convertible at the holder’s option into ordinary shares of
1p each. Under UK GAAP, convertible bonds are treated as debt, with the finance cost being measured on the assumption that the debt will not be converted.
Under IAS 32, from 1 October 2005 convertible bonds are split into a liability and a conversion option. On issue, the fair value of the liability component is determined
using a market rate for an equivalent non-convertible bond and recognised in non-current liabilities as part of borrowings on an amortised cost basis until
extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option. If the conversion option meets the definition of
an equity instrument, no subsequent changes in the value are recognised in the financial statements. However, where settlement is in a currency other than the
functional currency of Optos, the remainder of the proceeds are recognised as a financial liability, with the change in value of the conversion option in subsequent
accounting periods being recognised in the income statement. At the date of issue, the compound financial instruments were denominated in the functional currency
of Optos and, accordingly, the remainder of the proceeds were treated as an equity instrument.
At 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 is 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). The impact on 2006, up to the point of conversion, has been to
increase finance costs by $253,000 for imputed interest and a decrease in administrative expenses of $162,000 related to foreign exchange movements.
Share warrants
Optos had in issue a number of share warrants entitling the holders to subscribe for ordinary shares of 1p each at set prices under certain conditions. UK GAAP requires
the net proceeds of an issue to be credited direct to shareholders’ funds. Thereafter, the accounting depends on whether the warrant is exercised or is allowed to lapse.
If it is exercised, the proceeds on the original issue of the warrant are included in the net proceeds of the shares issued; if it lapses, they are included instead in the
statement of total recognised gains and losses.
Under IFRS, a non-derivative contract involving the delivery of a fixed number of own equity instruments, in exchange or a fixed amount of cash, is classified as an
equity instrument. Any consideration received, such as a premium on issues, is added directly to equity. Subsequent changes in the fair value of the instrument are not
recognised in the financial statements. However, where settlement is in a currency other than the functional currency of Optos, the net proceeds are recognised as a
financial liability, with the change in value of the conversion option in subsequent accounting periods being recognised in the income statement. At the date of issue,
the warrants were denominated in the functional currency of Optos and, accordingly, have been treated as an equity instrument.
t) Derecognition of financial assets & liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where the rights to receive cash flows from
the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a
third party under a ‘pass-through’ arrangement; or the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially
all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any
costs or fees incurred are recognised in profit or loss.
44
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
u) Significant judgements made
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the
most significant effect on the amounts recognised in the financial statements:
P200 financing arrangements
Upon placement of P200 equipment at the healthcare professional site, the Group enters into a three-year financing arrangement with third-party providers of vendor
finance involving the sale of the P200 equipment, with legal title being transferred back at the end of the arrangement period. The third-party providers of vendor finance
enter into a three-year lease agreement with the healthcare professional. As the significant risks and rewards of ownership are retained by the Group, the proceeds received
from the third-party providers of vendor finance are recorded as fixed-rate obligations which are repayable by instalments and are secured over the related P200 assets.
v) Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Useful lives of P200 equipment
The Group depreciates P200 equipment over its estimated useful life. The P200 equipment is still relatively new to market and management annually assesses the
appropriateness of the current estimate of useful life.
w) New standards and interpretations
The IASB and IFRIC have issued the following standards and interpretations with an effective date for periods after the date of these financial statements:
International Accounting Standards (IFRS/IAS)
Effective Date for
Periods Commencing
IFRS 1 Amendment relating to IFRS 6 1/1/06
IFRS 4 Amendment to IAS 39 and IFRS 4 – Financial Guarantee Contracts 1/1/06
IFRS 6 Exploration for and Evaluation of Mineral Assets 1/1/06
IFRS 6 Amendment relating to IFRS 6 1/1/06
IFRS 7 Financial Instruments: Disclosures 1/1/07
IFRS 8 Operating Segments 1/1/09*
IAS 1 Amendments to IAS 1 – Presentation of Financial Statements: Capital Disclosures 1/1/07
IAS 19 Amendment to IAS 19: Actuarial Gains and Losses, Group Plans and Disclosures 1/1/06
IAS 21 Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation 1/1/06
IAS 39 Amendment to IAS 39 The Fair Value Option 1/1/06
IAS 39 Amendment to IAS 39 Cash Flow Hedge Accounting 1/1/06
IAS 39 Amendments to IAS 39 and IFRS 4 – Financial Guarantee Contracts 1/1/06
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 4 Determining whether an Arrangement contains a Lease 1/1/06
IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds 1/1/06
IFRIC 7 Applying IAS 29 Financial Reporting in Hyperinflationary Economies for the First Time 1/3/06
IFRIC 8 Scope of IFRS 2 1/5/06
IFRIC 9 Reassessment of Embedded Derivatives 1/6/06
IFRIC10 Interim Financial Reporting and Impairment 1/11/06
IFRIC 11 IFRS2 Group and Treasury Share Transactions 1/3/07*
IFRIC 12 Service Concession Arrangements 1/1/08*
* not yet adopted for use in the European Union
The above standards and interpretations will be adopted in accordance with their effective dates. The Directors do not anticipate that the adoption of these standards
and interpretations will have a material impact on the Group’s financial statements in the period of initial application. Upon adoption of IFRS 7, the Group will have to
disclose additional information about its financial instruments, their significance and the nature and extent of risks that they give rise to. More specifically, the Group
will need to disclose the fair value of its financial instruments and its risk exposure in greater detail. There will be no effect on reported income or net assets.
Optos plc Annual Report & Accounts 2006 45

Notes to the Consolidated Financial Statements
continued
3 SEGMENTAL ANALYSIS
The primary segment reporting format is determined to be geographic segments as the Group’s risks and rates of return are affected predominantly by differences in
the geographic locations of the markets served. The Group’s principal area of activity is the design, development, manufacture and marketing of retinal examination
equipment (P200s) at healthcare professional sites. These sites are fully supported by the Group’s employees. Revenue is generated on a pay-per-examination basis,
usually with a minimum monthly usage level being agreed. For the year ended 30 September 2006, “pay-per-patient” agreements accounted for approximately 96%
of sales (2005: 99%).
Incidental to the above activity, the Group occasionally sells retinal examination equipment, in which case revenue is recognised when the significant risks and
rewards, of ownership of the goods have passed to the buyer. These sales are not material to the Group turnover or results. Accordingly, the Directors have determined
that the Group only has one class of business.
The operating businesses are organised and managed separately according to the geographic location of the operations, with each segment representing a strategic
business unit that offers the same products to different markets. The Group’s geographical segments are based on the location of the Group’s customers. Sales to
external customers disclosed in geographical segments are based on the geographical location of its customers.
Transfer prices between segments are set at cost. Segment revenue, segment expense and segment result include transfers between business segments. Those transfers
are eliminated on consolidation.
An analysis by geographical market is given below for the year ended 30 September 2006:
North America Europe Eliminations Total
2006 2006 2006 2006
$’000 $’000 $’000 $’000
Revenue
Sales to external customers 64,733 2,987 – 67,720
Inter-segment sales – 23,959 (23,959) –
Segment revenue 64,733 26,946 (23,959) 67,720
Result
Segment result before share-based payments 9,783 (3,297) 6,486
Share-based payments (480) (1,683) (2,163)
Operating profit after share-based payments 9,303 (4,980) 4,323
Net interest (5,423)
Loss from continuing operations before taxation (1,100)
Taxation 11,907
Net profit for the year 10,807
Assets and liabilities
Segment assets 77,571 50,706 (31,735) 96,542
Unallocated assets 48,059
Total assets 144,601
Segment liabilities 36,227 7,613 (31,735) 12,105
Unallocated liabilities 81,160
Total liabilities 93,265
Other segment information
Capital expenditure:
Property, plant and equipment 27,300 5,398 32,698
Intangible fixed assets – 2,463 2,463
Depreciation 18,295 2,624 20,919
Amortisation 45 309 354
Loss on disposal 756 – 756
Unallocated net liabilities comprise net debt and taxation.
46
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
An analysis by geographical market is given below for the year ended 30 September 2005:
North America Europe Eliminations Total
2005 2005 2005 2005
$’000 $’000 $’000 $’000
Revenue
Sales to external customers 45,987 2,412 – 48,399
Inter-segment sales – 26,287 (26,287) –
Segment revenue 45,987 28,699 (26,287) 48,399
Result
Segment result before share-based payments 6,437 (1,984) 4,453
Share-based payments (227) (943) (1,170)
Operating profit after share-based payments 6,210 (2,927) 3,283
Net interest (5,876)
Loss from continuing operations before taxation (2,593)
Taxation 396
Net loss for year (2,197)
Assets and liabilities
Segment assets 65,730 41,466 (27,510) 79,686
Unallocated assets 2,162
Total assets 81,848
Segment liabilities 30,818 6,055 (27,510) 9,363
Unallocated liabilities 93,513
Total liabilities 102,876
Capital expenditure:
Property, plant and equipment 35,309 2,466 37,775
Intangible fixed assets – 2,777 2,777
Depreciation 13,036 1,361 14,397
Amortisation 12 280 292
Unallocated net liabilities comprise cash, finance leases and taxation.
Optos plc Annual Report & Accounts 2006 47

