Nova Resources Limited Final Results for the Year -8-

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