Notes to the financial statements - Plasmon

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