REG - Churchill Mining plc - Final Results <Origin Href="QuoteRef">CHLL.L</Origin> - Part 2
29/10/2014 12:06
- Part 2: For the preceding part double click ID:nRSO3467Ua
resources and assessing performance of the operating segments.
Investments
In its separate financial statements, the Company recognises its investments in subsidiaries at cost inclusive of share
based payments less any provision for impairment.
Cash and cash equivalents
Cash comprises bank and cash deposits at variable interest rates. Any interest earned is accrued monthly and classified as
interest income. Cash equivalents comprise short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
Employee benefits
Provision is made for the Company's liability for employee benefits arising from services rendered by employees. Employee
benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the
liability is settled. Employee benefits payable later than one year have been measured at the present value of the
estimated future cash flows to be made for those benefits.
Key sources of estimation uncertainty
The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experiences and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual experience may deviate from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are as follows:
· While conducting an impairment review of its assets, the Group exercises judgement in making assumptions by
evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Changes in these
estimates used can result in significant charges to the statement of comprehensive income ; and
· Employee, corporate advisory and consulting services received as well as the corresponding increase in equity, are
measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non
market vesting conditions. The fair value of share options is estimated by using an option pricing model, on the date of
grant based on certain assumptions. Those assumptions are described in the Notes to the accounts where more details,
including carrying values, are disclosed.
NOTE 2: FINANCE INCOME
Consolidated
2014 2013
$'000 $'000
Finance income - foreign exchange gains 304 63
Finance income - Bank interest 2 16
Total finance income 306 79
NOTE 3: LOSS FROM OPERATIONS
Consolidated
2014 2013
$'000 $'000
Loss before tax includes the following expense items:
Administrative expenses
Audit & accounting and other fees 91 178
Consulting & professional fees 252 535
Legal fees 1,462 4,221
VAT costs unrecovered 6 61
Depreciation & amortisation 13 45
Employee salaries and benefits 336 872
Operating lease expense 60 120
Travel expenses 45 114
Public relations consultancy 58 619
Other administrative costs 139 272
Impairment of land - 1,757
Impairment of other financial assets - 2,258
Impairment of exploration and evaluation expenditure - 399
Equity settled share based payment expense 249 73
Loss from sale of financial assets 46 -
2,757 11,524
Finance expenses
Foreign exchange losses 7 160
Total administrative and finance expenses 2,764 11,684
During the year the following fees were paid or payable for services provided by the Auditors of the parent entity and subsidiaries:
Consolidated
2014 2013
$'000 $'000
Fees payable to the Company's Auditor for the audit of the Company's annual accounts 31 38
Other services - interim review 10 11
Fees payable for the audit of the subsidiaries 12 22
Total 53 71
NOTE 4: SALARIES
Consolidated
2014 2013
Note $'000 $'000
Staff costs (including Directors' fees) comprise:
Employee salaries and benefits 144 704
Superannuation/pension costs 7 25
Directors' fees and benefits 186 147
Share-based payments 18 249 73
586 949
Number
Average number of employees (including Directors) 11 17
2014 2013
Directors' remuneration and Other Key Management disclosures $'000 $'000
Directors' short term benefits
Directors' fees and benefits 186 147
Consultancy fees/Salaries 18 415
Sub-Total 204 562
Directors' long term benefits
Share based payments (options) 171 51
Total Director Remuneration 375 613
Other Key management short term benefits
Consultancy fees 209 229
Key management salaries - 116
Sub-Total 209 345
Key management long term benefits
Share based payments (options) 39 9
Total Other Key Management Remuneration 248 354
Total Director and Key Management Remuneration 623 967
The amounts set out above include emoluments for the highest paid Director as follows:
Short term benefits 51 333
Total 51 333
Key management consists of the Board of Directors and the Company Secretary/Chief Financial Officer.
The Company provides Directors' & Officers' liability insurance at a cost of $38,125 (2013: $38,821). This cost is not
included in the above table.