Notes to the Consolidated Financial Statements
continued
4 REVENUE AND EXPENSES
Revenue
2006 2005
$’000 $’000
Sales of goods 3,059 626
Rendering of services 64,661 47,773
Group revenue 67,720 48,399
Finance revenue 1,118 78
Total revenue 68,838 48,477
No revenue was derived from exchanges of goods or services.
Expenses
2006 2005
$’000 $’000
The loss from continuing operations is stated after charging:
Depreciation charge for the period 20,919 14,397
Research and development expenditure (1) 51 88
Amortisation of software (Note 10) 354 292
Cost of inventories recognised as an expense 781 310
Operating leases 601 421
Foreign exchange differences (117) (627)
(1) In addition, $2,169,000 (2005: $2,635,000) was incurred in respect of research and development, which has not been charged in arriving at the pre-tax loss for the
period as it has been capitalised as an intangible asset. Further information is included in Note 10 to the Group accounts.
Services provided by the Group’s auditor and network firms
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditor at costs as detailed below:
2006 2005
$’000 $’000
Audit of the financial statements 128 72
Other fees to auditors:
Other regulatory services 46 –
Taxation services 384 197
Corporate finance services 670 –
The Group incurred $670k for reporting accountants’ and due diligence services from its auditors related to the IPO. This amount has not been charged in arriving at
the pre-tax loss for the period as it has been charged to the share premium account.
5 FINANCING
2006 2005
$’000 $’000
Finance costs
Bank overdraft 316 564
Convertible loans 254 –
Lease finance 5,971 5,390
6,541 5,954
Finance income
Bank interest receivable 1,118 78
Finance costs – net 5,423 5,876
48
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
6 DIRECTORS AND EMPLOYEES
2006 2005
$’000 $’000
Staff costs for the Group during the year:
Wages and salaries 19,156 13,133
Social security costs 2,055 1,596
Defined contribution pension costs 259 202
Share-based payments 1,820 885
Share-based schemes and outstanding options are set out in Note 20.
The average monthly number of persons employed during the year was as follows:
23,290 15,816
2006 2005
No
No
Executive Directors 4 5
Field (Sales and Support) 108 86
Manufacturing 37 28
Product Development 15 14
Central 38 26
Marketing 12 14
The above tabulation excludes the non-executive Directors.
214 173
Details of the fees, emoluments, pension contributions and gains on exercise of share options attributable to each Director during the year are given in the section
headed ‘Directors’ Remuneration’ in the Directors’ Remuneration Report on pages 28-31.
PENSION SCHEME ARRANGEMENTS
Optos operates a defined contribution pension scheme, the Optos Group Personal Pension Scheme, for its Directors and senior employees. The assets of the
scheme are held separately from those of the Company in an independently administered fund. There were no outstanding contributions at 30 September 2006
or 30 September 2005.
7 TAXATION
2006 2005
$’000 $’000
Current income tax
UK corporation tax on income for the year
Research and development tax credits – (396)
Total corporation tax credit – (396)
Deferred income tax
Origination and reversal of timing differences
Adjustment to estimated recoverable deferred tax assets (11,907) –
Total deferred tax credit (11,907) –
Total income tax credit (11,907) (396)
US corporation tax has been reduced to $nil as a result of the recognition of $1,112,000 of previously unrecognised tax losses.
Optos plc Annual Report & Accounts 2006 49

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.
50
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
8 PROFIT/(LOSS) PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the profit/(loss) for the financial year after taxation by the weighted average number of ordinary shares outstanding
during the period.
Diluted earnings per share amounts are calculated by dividing the profit for the year to 30 September 2006 after taxation by the weighted average number of ordinary
shares outstanding during the period (adjusted for the effects of dilutive options). The 2005 loss attributable to ordinary shareholders and the weighted average
number of ordinary shares for the purpose of calculating the diluted loss per share are identical to those for the basic loss per share. This is because the conversion of
loan notes, exercise of share options and warrants, would not have the effect of increasing the loss per share and is therefore not dilutive. The 2005 loss per share has
been adjusted for the share consolidation.
The basic earnings/(loss) per share is calculated as follows:
2006 2005
Profit/(loss) after taxation ($’000s) 10,807 (2,197)
Weighted average number of ordinary shares in issue 58,426,930 46,036,899
Effect of dilution: share options 3,113,912 –
Adjusted weighted average number of ordinary shares for diluted earnings per share 61,540,842 46,036,899
Basic profit/(loss) per share (cents) 18.5c (4.8c)
Diluted profit/(loss) per share (cents) 17.6c (4.8c)
9 TANGIBLE FIXED ASSETS
Leasehold P200 Plant and
Improvements Equipment Equipment Total
$’000 $’000 $’000 $’000
Cost
At 1 October 2005 736 99,366 4,337 104,439
Additions 815 30,689 1,194 32,698
Disposals (33) (1,286) (109) (1,428)
Exchange adjustment – 357 – 357
At 30 September 2006 1,518 129,126 5,422 136,066
Depreciation
At 1 October 2005 374 35,123 2,587 38,084
Charge for year 118 19,893 908 20,919
Disposals – (576) (96) (672)
Exchange adjustment – 92 – 92
At 30 September 2006 492 54,532 3,399 58,423
Net book value at 30 September 2006 1,026 74,594 2,023 77,643
Cost
At 1 October 2004 732 66,948 3,389 71,069
Additions 4 36,773 998 37,775
Disposals – (4,606) (50) (4,656)
Exchange adjustment – 251 – 251
At 30 September 2005 736 99,366 4,337 104,439
Depreciation
At 1 October 2004 295 22,928 1,869 25,092
Charge for year 79 13,569 749 14,397
Disposals – (1,426) (31) (1,457)
Exchange adjustment – 52 – 52
At 30 September 2005 374 35,123 2,587 38,084
Net book value at 30 September 2005 362 64,243 1,750 66,355
Optos plc Annual Report & Accounts 2006 51

