Notes to the financial statements - Plasmon

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Notes to the financial statements for the year ended 31 March 2003 1 Principal accounting policies The financial statements have been prepared in accordance with applicable Accounting Standards in the United Kingdom. A summary of the more important Group accounting policies, which have been consistently applied, is set out below. Basis of accounting The financial statements have been prepared under the historic cost basis of accounting. Basis of consolidation The consolidated financial statements include the financial statements of Plasmon Plc and all of its subsidiaries, made up to 31 March 2003. The results of subsidiaries and businesses acquired are included in the consolidated profit and loss account from the date control passes to the Group. Intra-Group sales and profits are eliminated fully on consolidation. Turnover Turnover, which excludes sales between Group companies and trade discounts, represents the invoiced value of goods and services net of value added tax. Turnover in respect of the sale of goods is recognised when the goods are dispatched to the customer, whilst turnover in respect of the sale of services is recognised over the period the related work is performed. Turnover from longer-term development work is recognised in proportion to the costs of the development work undertaken. Turnover in respect of royalties receivable is recognised on an accruals basis as earned. Development expenditure Expenditure on research or development is written off as incurred. Tangible fixed assets Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on fixed assets when placed into effective use, on a straight-line basis, at rates calculated to reduce each asset at the end of its effective useful life to its estimated net realisable value. The rates used are as follows: Land Not depreciated Buildings 2% Building improvements 4%–15% Short leasehold improvements 20%–33% Office equipment 20%–33% Research and development, manufacturing and test plant and machinery 10%–25% Motor vehicles 25%–33% Leased assets Assets acquired under finance leases and hire purchase agreements are capitalised and depreciated over the shorter of the lease term and the useful life of the asset. The capital element of the leasing commitment is shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged against profit so as to give a constant periodic charge on the remaining balance outstanding for each accounting period. Rental payments under operating leases are charged to the profit and loss account on a straight-line basis. Purchased goodwill Goodwill arising on acquisitions represents the excess of the fair market value of the consideration over the fair value of the identifiable assets and liabilities acquired. FRS 10 “Goodwill and intangible assets” has been adopted from 1 April 1998 and purchased goodwill arising from acquisitions after this date has been capitalised as intangible assets and is amortised over its useful economic life. The useful economic life of goodwill arising on acquisitions after 1 April 1998 is estimated to be between eight and ten years from the date of acquisition which is primarily based on the number of future generations of products expected to be based on the acquired technologies. Purchased goodwill arising on acquisitions prior to the adoption of FRS10 remains eliminated against reserves. This goodwill will be charged in the profit and loss account on any subsequent disposal of the related business. Licences Licences acquired for use in proprietary software or manufacturing processes are capitalised at cost. Amortisation commences when the related product is commercially launched with the cost being amortised on a straight-line basis over the expected life cycle of the product. Current licences are being amortised over five years. Fixed asset investments Fixed asset investments are stated at cost less any amount written-off to reflect a permanent impairment. Plasmon Plc Annual Report 2003 Notes to the financial statements 30
Notes to the financial statements continued for the year ended 31 March 2003 Stocks Stocks are valued at the lower of cost and net realisable value. Cost comprises expenditure incurred in bringing stocks and work in progress to their present location and condition. Net realisable value represents the estimated selling price less further production costs to completion and appropriate selling and distribution costs. Provision is made where necessary for obsolete, slow-moving and defective stocks. 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 that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date. Deferred tax assets are recognised 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. Provision is made for the tax that would arise on the 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 is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse, based on the tax rates and laws enacted or substantively enacted at the balance sheet date. Foreign currency translation Assets and liabilities are translated into sterling at the rate of exchange ruling at the balance sheet date and the results of foreign subsidiaries are translated at the average rate of exchange for the year. Foreign currency trading transactions are translated at the rate ruling at the time of the transaction. All foreign currency exchange differences are dealt with in the profit and loss account for the period with the exception of those arising on consolidation which are shown as movements on reserves. Patent fees Costs of acquiring patents are written off as incurred. Pension costs Pension costs in respect of the defined benefit pension scheme are accounted for on the basis of charging the expected cost of providing pensions over the period during which the Group expects to benefit from the employees’ services. This treatment follows the requirements of SSAP 24 “Accounting for pension costs”. In addition, the notes to the financial statements provide the transitional disclosures prepared under the accounting standard FRS 17 “Retirement benefits”. As permitted by this standard, the Group has decided to defer full implementation until the financial year ending 31 March 2005. Pension costs in respect of defined contribution schemes and employees’ personal pension plans are charged on an accrual basis in line with amounts payable in respect of the accounting period. National Insurance and Share Options Provision is made for future employer’s National Insurance liabilities in respect of certain outstanding unapproved employee share options. The provision is calculated at the current National Insurance rate applied to the difference between the market value of the underlying shares at the balance sheet date and the option exercise prices. Plasmon Plc Annual Report 2003 Notes to the financial statements 31
Page 1 and 2: Plasmon Plc Annual Report 2003
Page 3 and 4: Plasmon Overview Plasmon manufactur
Page 5 and 6: Plasmon Plc Annual Report 2003 Pre-
Page 7 and 8: Plasmon Plc Annual Report 2003 5
Page 9 and 10: In the first half of 2002/3, the Gr
Page 11 and 12: from Nichia, our Japanese supplier.
Page 13 and 14: performance benefits of the technol
Page 15 and 16: Outlook 2002/3 has been a year of c
Page 17 and 18: Plasmon Plc Annual Report 2003 The
Page 19 and 20: Board of Directors & Senior Managem
Page 21 and 22: Accountability and Audit Following
Page 23 and 24: Directors’ emoluments The remuner
Page 25 and 26: Directors’ report for the year en
Page 27 and 28: Consolidated profit and loss accoun
Page 29 and 30: Consolidated balance sheet at 31 Ma
Page 31: Consolidated cash flow statement fo
Page 35 and 36: Notes to the financial statements c
Page 51 and 52: Directors John Barrie Morgans (Chai

Notes to the financial statements - Plasmon

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