On 23 October 2013, the exercise period of the remaining
146,228,253 was extended from 24 October 2013 to 24 January 2014.
As a result of this amendment the increase in fair value of the
warrants was determined at the date of the amendment using Black
Scholes model, using the following inputs:
Share price at the date of amendment 2.2p
Strike price 2p
Volatility 41%
Expected life 92 days
Risk free rate 1%
The resultant increase of the fair value of the warrants was
determined to be GBP424,062, which was recognised in the income
statement.
Following the extension of the exercise period between 24
October 2013 and 2 January 2014 a total of 31,621,633 warrants were
exercised, raising GBP632,433 before expenses.
On 24 January 2014, the exercise period of the remaining
114,606,620 was extended from 24 January 2014to 24 April 2014. As a
result of this amendment the increase in fair value of the warrants
was determined at the date of the amendment using Black Scholes
model, using the following inputs:
Share price at the date of amendment 2.08p
Strike price 2p
Volatility 50%
Expected life 90 days
Risk free rate 1%
The resultant increase of the fair value of the warrants was
determined to be GBP286,517, which was recognised in the income
statement.
Total charge for the year was GBP1,650,828 which had been
recognised in the income statement.
Following the extension of the exercise period between 28
January 2014 and 24 April 2014 a total of 103,185,478 warrants were
exercised, raising GBP1,305,161 before expenses and 11,421,142 were
allowed to lapse. Subsequent to the year end, there were no
warrants outstanding; the total warrant reserve of GBP3,938,170 was
transferred within the equity.
20. WARRANT RESERVE
Proceeds from the issuance of warrants, net of issue costs, are
credited to warrant reserve. Warrant reserve is non-distributable
and will be transferred to share premium account upon the exercise
of warrants. Balance of warrant reserve in relation to the
unexercised warrants at the expiry of the warrants period will be
transferred to accumulated profits.
21. FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern, while maximising
the return to shareholders.
The capital resources of the Group comprises issued capital,
reserves and retained earnings as disclosed in the Consolidated
Statement of Changes in Equity. The Group's primary objective is to
provide a return to its equity shareholders through capital growth.
Going forward the Group will seek to maintain a yearly ratio that
balances risks and returns of an acceptable level and also to
maintain a sufficient funding base to the Group to meet its working
capital and strategic investment needs.
Externally imposed capital requirement
The Group is not subject to externally imposed capital
requirements.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement, the basis on which income and expenses are recognised,
in respect of each class of financial asset, financial liability
and equity instrument are disclosed in note 3 to the Consolidated
Financial Statements.
Categories of financial instruments
2014 2013
GBP GBP
Group
Financial assets
Cash and cash equivalents 750,695 297,293
Other receivables classified
as loans and receivables at
amortised cost 70,628 151,029
821,323 448,322
---------- ----------
Financial liabilities classified
as held at amortised cost
Trade and other payables 706,729 176,850
---------- ----------
706,729 176,850
---------- ----------
2014 2013
GBP GBP
Company
Financial assets
Cash and cash equivalents 685,795 259,808
Other receivables classified
as loans and receivables at
amortised cost 67,570 136,934
---------- ----------
753,365 396,742
---------- ----------
Financial liabilities classified
as held at amortised cost
Trade and other payables 704,099 176,850
---------- ----------
704,099 176,850
---------- ----------
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could
be exchanged in an arm's length transaction between informed and
willing parties, other than a forced or liquidation sale and
excludes accrued interest. Where available, market values have been
used to determine fair values.
Financial risk management objectives
Management provides services to the business, co-ordinates
access to domestic and international financial markets, monitors
and manages the financial risks relating to the operations of the
Group through internal risks reports which analyse exposures by
degree and magnitude of risks. These risks include foreign currency
risk, credit risk, liquidity risk and cash f low interest rate
risk. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative
purposes.
As the Group has no committed borrowings, the Group is not
exposed to any risks associated with fluctuations in interest rates
on loans. Fluctuation in interest rates applied to cash balances
held at the 2012 balance sheet date would have minimal impact on
the Group.
Foreign exchange risk and foreign currency risk management
Foreign currency exposures are monitored on a monthly basis.
Funds are transferred between the Sterling and US Dollar accounts
in order to minimise foreign exchange risk. The Group holds the
majority of its funds in Sterling.
The carrying amounts of the Group's and Company's foreign
currency denominated financial assets and monetary liabilities at
the reporting date are as follows:
Group Financial Liabilities Financial assets
2014 2013 2014 2013
GBP GBP GBP GBP
Zambian Kwacha 2,351 - 37,504 42,090
US Dollars 279 - 280,971 265,600
Company Financial Liabilities Financial assets
2014 2013 2014 2013
GBP GBP GBP GBP
Zambian Kwacha - - - -
US Dollars - - 250,517 262,880
Foreign currency sensitivity analysis
The Group is exposed primarily to movements in Sterling against
the US Dollar. Sensitivity analyses have been performed to indicate
how the profit or loss would have been affected by changes in the
exchange rate between the US Dollar and Sterling. The analysis is
based on a weakening and strengthening of Sterling by 10 per cent
against the US Dollar in which the Group has assets and liabilities
at the end of each respective period.
A movement of 10 per cent reflects a reasonably possible
sensitivity when compared to historical movements over a three to
five year timeframe. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a ten per cent change in
foreign currency rates.
A positive number below indicates an increase in profit where
the US Dollar strengthens ten per cent. against Sterling. For a ten
per cent. weakening of the US Dollar against Sterling, there would
be an equal and opposite impact on the profit, and the balance
below would be negative.
The following table details the Group's sensitivity to a ten per
cent. strengthening in the US Dollar against Sterling
2014 2013
GBP GBP
(Decrease)/increase in income statement
and net assets ( 22,373) 11,242
Credit risk management
Credit risk refers to the risk that a counter party will default
on its contractual obligations resulting in financial loss to the
Group. The Group does not have any significant credit risk exposure
on trade receivables.
The Group makes allowances for impairment of receivables where
there is an identified event which, based on previous experience,
is evidence of a reduction in the recoverability of cash f
lows.
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