Notes to the Consolidated Financial Statements
continued
P200 equipment refers to retinal examination equipment located at healthcare professional sites and being utilised on a pay-per-examination basis and significant
parts and major spares. P200 equipment is depreciated upon activation at the relevant healthcare professional site.
The carrying value of plant and equipment and P200 equipment held under finance leases at 30 September 2006 was $61,053,000 (2005: $48,556,000).
Leased assets are pledged as security for the related finance lease and hire-purchase liabilities.
10 INTANGIBLE FIXED ASSETS
Development
Software
Costs Costs Total
$’000 $’000 $’000
Cost
At 1 October 2005 5,120 1,678 6,798
Additions – internal development 2,169 294 2,463
At 30 September 2006 7,289 1,972 9,261
Accumulated amortisation
At 1 October 2005 – 1,063 1,063
Amortisation in year – 354 354
At 30 September 2006 – 1,417 1,417
Net carrying amount
At 30 September 2006 7,289 555 7,844
Development
Software
Costs Costs Total
$’000 $’000 $’000
Cost
At 1 October 2004 2,485 1,536 4,021
Additions – internal development 2,635 142 2,777
At 30 September 2005 5,120 1,678 6,798
Accumulated amortisation
At 1 October 2004 – 771 771
Amortisation in year – 292 292
At 30 September 2005 – 1,063 1,063
Net carrying amount
At 30 September 2005 5,120 615 5,735
Intangibles comprise principally P200MA development costs $6,163,000 (2005: $5,120,000). These have been capitalised as intangible assets and, along with the other
development costs, will be amortised over the number of production units expected to be obtained from the asset. The carrying value of development costs will be
reviewed for impairment annually when the asset is not yet in use or, more frequently, when an indication of impairment arises during the reporting year.
11 INVENTORIES
2006 2005
$’000 $’000
Raw materials, spares and consumables 3,693 2,708
12 TRADE AND OTHER RECEIVABLES
2006 2005
$’000 $’000
Trade debtors 4,219 2,890
Value-added tax recoverable 1,311 432
Prepayments 1,832 1,565
7,362 4,887
52
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
Trade receivables, which generally have 30-90 days’ terms, are recognised and carried at original invoice amount less an allowance for uncollectible amounts.
Provision is made when there is objective evidence that the Group will not be able to collect the debts. Balances are written off when the probability of recovery
is assessed as being remote. The charge recognised in respect of the allowance for uncollectable debt was $208,000 (2005: $140,000).
13 CASH AND CASH EQUIVALENTS
2006 2005
$’000 $’000
Cash at bank and in hand 7,752 2,163
Short-term deposits 28,400 –
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following:
36,152 2,163
2006 2005
$’000 $’000
Cash and cash equivalents
Cash at bank and in hand 36,152 2,163
Overdraft – (6,853)
36,152 (4,690)
Cash at bank earns interest at floating rates based on daily bank deposit rates. The Company had an overdraft facility of £5,000,000 ($8,814,000) with the Bank of
Scotland. The overdraft facility carried an interest rate 2% above the Bank of Scotland base rate. Following the listing of the Group on the London Stock Exchange on
15 February 2006, the Group’s overdraft with the Bank of Scotland was cleared. The Group did not seek to renew the overdraft facility upon its expiry at the end of
March 2006. At 30 September 2005, the Group had available $2,047,000 of undrawn committed borrowing facilities in respect of which all conditions precedent had
been met. There were no restrictions on the use of these facilities.
14 TRADE AND OTHER PAYABLES
2006 2005
$’000 $’000
Trade payables 3,548 3,457
Other taxes and social security costs 1,032 551
Other payables 420 422
Accruals 5,252 3,357
Related parties – 19
10,252 7,806
Optos’ policy for the year to 30 September 2006, for all suppliers, was to fix terms of payment when agreeing the terms of the credit account, to ensure that the supplier
was aware of the terms, and to abide by the agreed terms of payment. Trade payables are paid on the 20th of the month following the month of invoice, equivalent to
an average of 35 days.
Other payables are non-interest bearing and have an average term of between 30 and 60 days.
15 FINANCIAL LIABILITIES
2006 2005
$’000 $’000
Current
Finance leases 40,940 31,587
Bank overdraft – 6,853
40,940 38,440
Non-current
Finance leases 40,220 44,496
Secured loan stock 2006 – 1,763
Unsecured loan stock 2007 – 8,814
40,220 55,073
Optos plc Annual Report & Accounts 2006 53

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.
54
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
17 PROVISIONS
2006 2005
$’000 $’000
At 1 October 843 558
Arising during the year 343 285
Utilised (47) –
At 30 September 1,139 843
Current 114 281
Non-current 1,025 562
1,139 843
Social security contributions on share options
Social security contributions on share options are considered to fall within the scope of IFRS2 and are measured as though a cash-settled option under IFRS2.
The provision is calculated based on the number of options outstanding at the balance sheet date that are expected to be exercised and using the fair value of
the options at the balance sheet date. It is expected that the costs will be incurred during the exercise period to 31 December 2012.
18 Government grants
2006 2005
$’000 $’000
At 1 October 714 947
Received during the year – 88
Released to the income statement – (321)
At 30 September 714 714
Current – –
Non-Current 714 714
Government grants relate to development costs capitalised as intangible assets.
714 714
19 CALLED UP SHARE CAPITAL
2006 2005
Equity Share Capital No (million) No (million)
Authorised share capital
Ordinary shares of 2p each ( 2005: 1p each) 90 120
The Company has one class of ordinary share which carries no rights to fixed income.
2006 2005
$’000 $’000
Ordinary shares of 1p each
At 1 October 92,126,193 91,954,282
Issue of shares prior to consolidation 350,000 _
Exercise of employee share options prior to consolidation 361,660
Consolidation of shares (46,418,927) _
Issued on IPO 12,000,000 _
Exercise of employee share options post-IPO 489,631 34,791
Conversion of loan stock 6,683,984 544
Exercise of other options and warrants 568,297 _
Other share issues post-consolidation 17,500 136,576
At 30 September, ordinary shares of 2p each (2005: 1p each) 66,178,338 92,126,193
Optos plc Annual Report & Accounts 2006 55

