Accounting Policies (as at 31 August 2007)
General
Cyan Holdings plc is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is Buckingway Business Park, Swavesey, Cambridge, CB24 4UQ.
The financial statements are presented in pounds sterling because that is the functional currency of the primary economic environment in which the Group operates.
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements are also prepared in accordance with IFRSs adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation.
The financial statements are prepared on the historical cost basis. The principal accounting policies are set out below.
The following accounting standards in issues, but not yet effective, have not been adopted;
| IFRS7 | Financial instruments: disclosures |
| IFRS8 | Operating segments |
| IFRIC7 | Applying the restatement approach under IAS29 |
| IFRIC9 | Reassessment of embedded derivatives |
| IFRIC10 | Interim financial reporting and impairment |
| IFRIC12 | Service concession arrangements |
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The Company takes advantage of section 230 of the Companies Act 1985 and consequently the profit and loss account of Cyan Holdings plc is not presented as a part of the financial statements.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Sales of goods are recognised when the risks and rewards of ownership are transferred.
Foreign currency
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing in each bi-annual reporting period. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Property, plant and equipment
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on a straight line basis over its expected useful life as follows:
| Plant and equipment | 2-5 years |
| Leasehold improvements | 5 years |
| Fixtures and fittings | 4 years |
Residual values are the estimated amount that the Group would obtain from disposal of the asset, after deducting estimated costs of disposal if the asset were already of the age and in the condition expected at the end of its useful life, based on prices prevailing at the balance sheet date.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Internally generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the Group’s technology development is recognised only if all of the following conditions are met:
- An asset is created that can be identified;
- It is probable that the asset created will generate future economic benefits; and
- The development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-line basis over their useful economic lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and production overheads appropriate to the relevant stage of production. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. The Group periodically reviews its inventory for obsolete or slow moving items.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables do not carry any interest and are initially recognised at their face value. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the estimated future recoverable amount.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The Group considers all highly liquid investments with original maturities at the time of purchase of three months or less to be cash equivalent.
Trade payables
Trade payables are not interest bearing and are stated at their face value.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Share based payments
The Group has applied the requirements of IFRS2 Share-based Payment. In accordance with the transitional provisions, IFRS2 has been applied to the all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005.
The group issues equity-settled share-based payments to certain employees. These are measured at fair-value at the date of grant. The fair value determined at the date of grant of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the groups estimate of shares that will eventually vest and adjusted for the effect of non-market vesting conditions.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model as been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.