During the year, the company changed its accounting policy with respect to the treatment of development and intellectual property costs. Previously, the company capitalised these costs as intangible assets on the balance sheet. However, effective from 1st May 2023, the company has adopted a new accounting policy to expense all development and intellectual property costs as incurred, through the profit and loss account.
Rationale for the Change
The change in accounting policy was made to better reflect the nature of these expenditures in the financial statements and to align with the company's updated financial reporting objectives. This change is also consistent with industry best practices and provides a clearer view of the company's financial performance.
Impact of the Change
The change in accounting policy has been applied retrospectively, and the comparative figures for the year ended 30th April 2023 have been restated accordingly. The impact of the restatement is summarised below:
Increase in loss for the prior year: £845,182
Increase loss in reserves for the prior year: £1,243,736
Decrease in intangible assets for the prior year: £2,088,918
The restatement has no impact on cash flows for the prior year.
Restated Figures
The comparative figures in the financial statements have been adjusted as follows:
Intangible Assets: Decreased from £2,088,918 to £Nil, a reduction of £2,088,918.
Reserves: Decreased from £54,386 to (£2,034,532) a decrease of £2,088,918.
Net Profit: Decreased from £56,952 to (£788,230) a decrease of £845,182.
Conclusion
The company believes that this change in accounting policy provides a more accurate representation of its financial position and performance. The restated figures have been adjusted to reflect this new policy, with all prior periods presented on a consistent basis.