Notes to the Consolidated Financial Statements
continued
Share Share Share Share
Capital Premium Capital Premium
2006 2006 2005 2005
Consideration received on issue of shares $’000 $’000 $’000 $’000
Issued on IPO 415 51,744 – –
Cost of issue of ordinary share capital – (5,605) – –
Exercise of employee share options 20 765 – –
Conversion of loan stocks 217 10,213 – –
Exercise of other options and warrants 35 1,554 – –
Other share issues 9 232 2 55
Consideration received 696 58,903 2 55
Following the annual general meeting of the Group held on 27 January 2006, the members voted to consolidate each ordinary share of £0.01 in the Group on a
2:1 basis, consolidating two ordinary shares of £0.01 each into one ordinary share of £0.02. The members then voted to increase the share capital of the Group by
£600,000 to £1,800,000 by the creation of an additional 30.0 million ordinary shares.
As at 1 October 2005, the Company had 46.1 million ordinary shares of £0.02 outstanding. On 15 February 2006, the Company issued 19.2 million ordinary shares of
£0.02 in respect of new capital raised during the IPO, loan stock conversion and through the exercise of various options and warrants. In addition to this, during the year
ended 30 September 2006, 0.7 million ordinary shares were issued to staff exercising options and 0.2 million ordinary shares were issued to third parties. As at
30 September 2006, the Company had 66,178,338 ordinary shares in issue.
20 SHARE-BASED PAYMENTS
The Company has operated discretionary share option arrangements. The discretionary options have been granted pursuant to four different types of option agreement.
Most terms of those options agreements are identical. However, the terms on which options vest differ between the types of agreement. The four types of vesting are as
follows:
• Time-based vesting over the three years commencing on the date on which the option was granted. One third of the options vest on grant and the remaining
two-thirds vest over the following 36 months on a monthly basis.
• Time-based vesting over three years as described above but with full acceleration of vesting on the admission of the Company’s shares to trading on certain stock
exchanges, including the London Stock Exchange.
• Time-based vesting by reference to the flotation of the Company. Under this form of option agreement, one third of the shares under option vest on the admission
of the Company’s shares to trading on certain stock exchanges, including the London Stock Exchange. The remaining two-thirds then vest in two tranches – on the
date six months after admission and on the date 12 months after admission.
• Vesting as to one third immediately with the remaining two-thirds vesting subject to satisfaction of performance targets. Such targets are based on the Company
achieving two successive quarters of positive operating profit and two successive quarters of positive earnings over the period from grant to 31 March 2006 and
31 March 2007 respectively. These performance periods were accelerated by 12 months due to the IPO, and the conditions have been achieved.
In addition to the above, two further vesting arrangements have been utilised in respect of two separate grants. The first grant is subject to time-based vesting with
one third of the option vesting on the first, second and third anniversaries of the date of grant. The second grant is subject to performance-based vesting, with the
option vesting over four quarters dependent on the North American business attaining certain performance levels relating to net installs, revenue per site of existing
customers and control of expenditure.
All option agreements contain provisions for the full acceleration of the option on a change in the control of the Company. Option holders who cease to be employees
of the Group are entitled to exercise their vested options in full for a period of either one month or six months following cessation of employment, depending on the
reasons for that cessation. All agreements contain provisions enabling the adjustment of the number of shares subject to option and the exercise price in the event of
capitalisation issue, subdivision or consolidation of ordinary shares. All options are to be settled by way of equity with a maximum term of 10 years.
In addition, the Company operated a share save scheme under which options were granted in 2002 and mature in 2007.
Option movements during year
The expense recognised from equity-settled, share-based payment transactions for employee services received during the year to 30 September 2006 is $1,820,000
(September 2005: $885,000) with an additional $343,000 (2005: $285,000) in respect of National Insurance.
56
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options during the year ended 30 September 2006.
After Consolidation
Prior to Consolidation
2006 2006 2005 2005
No WAEP No WAEP
Outstanding at the beginning of the year (1) 5,530,818 £0.92 8,046,135 £0.43
Granted during the year 544,250 £1.06 4,432,500 £0.50
Forfeited during the year (157,801) £1.16 (1,382,209) £0.50
Exercised during the year (670,461) £0.85 (34,791) £0.65
Outstanding at the end of the year (1) 5,246,806 £0.93 11,061,635 (1) £0.46
Exercisable at the end of the year 4,073,493 £0.94 7,244,976 £0.45
(1) Included within this balance are options over 2,440,900 2p shares (4,881,800 1p shares) that have not been recognised in accordance with IFRS 2 as the options were
granted on or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.
Share options outstanding at the end of the period have the following exercise prices:
After
Prior to
Consolidation Consolidation
Price Per Share 2006 2005
After Consolidation No No
Share option scheme
Expiry dates
April £0.046 – 352,000
March 2007 £0.41 200,000 600,000
November 2007 £0.42 100,000 200,000
September 2008 - June 2009 £1.00 97,500 227,000
September 2009 - October 2010 £1.30 196,700 637,600
September 2010 - February 2011 £1.45 108,700 110,000
October 2011 £0.80 777,625 1,723,000
January 2012 - May 2012 £1.00 66,759 513,084
June 2012 - November 2012 £1.00 315,250 862,500
January 2013 - December 2013 £1.00 526,127 1,072,000
February 2014 - December 2014 £1.00 329,056 848,500
January 2015 - December 2015 £1.00 2,317,071 3,589,915
January 2016 £1.00 16,500 –
June 2016 £2.07 32,500 –
Share save scheme
Expiry Dates
March 2007 £1.00 163,018 326,036
Outstanding at the end of the year 5,246,806 11,061,635
The fair value of equity-settled, share options granted is estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon
which the options were granted. The following table lists the inputs to the model used for the years ended 30 September 2006 and 30 September 2005.
After
Prior to
Consolidation Consolidation
2006 2005
Dividend yield (%) Nil Nil
Expected volatility (%) 70% 70%
Historical volatility (%) 70% 70%
Risk-free interest rate (%) 4.8% 4.5%
Expected life of option (years) 5 7
Weighted average share price £1.06 £0.5
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. As the Company has only a limited history
of quoted share price volatility, the expected volatility has been based on the historical volatility of comparative companies.
Optos plc Annual Report & Accounts 2006 57

Notes to the Consolidated Financial Statements
continued
No other features of options granted were incorporated into the measurement of fair value.
Other options and warrants falling outside the scope of IFRS2 comprise:
A warrant instrument dated 17 December 1999 which entitled TBCC Funding Trust II to subscribe for up to 114,476 ordinary shares at a price of £1.30 per share in the
event of a sale of the Company or its admission to a recognised stock exchange prior to 22 December 2006. This warrant was not exercised during the year and has
since lapsed.
Two option agreements dated 17 May 2002, under which Brewin Dolphin Securities Limited had options to subscribe for up to 10,500 ordinary shares at a price of £0.80 per
share in the event of a sale of the Company or its admission to a recognised stock exchange prior to 17 May 2009. These options were exercised during the year.
An option and warrant agreement dated 26 July 2002, under which Amadeus II ‘‘A’’, Amadeus II ‘‘B’’, Amadeus II ‘‘C’’, Amadeus II Affiliates LLP and Amadeus II ‘‘D’’ GmbH
& Co. KG had the right to subscribe for 557,797 ordinary shares at a price of £1.00 per share upon the earlier of 31 December 2007 and either a sale of the Company or its
admission to a recognised stock exchange. This option and warrant agreement was exercised during the year.
21 RELATED PARTY TRANSACTIONS
During the year to 30 September 2006, purchases totalling $92,472 (2005: $391,000) at normal market prices were made by Group companies from Crombie Anderson
Limited, of which the D C Anderson is a Director and controlling shareholder, of which $Nil was outstanding at 30 September 2006 (2005: $19,000). No guarantees have
been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties.
Compensation of key management personnel
2006 2005
$’000 $’000
Short-term employee benefits 2,471 1,828
Post-employment benefits 100 109
Share-based payments 1,301 614
Termination benefits 643 –
4,515 2,551
22 FINANCIAL INSTRUMENTS
The Group’s principal financial instruments comprise bank overdrafts, short-term debt, loans and cash.
The main purpose of these financial instruments is to manage the Group’s funding and liquidity requirements. The Group has other financial instruments, such as
trade receivables and trade payables, which arise directly from its operations. The principal financial risks to which the Group is exposed are those relating to foreign
currency, credit, liquidity and interest rate.
Foreign currency risk
The Group has invested in overseas operations and also buys and sells goods and services in currencies other than in the functional currency of its relevant operations.
As a result, the Group’s non-US dollar revenues, profits, assets, liabilities and cash flows can be affected by movements in exchange rates.
The Group monitors its foreign currency exposure and, when deemed necessary by the Board, seeks to minimise its transaction exposure by using forward foreign
currency contracts to eliminate exposures on any committed significant transactions. The Board has determined that it was not necessary to use forward foreign
currency contracts in 2006. It is Group policy not to engage in any speculative transaction of any kind.
Credit risk
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Group’s
credit risk is primarily attributable to its trade receivables.
The Group is exposed to risk over a large number of customers and there is no significant concentration of risk. Creditworthiness checks are undertaken before
entering into contracts with new customers and credit limits are set as appropriate. The amounts presented in the balance sheet are net of allowance for doubtful
receivables. An allowance for impairment is made where there is an identifiable loss event which, based on previous experience, is evidence of a reduction in the
recoverability of cash flows.
Liquidity risk
The Group aims to mitigate its liquidity risk by managing its cash resources and improving its credit rating to facilitate effective fund-raising. The Group’s funding
objective is to maintain continuity of funding and flexibility through the use of finance leases. Excess cash is placed on short-term interest-bearing deposit accounts.
Interest rate risk
The majority of the Group’s borrowings are at fixed rates of interest. Excess cash is placed on short-term interest-bearing deposit accounts.
Interest rate risk is regularly monitored to ensure that the mix of variable and fixed rate borrowing is appropriate for the Group in the short to medium term. Based on
current levels of net debt, interest rate risk is not considered to be material. The associated cash flow risk, which can have a negative impact on the Group if interest
rates decrease as well as a positive impact if interest rates increase, is also not considered to be material.
58
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
Fair values of financial assets and financial liabilities
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments.
Carrying Amount Fair Value Carrying Amount Fair Value
2006 2006 2005 2005
$’000 $’000 $’000 $’000
Financial assets
Cash 36,152 36,152 2,163 2,163
Financial liabilities
Bank overdraft – – (6,853) (6,853)
Obligations under finance leases (81,160) (80,079) (76,083) (74,618)
Fixed rate borrowing – – (8,814) (8,814)
Floating rate borrowing (1,763) (2,204)
The fair value of items has been calculated by discounting the expected future cash flows at prevailing interest rates, or in the case of convertible debt, by reference to
the value of an ordinary share. The carrying amounts of all other financial instruments of the Group, ie short-term trade receivables and payables that are not included
in the above table, is a reasonable approximation of fair value. The carrying amount recorded in the balance sheet of each financial asset represents the Group’s
maximum exposure to credit risk.
Interest rate risk profile of financial assets and liabilities
The following tables set out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk:
Year ended 30 September 2006
Within 1-2 2-3
1 Year Years Years Total
$’000 $’000 $’000 $’000
Fixed rate
Obligations under finance leases (45,649) (26,843) (8,668) (81,160)
Floating rate
Cash 36,152 – – 36,152
Year ended 30 September 2005
Within 1-2 2-3
1 year years years Total
$’000 $’000 $’000 ‘$000
Fixed rate
Obligations under finance leases (1) (36,365) (31,790) (7,928) (76,083)
Unsecured loan stock (3) – (8,814) (8,814)
Floating rate
Cash (2) 2,163 – – 2,163
Bank overdraft (3) (6,853) – – (6,853)
Secured loan stock (3) – (1,763) – (1,763)
(1) Includes $4,446,000, $626,000 and $356,000 denominated in $Canadian, Euro and GBPounds respectively.
(2) Includes $316,000 and $325,000 denominated in $Canadian and Euro respectively.
(3) Denominated in GBPounds.
Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. Interest on financial instruments classified as floating rate is repriced
at intervals of less than one year. The other financial instruments of the Group that are not included in the above tables are non-interest bearing and are therefore not
subject to interest rate risk.
Optos plc Annual Report & Accounts 2006 59

