The accounting policies for financial instruments have been
applied to the items below:
2013 2013 2013
GBP GBP GBP
Assets at fair
Assets as per Loans and value through Available for
balance sheet receivables profit and loss sale
Cash 18,758 - -
Trade and other -
receivables 232 -
Investment at
fair value through - - -
profit and loss
Available for
sale investment - - 606,787
-------------- -------------- --------------
Total 18,990 - 606,787
2012 2012
GBP GBP
Assets as per Loans Assets at fair
balance sheet and receivables value through
profit and loss
Cash 119,016 -
Trade and other -
receivables 922,218
Investment at
fair value through
profit and loss - 653,184
-------------- --------------
Total 1,041,234 653,184
2013 2012
Liabilities as per balance Other financial Other financial
sheet liabilities liabilities
GBP GBP
Trade and other payables 184,464 381,398
Loan - 2,308,332
Unsecured loan notes 251,500 50,000
---------------- ----------------
435,964 2,739,730
Assets classified as fair value through profit or loss and
available for sale instruments were designated as such upon initial
recognition. The Company has not reclassified financial assets
between any of the categories detailed in IAS39, either in current
or prior periods.
2.16 Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary or associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included
in 'intangible assets'. Goodwill on acquisitions of associates is
included in 'investments in associates' and is tested for
impairment as part of the overall balance. Separately recognised
goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example
goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial
assets other than goodwill that have suffered impairment are
reviewed for possible reversal of the impairment at each reporting
date.
2.17 Loss of the parent company
As permitted by Bermuda Companies Act 1981, the income statement
of the Parent Company is not presented as part of these financial
statements. The Parent Company's loss for the financial year was
GBP324,453 (2012: GBP4,223,633).
3. RISKS SENSITIVITY AND ANALYSIS
The Group's activities expose it to a variety of financial
risks: interest rate risk, liquidity risk, foreign currency risk
and capital risk. The Group's activities also expose it to
non-financial risks: market risk, regulatory and legislative risk.
The Group's overall risk management programme focuses on
unpredictability and seeks to minimise the potential adverse
effects on the Group's financial performance. The Board, on a
regular basis, reviews key risks and, where appropriate, actions
are taken to mitigate the key risks identified.
3.1 Foreign currency risk
Currency fluctuations may affect the Group's operating cash
flows since certain of its costs and potential future revenues are
likely to be denominated in a number of different currencies other
than Pound Sterling and any potential income may become subject to
exchange controls. The Group does not currently have a foreign
currency hedging policy in place. If and when appropriate, the
adoption of such a policy will be considered.
3.2 Interest rate risk
The following table sets out the carrying amounts, the effective
interest rates as at the Statement of Financial Position date and
the remaining maturities of the Group's financial instruments that
are exposed to interest rate risk:
2013 2013 2012 2012
Effective interest
rate
Note % Within 1 2 - 5 Within 1 2-5
year years year years
GBP GBP GBP GBP
Loan 20 7.5 - - 1,611,135 -
Loan 20 16.8 - - 697,197 -
Convertible loan
note 21 9 31,500 220,000 - 50,000
------------ -------------- ---------------- --------------
31,500 50,000 2,308,332 50,000
3.3 Liquidity risk
The Group prepares periodic working capital forecasts for the
foreseeable future, allowing an assessment of the cash requirements
of the Company, to manage liquidity risk. Cash resources are
managed in accordance with planned expenditure forecasts and the
directors have regard to the maintenance of sufficient cash
resources to fund the Group's immediate operating activities.
3.4 Capital risk
The successful implementation of the Company's New Investing
Policy will require significant capital investment. The only
sources of financing currently available to the Group are through
the issue of additional equity capital or convertible debt. The
Group's ability to raise funds will depend, inter alia, on the
success of its strategy and operations.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Impairment of receivables
The Group assesses at each Statement of Financial Position date
whether there is objective evidence that trade receivables have
been impaired. Impairment loss is calculated based on a review of
the current status of existing receivables and historical
collections experience. Such provisions are adjusted periodically
to reflect the actual and anticipated impairment. The carrying
amount of the Group's receivables at the reporting date is
disclosed in Note 16.
Impairment of goodwill
The Group is required to test, at least annually, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the choice
of a suitable discount rate in order to calculate the present value
of these cash flows. Actual outcomes could vary.
Share-based compensation
The fair value of options and warrants are determined by
reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest. At each balance sheet date, the entity
revises its estimates of the number of options that are expected to
vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
Convertible loan notes
Convertible loan notes have been split into their respective
liability and equity portions using an implicit rate of 9% based on
available market data of similar corporate debt without the option
for conversion.
5. EMPLOYEES AND DIRECTORS
Nova Res. (LSE:NOVA)
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