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

Notes to the Consolidated Financial Statements
continued
23(c) Effect on Group balance sheet as at 30 September 2005
The effect of the changes to the Group’s accounting policies on the equity of the Group at 30 September 2005 was as follows:
Impact of Transition to IFRS
Under UK
Accounting Development Computer Significant Inventory Government Currency Share Holiday IFRS
Standards Expenditure Software Parts Reclass. Grant Translation Option NI Pay Accrual GAAP
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Total non-current assets
Property, plant and equipment 62,508 – (615) 4,584 (122) – – – – 66,355
Intangible assets – 5,120 615 – – – – – – 5,735
Total non-current assetts 62,508 5,120 – 4,584 (122) – – – – 72,090
Current assets
Inventories 7,202 – – (4,584) 90 – – – – 2,708
Trade and other receivables 4,887 – – – – – – – – 4,887
Cash and cash equivalents 2,163 – – – – – – – – 2,163
Total current assets 14,252 – – (4,584) 90 – – – – 9,758
Current liabilities
Trade and other payables (7,654) – – – – – – – (152) (7,806)
Government grants – – – – – – – – – –
Provisions – – – – – – – (281) – (281)
Financial liabilities (38,440) – – – – – – – – (38,440)
Total current liabilities (46,094) – – – – – – (281) (152) (46,527)
Total assets less current liabilities 30,666 5,120 – – (32) – – (281) (152) 35,321
Non-current liabilities
Financial liabilities (55,073) – – – – – – – – (55,073)
Provisions – – – – – – – (562) – (562)
Government grants – – – – – (714) – – – (714)
Total non-current liabilities (55,073) – – – – (714) – (562) – (56,349)
Net liabilities (24,407) 5,120 – – (32) (714) – (843) (152) (21,028)
Equity and liabilities
Equity attributable to equity holders of the parent
Issued capital 1,665 – – – – – – – – 1,665
Share premium 52,472 – – – – – – – – 52,472
Retained earnings (78,544) 5,120 – – (32) (714) 29 (843) (152) (75,136)
Other reserves – – – – – – (29) – – (29)
(24,407) 5,120 – – (32) (714) – (843) (152) (21,028)
23(d) Principal adjustments
The principal effects of the changes arising from adoption of IFRS are explained below:
Computer software
Under UK accounting standards, all capitalised computer software was included within tangible fixed assets. Under IAS 38 “Intangible Assets”, capitalised computer
software must be presented as an intangible asset unless it is integral to an item of property, plant and equipment. Under IFRS, non-integral computer software with
a carrying value of $615,000 has been reclassified from property, plant and equipment to intangible assets at 30 September 2005 (2004: $764,000).
Development costs
Under UK accounting standards, research and development costs were written off in the period in which they were incurred. Under IAS 38 “Intangible Assets”,
development costs associated with new products must be capitalised from the time at which the development project satisfies the conditions specified within IAS
38 “Intangible Assets”. These conditions can be summarised as technical feasibility, intention to complete, ability to use or sell, probable future economic benefits,
availability of adequate resources and the ability to measure reliably the expenditure.
62
Optos plc Annual Report & Accounts 2006

Notes to the Consolidated Financial Statements
continued
The resulting asset will be amortised over the number of production units expected to be obtained from the asset by the entity. The carrying value of development
costs will be reviewed for impairment annually when the asset is not yet in use or, more frequently, when an indication of impairment arises during the reporting year.
Under IFRS, an intangible asset of $5,120,000 has been recognised at 30 September 2005 (2004: $2,485,000). Research and development costs expensed through the
income statement in the year ended 30 September 2005 decreased by $2,635,000.
Amortisation of the intangible asset will commence when the asset is available for use.
Government grant
Under UK accounting standards, when the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to
the costs that it was intended to compensate. Where the grant related to an asset, the fair value was credited to a deferred income account and was released to the income
statement over the expected useful life of the relevant asset by equal annual instalments. Under IAS 20 “Government Grants”, the $714,000 government grant associated with
the development costs which was credited to the income statement in line with the expenditure in the 2005 and 2004 financial statements has been reversed.
Share-based payments
Under UK accounting standards, the cost of awards made under the Group’s employee share schemes was based on the intrinsic value of the awards.
Under IFRS 2 “Share-based Payment”, the cost of employee share schemes is based on the fair value of the awards that must be assessed using an option pricing
model. Generally, the fair value of the award is expensed on a straight-line basis over the vesting period. Adjustments are made to reflect expected and actual
forfeitures during the vesting period due to failure to satisfy either service conditions or non-market performance conditions. As a result of these changes, the cost of
employee share schemes recognised during the year ended 30 September 2005 increased by $1,170,000, including related social security costs. An employer’s National
Insurance liability of $285,000 was recorded in respect of the options in the year ended 30 September 2005.
Foreign currency translation differences
Under UK accounting standards, cumulative foreign currency translation differences arising on the retranslation into sterling of the Group’s net investment in foreign
operations were recognised within reserves. Under IAS 21 “The Effects of Changes in Foreign Exchange Rates”, cumulative foreign currency translation differences must
be recognised as a separate component of equity and should be taken into account in calculating the gain or loss on the disposal of a foreign operation. As permitted
under IFRS 1, Optos has elected to deem cumulative translation differences to be $nil on 1 October 2004.
Property, plant and equipment – significant parts
Under UK accounting standards, significant parts are classified within inventory. Under IAS 16, “Property, Plant and Equipment”, significant parts must be included
within Property, Plant and Equipment. Parts are amortised from the point when the assets are available for use. It has been assessed that available for use is the point
in time when the assets are installed at customer premises. The scan heads and component parts have been assessed as the significant parts. Significant parts with a
carrying value of $4,584,000 (2004: $2,324,000) were reclassified from Inventory to Property, Plant and Equipment as at 30 September 2005.
Holiday pay accrual
As required by IAS 19, “Employee benefits”, an accrual of $152,000 has been included in the balance sheet at 30 September 2005, representing the holiday pay accrual as at
that date and a charge of $23,000 included in the profit and loss for the year ended 30 September 2005. No such accrual was made under UK accounting standards.
Taxation
While the above changes may require an adjustment for the effect of taxation, these would impact the unrecognised deferred tax asset and, as such, have not been
disclosed within this statement
Financial instruments
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 was 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.
Optos plc Annual Report & Accounts 2006 63

Independent Auditors’ Report
to the Members of Optos plc (Company)
We have audited the parent company financial statements of Optos plc for the year ended 30 September 2006, which comprise the Company Balance Sheet and
the related Notes 1 to 17. These parent company financial statements have been prepared under the accounting policies set out therein. We have also audited the
information in the Directors’ Remuneration Report that is described as having been audited.
We have reported separately on the Group financial statements of Optos plc for the year ended 30 September 2006.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so
that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report, the Directors’ Remuneration Report and the parent company financial statements in accordance with applicable
United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the parent company financial statements and the part of the Directors’ Remuneration Report to be audited in accordance with relevant
legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the parent company financial statements give a true and fair view and whether the parent company financial statements
and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you
whether, in our opinion, the information given in the parent company Directors’ Report is consistent with the financial statements. The information given in the
Directors’ Report includes that specific information presented in the Operating and Financial Review that is cross-referred from the Business Review section of the
Directors’ Report.
In addition, we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we
require for our audit, or if information specified by law regarding Directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited parent company financial statements. The other
information comprises only the Highlights, the History of Optos, A Closer Look at Optos, optomap® Retinal Exam, the Chairman’s Statement, the Operational and
Financial Review, Board of Directors, Corporate Governance, Corporate Social Responsibility, the unaudited part of the Directors’ Remuneration Report and the
Directors’ Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the parent company
financial statements. Our responsibilities do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the parent company financial statements and the part of the Directors’ Remuneration Report to be
audited. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the parent company financial statements,
and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of
information in the parent company financial statements and the part of the Directors’ Remuneration Report to be audited.
Opinion
In our opinion:
• the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the
Company’s affairs as at 30 September 2006;
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with the
Companies Act 1985; and
• the information given in the Directors’ Report is consistent with the parent company financial statements.
Ernst & Young LLP
Registered Auditor
Glasgow
18 December 2006
64
Optos plc Annual Report & Accounts 2006

Company Balance Sheet
At 30 September 2006
2006 2005
Notes $’000 $’000
Non-current assets
Tangible fixed assets 3 4,365 3,330
Investments in subsidiaries 4 1,422 1,391
Total non-current assets 5,787 4,721
Current assets
Stock 5 3,446 2,729
Debtors 6 39,864 56,804
Cash at bank and in hand 7 32,283 –
Total current assets 75,593 59,533
Creditors falling due within one year 8 (9,235) (37,703)
Net current assets 66,358 21,830
Total assets less current liabilities 72,145 26,551
Creditors falling due after more than one year 9 (160) (10,759)
Provisions 10 (843) –
Total assets less liabilities (1,003) (10,759)
Net assets 71,142 15,792
Capital and reserves
Called up share capital 13 2,361 1,665
Share premium account 14 111,375 52,472
Profit and loss account 14 (42,594) (38,345)
Shareholders’ funds 71,142 15,792
Approved by the Board of Directors on 18 December 2006 and signed on its behalf by:
Allan Watson
Director
Optos plc Annual Report & Accounts 2006 65

Notes to the Company Financial Statements
For the year ended 30 September 2006
1 ACCOUNTING POLICIES
Basis of preparation
The Company financial statements have been prepared in accordance with UK GAAP and applicable accounting standards. In preparing the financial statements
for the year ended 30 September 2006, the Company has adopted FRS20 “Share-based Payment”; FRS21 “Events After the Balance Sheet Date”; FRS23 “The Effects
of Changes in Foreign Exchange Rates”; FRS25 “Financial Instruments: Disclosure and Presentation”; FRS26 “ Financial Instruments: Measurement”; and, FRS28
“Corresponding Amounts”. Further information is provided in Note 14 to the financial statements.
No profit and loss account is presented for Optos plc, as permitted by Section 230 of the Companies Act 1985.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value, of each asset evenly over its
expected useful life, as follows:
Leasehold improvements
Other equipment
P200 equipment
10 years
3-5 years
5 years
P200 equipment refers to retinal examination devices located at healthcare practitioner sites and being utilised on a pay-per-examination basis.
Government grants in respect of capital expenditure are credited to a deferred income account and are released to profit over the expected useful lives of the relevant
assets by equal annual instalments. Grants of a revenue nature are credited to income so as to match them with the expenditure to which they relate.
Leasing and hire-purchase commitments
Assets held under finance leases and hire-purchase contracts are capitalised in the balance sheet and are depreciated over the lease term or useful life as appropriate.
The interest element of the rental obligations is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance
of capital repayments outstanding. Rentals paid under operating leases are charged to income as they occur over the term of the lease.
Stock
Stock primarily comprises spares components relating to P200 equipment. Stocks are valued at the lower of cost and net realisable value. Costs incurred in bringing
each product to its present location and condition are accounted for as follows:
• Raw materials spares & consumables – purchase cost on a first-in, first-out basis;
• Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make
the sale.
Foreign currencies
The Company’s reporting currency is the US dollar.
Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit
or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
The Company’s share capital and share premium account are denominated in £sterling and are translated at the historical rates of exchange
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated, but not reversed, at the balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions:
• provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date,
dividends have been accrued as receivable;
• deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which
the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and
laws enacted or substantially enacted at the balance sheet date.
Pension schemes
The Company operates a defined contribution pension scheme. The assets of the scheme are invested and managed independently of the finances of the Company.
The contributions payable to the scheme in respect of the accounting period are charged directly to the profit and loss account.
Research and development
Research and development expenditure is written off as incurred.
66
Optos plc Annual Report & Accounts 2006

Notes to the Company Financial Statements
continued
Share-based payments
Employees (including senior executives) of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services
as consideration for equity instruments (“equity-settled transactions”).
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised as an
expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. In valuing equity-settled transactions,
no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (“market conditions”), if applicable.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s
best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in
cumulative expense recognised as at the beginning and end of that period.
Where the terms of an equity-settled award are modified, or a new award is designated as replacing a cancelled or settled award, the cost based on the original
award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for
the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award,
both as measured on the date of modification. No reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income statement for
the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any
excess over fair value being treated as an expense in the income statement.
The Company has taken advantage of the transitional provisions of FRS 20 in respect of equity-settled awards and has applied FRS 20 only to equity-settled awards
granted after 7 November 2002 that had not vested on 1 January 2005.
Trade and other debtors
Trade debtors, which generally have 30-90 days’ terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
Provision is made when there is objective evidence that the Company will not be able to collect the debts. Balances are written off when the probability of recovery
is assessed as being remote.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Financial instruments
Prospective adoption of FRS25 and FRS26
As permitted by FRS26, the Group has elected to apply FRS25 “Financial Instruments: Disclosure and Presentation” and FRS26 “Financial Instruments: Recognition and
Measurement” prospectively from 1 October 2005. As a result, the relevant comparative information for the year ended 30 September 2005 and as at 30 September
2005 does not reflect the impact of these standards and is accounted for in accordance with previous UK GAAP.
Derivative financial instruments
In 2005, Optos used derivative financial instruments, principally forward currency contracts, to reduce its exposure to exchange rate movements. Under previous
UK GAAP, such derivative contracts are not recognised as assets and liabilities on the balance sheet, and gains or losses arising on them are not recognised until the
hedged item has itself been recognised in the financial statements.
From 1 October 2005, derivative financial instruments are recognised as assets and liabilities measured at their fair value at the balance sheet date. Changes in
fair values will be recognised in the income statement and this is likely to cause volatility in situations where the carrying value of the hedged item is either not
adjusted to reflect fair value changes arising from the hedged risk or is so adjusted but that adjustment is not recognised in the income statement. However, under
certain conditions specified within IAS39, hedge accounting may be used to mitigate income statement volatility. The Company had no such financial instruments
outstanding at 1 October 2005 or in use during the year ended 30 September 2006.
Optos plc Annual Report & Accounts 2006 67

Notes to the Company Financial Statements
continued
Compound financial instruments
Optos had in issue secured loan notes 2006 and unsecured loan notes 2007, both of which were convertible at the holder’s option into ordinary shares of 1p each.
Under previous UK GAAP, convertible bonds are treated as debt, with the finance cost being measured on the assumption that the debt will not be converted.
Under new UK GAAP, from 1 October 2005 convertible bonds are split into a liability and a conversion option. On issue, the fair value of the liability component is
determined using a market rate for an equivalent non-convertible bond and recognised in non-current liabilities as part of borrowings on an amortised cost basis
until extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option. If the conversion option meets the definition
of an equity instruments no subsequent changes in the value are recognised in the financial statements. However, where settlement is in a currency other than the
functional currency of Optos, the remainder of the proceeds are recognised as a financial liability with the change in value of the conversion option in subsequent
accounting periods being recognised in the income statement. At the date of issue, the compound financial instruments were denominated in the functional currency
of Optos and, accordingly, the remainder of the proceeds have been treated as an equity instrument.
At 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 $2,745,000 reflects the
removal of the original value of the conversion options (which is taken to equity) and the balance of $1,306,000 represents the imputed interest calculated on an
amortised costs basis from date of issue to 1 October 2005 (which is taken to retained earnings). The impact on 2006, up to the point of conversion, has been to
increase finance costs by $253,000 for imputed interest and a decrease in administrative expenses of $162,000 related to foreign exchange movements.
Share warrants
Optos had in issue a number of share warrants entitling the holders to subscribe for ordinary shares of 1p each at set prices under certain conditions. Previous UK GAAP
requires the net proceeds of an issue to be credited direct to shareholders’ funds. Thereafter, the accounting depends on whether the warrant is exercised or is allowed
to lapse. If it is exercised, the proceeds on the original issue of the warrant are included in the net proceeds of the shares issued; if is lapses, they are included instead in
the statement of total recognised gains and losses.
Under new UK GAAP, a non-derivative contract involving the delivery of a fixed number of own equity instruments, in exchange or a fixed amount of cash, is classified
as an equity instrument. Any consideration received, such as a premium on issues, is added directly to equity. Subsequent changes in the fair value of the instrument
are not recognised in the financial statements. However, where settlement is in a currency other than the functional currency of Optos, the net proceeds are
recognised as a financial liability with the change in value of the conversion option in subsequent accounting periods being recognised in the income statement.
At the date of issue, the warrants were denominated in the functional currency of Optos and, accordingly, have been treated as an equity instrument.
Derecognition of financial assets & liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where the rights to receive cash flows from
the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a
third party under a ‘pass-through’ arrangement; or the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially
all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any
costs or fees incurred are recognised in profit or loss.
2 LOSS attributable to the Company
Directors
Details of Director remuneration, pension benefits and share options are included in the Directors’ Remuneration report on pages 28-31.
Auditors remuneration
The total fees payable by the Company to Ernst & Young LLP for work performed in respect of the audit of the Company was $30,000 (2005: $18,000).
68
Optos plc Annual Report & Accounts 2006

Notes to the Company Financial Statements
continued
3 TANGIBLE FIXED ASSETS
Leasehold Plant and P200
Improvements Equipment Equipment Total
$’000 $’000 $’000 $’000
Cost:
At beginning of year 606 4,420 4,156 9,182
Additions 573 1,112 1,006 2,691
Disposals – (10) (317) (327)
At end of year 1,179 5,522 4,845 11,546
Depreciation:
At beginning of year 283 2,911 2,658 5,852
Provided during year 77 887 525 1,489
Disposals – – (160) (160)
At end of year 360 3,798 3,023 7,181
Net book value:
At beginning of year 323 1,509 1,498 3,330
At end of year 819 1,724 1,822 4,365
Included in the net book values above are the following amounts relating to assets acquired under finance lease or hire-purchase contracts.
P200
Total
Equipment Equipment
$’000 $’000
At beginning of year 255 255
At end of year 227 227
The depreciation charged for the year on these assets was $72k (2005: $87k)
4 INVESTMENTS
Subsidiary Undertakings
2006 2005
Cost $’000 $’000
At beginning of year 2 2
Additions 28 –
At end of year 30 2
Long-term loan 1,392 1,389
1,422 1,391
Details of the investments in which the Group and the Company (unless indicated) holds 20% or more of the nominal value of any class of share capital are as follows:
Name of Company Country of Registration Proportion
Optos Inc USA 100%
Optos Canada Inc Canada 100%
Optos GmbH Germany 100%
5 Stock
2006 2005
$’000 $’000
Raw materials, spares and consumables 3,446 2,729
Optos plc Annual Report & Accounts 2006 69

Notes to the Company Financial Statements
continued
6 Debtors
2006 2005
$’000 $’000
Amounts owed by Group undertakings 38,008 54,880
Trade debtors 375 459
Value-added tax recoverable 1,311 432
Pre-payments 170 1,033
39,864 56,804
7 CASH AT BANK AND IN HAND
2006 2005
$’000 $’000
Cash at bank and in hand 4,283 –
Short-term deposits 28,000 –
32,283 –
8 Creditors: amounts falling within one year
2006 2005
$’000 $’000
Obligations under finance leases
and hire-purchase contracts (see Note 11) 191 173
Bank overdraft – 6,853
Trade creditors 2,281 2,427
Other taxes and social security costs 198 140
Other creditors 297 218
Accruals 3,048 1,626
Amounts due to Group undertakings 3,220 26,266
9,235 37,703
9 Creditors : amounts falling due after more than one year
2006 2005
$’000 $’000
Obligations under finance leases and
hire-purchase contracts (see Note 11) 160 182
Secured loan stock 2006 – 1,763
Unsecured loan stock 2007 – 8,814
160 10,759
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 is repayable in 2006 and carries 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 is 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.
70
Optos plc Annual Report & Accounts 2006

Notes to the Company Financial Statements
continued
10 Provisions
2006 2005
$’000 $’000
At 1 October – –
Arising during the year 879 –
Utilised (36) –
At 30 September 843 –
Social security contributions on share options
Social security contributions on share options are calculated based on the number of options vested at the balance sheet date valued at market rate less exercise price.
It is expected that the costs will be incurred during the exercise period to 31 December 2012.
11 Obligations under finance leases and hire-purchase contracts
2006 2005
$’000 $’000
Amounts payable:
Within one year 211 231
Between one and two years 129 122
Between two and five years 34 44
374 397
Less: finance charges allocated to future periods (23) (42)
351 355
Finance leases and hire-purchase contracts are shown as:
Current 191 173
Non-current 160 182
351 355
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.
12 Other financial commitments
At 30 September 2006, the Company had annual commitments under non-cancellable operating leases as set out below:
Land
and Buildings
2006 2005
$’000 $’000
Operating leases which expire:
In less than one year – 30
In two to five years – 218
In over five years 294 189
294 437
Optos plc Annual Report & Accounts 2006 71

Notes to the Company Financial Statements
continued
13 SHARE CAPITAL
2006 2005
Authorised: No. (million) No. (million)
Equity shares
Ordinary shares of 2p 90 120
(2005: 1p each)
2006 2005
Allotted, Called Up and Fully Paid: $’000 $’000
Equity shares
Ordinary shares of 1p each 2,361 1,665
Equity-settled, share-based payments
Share options outstanding at the end of the year were 5,246,806 (2005: 11,061,635 prior to consolidation). Further details of equity-settled, share-based payments can
be found in Note 20 to the Group financial statements.
2006 2005
No
No
Ordinary shares of 1p each
At 1 October 92,126,193 91,954,282
Issue of shares prior to consolidation 350,000 _
Exercise of employee share options prior to consolidation 361,660
Consolidation of shares (46,418,927) _
Issued on IPO 12,000,000 _
Exercise of employee share options 489,631 34,791
Conversion of loan stock 6,683,984 544
Exercise of other options and warrants 568,297 _
Other share issues post-consolidation 17,500 136,576
At 30 September: ordinary shares of 2p each (2005: 1p each) 66,178,338 92,126,193
Share Share Share Share
Capital Premium Capital Premium
2006 2006 2005 2005
Consideration Received on Issue of Shares $’000 $’000 $’000 $’000
Issued on IPO 415 51,744 – –
Cost of issue of ordinary share capital – (5,605) – –
Exercise of employee share options 20 765 – –
Conversion of loan stocks 217 10,213 – –
Exercise of other options and warrants 35 1,554 – –
Other share issues 9 232 2 55
Consideration received 696 58,903 2 55
72
Optos plc Annual Report & Accounts 2006

Notes to the Company Financial Statements
continued
14 OTHER EQUITY
Profit and
Share
Loss Premium Equity Special
Account Account Reserve Reserve
$’000 $’000 $’000 $’000
At 1 October 2004 (35,006) 52,417 – 686
Reclasssification 686 – – (686)
Issue of ordinary shares – 55 – –
Share-based payments 670 – – –
Loss for the year (4,695) – – –
At 30 September 2005 (38,345) 52,472 – –
Implementation of FRS 25/26 (1,305) – 2,744 –
At 1 October 2005 (39,650) 52,472 2,744 –
Conversion of loan 1,543 10,213 (2,744) –
Issue of ordinary shares – 54,295 – –
Cost of issue of ordinary shares – (5,605) – –
Share-based payments 1,393 – – –
Loss for the year (5,880) – – –
At 30 September 2006 (42,594) 111,375 – –
Under FRS20, the cost of employee share schemes, including SAYE schemes, is based on the fair value of the awards that must be assessed using an option pricing
model and expensed on a straight-line basis over the vesting period. As a result, the cost of employee share schemes recognised in 2005 increased losses by $670,000.
15 Related party transactions
During the year to 30 September 2006, purchases totalling $92,472 (2005: $391,000) at normal market prices were made by the Company from Crombie Anderson
Limited, of which the D C Anderson is a Director and controlling shareholder, of which $Nil was outstanding at 30 September 2006 (2005: $19,000). The amounts
outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of
the amounts owed by related parties.
16 Pension commitments
The Company operates a defined contribution pension scheme, the Optos Group Personal Pension Scheme, for its Directors and senior employees. The assets of the
scheme are held separately from those of the Company in an independently administered fund. There were no outstanding contributions at the year end (2005: $nil).
17 Financial risk management objectives and policies
A description of the Group’s financial risk management objectives and policies is provided in Note 22 to the Group’s financial statements. These financial risk
management objectives and policies also apply to the Company.
Optos plc Annual Report & Accounts 2006 73

Glossary of Terms
510(k)
pre‐marketing process under section 510(k) of the US Federal Food, Drug and
Cosmetic Act whereby manufacturers notify the FDA of their intent to market
a medical device
age‐related macular degeneration (or AMD)
eye disease that progressively destroys the macula; AMD is the leading cause
of severe vision loss in people over 50 in the Western world
angiographic
diagnostic test in which dye is injected and an image created to determine
the blood flow in an area
binocular indirect ophthalmoscope (or BIO)
an instrument designed to visualise the interior of the eye, with the instrument
at arm’s length from the subject’s eye and the observer viewing an inverted
image through a convex lens located between patient and instrument
CE
Conformite Europeene, a product marking applying to products regulated
by the European Commission’s health, safety and environmental protection
legislation, which indicates that a manufacturer has conformed with all the
obligations required and is allowed to freely distribute the product
choroid
a collection of blood vessels in the rear of the eye which feed the retinal sensory
layer with nutrients and oxygen
diabetes
a chronic health condition where the body is unable to produce insulin and break
down glucose in the blood
diabetic retinopathy
a consequence of unmanaged blood sugar levels in a person with diabetes
whereby the retinal blood vessels are damaged, causing destruction of the
retina itself
direct ophthalmoscope
an ophthalmoscope that produces an upright, or unreversed, image of
approximately 15 times magnification
ellipsoidal mirror
a reflecting surface formed to the shape of a concave three-dimensional ellipse
that has the property of two focal points
FDA
US Food and Drug Administration
fluorescein angiography
a procedure allowing the blood vessels at the back of the eye to be
photographed as a fluorescent dye is injected into the patient’s bloodstream
fundus
the interior posterior surface of the eyeball which includes the retina and the
macula
fundus camera
conventional device derived from practitioner photography that is used to
photograph small areas of the fundus
glaucoma
disorder of the eye, characterised by increased pressure within the eyeball,
resulting in damage to the optic nerve and retinal nerve fibres, with resulting
loss of vision
macula
highly sensitive part of the retina responsible for detailed central vision
ophthalmologist
a medically qualified specialist of eye surgery and pathology
ophthalmoscope
an instrument for examining the interior structure of the eye, especially the retina
optician
a professional in respect of which these are two variants: dispensing optician
– a provider of glasses and contact lenses; ophthalmic optician – a person
qualified to perform eye examinations and prescribe eye wear
optometrist
a primary level eyecare provider who performs eye examinations and prescribes
eye wear
Panoramic200
the Panoramic200 Scanning Laser Ophthalmoscope supplied by Optos
that delivers the optomap® Retinal Exam
pathology
the manifestations of disease
posterior pole
the rear hemisphere from the central vertical equator of the eye
primary level care
the point in the healthcare system that is responsible for the detection of health
problems
retina
light-sensitive nerve tissue in the eye that coverts light into electrical impulses for
transmission to the brain via the retinal nerve fibre layer and the optic nerve
retinal detachment
separation of the retina from its attachments to the back of the eyeball
scanning laser ophthalmoscopes
a device that uses reflected laser light scanned into the eye to analyse the retina
secondary level care
that part of the healthcare system that diagnoses health problems and is often
(but not always) concerned with defining treatment plans
single image capture
a term used by Optos to discriminate a single retinal image (optomap® Retinal
Exam) from a sequence of retinal images used, for instance, in fluorescein
angiography (optomap® fa Medical Procedure)
slit lamp biomicroscope
an instrument that combines a microscope with special lights that allows a
practitioner to view the front of the eye and the retina (with the additional lens)
SLO
scanning laser ophthalmoscope
virtual point scan
a term used by the Company to define the effect created by the patented system
that gives rise to wide field of view created by the Panoramic200 instrument – it
conveys the effect of being equivalent to positioning a scanning system inside
the patient’s eye
vitreous humour
the clear, gel‐like substance that fills the eyeball behind the lens
74
Optos plc Annual Report & Accounts 2006

Optos plc Annual Report & Accounts 2006 75

United Kingdom
Optos plc
Queensferry House
Carnegie Business Campus
Dunfermline, Fife
Scotland KY11 8GR
United Kingdom
+44 (0) 1383 843 300
United States & Canada
Optos Inc.
199 Forest Street
Marlborough, MA 01752
United States
Toll-free:
1-800-854-3039
Outside of the US:
+001 (508) 787-1400
Germany
Optos GmbH
Hauptstrasse 161
D-68259 Mannheim
+49 (0) 621 71419100
www.optos.com