NOTE 5: TAXATION ON LOSS FOR THE YEAR
Major components of income tax expense for the years ended 30 June 2014 and 2013 are:
Current tax expense - -
Deferred tax expense - -
Total tax expense - -
A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory income tax rate to income tax expense at the Company's effective income tax rate for the years ended 30 June 2014 and 2013 is as follows:
Accounting loss before income tax (2,450) (11,601)
At the statutory income tax rate of 30% (735) (3,480)
Effects of:
Non-deductible expenses 566 1,549
Temporary differences and tax losses not brought to account as a deferred tax asset 158 1,775
Less:
Tax rate differential 11 156
Income tax expense - -
Effective income tax rate of 0% 0% 0%
Effective income tax rate of 0%
0%
0%
No amounts of deferred tax assets or liabilities have been charged / (credited) to the consolidated statement of
comprehensive income or reserves. The deductible temporary differences and Australian domestic tax losses being $18,405,000
(2013: $18,176,000) do not expire under current tax legislation. Indonesian tax losses expire after five years. Deferred
tax assets have not been recognised in respect of these items because at this point it is not probable that future taxable
profits will be available against which the Group can utilise the benefits of tax losses. The Group has not offset deferred
tax assets across different jurisdictions. Foreign tax losses in relation to the Indonesian subsidiary PT Indonesia Coal
Development expire as follows:
Financial Year Expire (year) $'000
2009/2010 2015 2,798
2010/2011 2016 4,351
2011/2012 2017 3,680
2012/2013 2018 1,086
2013/2014* 2019 277
*Estimate based on the actual loss for 2013/2014
NOTE 6: LOSS PER SHARE
Consolidated
2014 2013
$'000 $'000
Loss attributable to owners of the parent company (2,450) (11,601)
Number
Weighted average number of shares used in the calculation of basic and diluted loss per share 123,383,315 122,822,049
Cents
Loss per share
Basic and diluted loss per share (1.99c) (9.45c)
The effect of all potential ordinary shares arising from the exercise of options going forward is considered to be anti-dilutive. 13,318,493(2013: 7,205,068) potential ordinary shares have been excluded from the above calculation as they are not dilutive.
NOTE 7: PARENT COMPANY LOSS FOR THE FINANCIAL YEAR
The Company has taken advantage of the exemption as allowed by Section 408 of the Companies Act 2006 and has not presented
its own statement of comprehensive income in these financial statements. The Company loss for the year was $2,390,597
(2013: Loss $9,335,223).
NOTE 8: OTHER FINANCIAL ASSETS
Name Country of incorporation Reporting Date Proportion of voting rights held at 30 June 2014 Proportion of voting rights held at 30
June 2013
Spitfire Resources Limited Australia 30 June 2014 0% 9.8%
$'000
2013
Balance at 1 July 2012 2,006
Impairment of available for sale asset (2,558)
Reversal of available for sale reserve to income statement 533
Effect of movement in exchange rates (7)
Balance at 30 June 2013 274
2014
Balance at 1 July 2013 274
Sale of financial asset (240)
Loss on sale of financial asset (46)
Effect of movement in exchange rates 12
Balance at 30 June 2014 -
NOTE 9: SEGMENT INFORMATION
The Group's reportable segments are set out below and include the Indonesian and Australian corporate offices which are
administrative cost centres.
Operating segments are reported in a manner consistent with the reporting provided to the board.
Consolidated 2014 Australia - Corporate office Indonesia - Administration Office Total
$'000 $'000 $'000
Finance income 5 5 10
Administration expenses (2,479) (232) (2,711)
Loss on sale of financial assets (46) - (46)
Exchange differences 304 (7) 297
Loss for the year after taxation (2,216) (234) (2,450)
Non current assets 6 1 7
Other receivables 57 2,492 2,549
Cash and cash equivalents 2,993 23 3,016
Segment assets 3,056 2,516 5,572
Trade and other payables 681 58 739
Loans and Borrowings - 2,483 2,483
Provisions - 40 40
Segment liabilities 681 2,581 3,262
Segment net assets 2,375 (65) 2,310
Consolidated 2013 Australia - Corporate office Indonesia - Administration Office Total
$'000 $'000 $'000
Finance income 15 1 16
Administration expenses (5,846) (1,264) (7,110)
Impairment of Land - (1,757) (1,757)
Impairment of other financial assets (2,258) - (2,258)
Impairment of exploration and evaluation assets (253) (146) (399)
Exchange differences (160) 67 (93)
Loss for the year after taxation (8,502) (3,099) (11,601)
Non current assets 284 11 295
Other receivables 202 3,025 3,227
Cash and cash equivalents 4,825 23 4,848
Segment assets 5,311 3,059 8,370
Trade and other payables 832 3,135 3,967
Provisions - 44 44
Segment liabilities 832 3,179 4,011
Segment net assets 4,479 (120) 4,359
NOTE 10: OTHER RECEIVABLES
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Current
Related party receivables 3,342 4,029 - -
Impairment for non-recovery (859) (1,036) - -
Prepayments and other receivables 66 234 56 202
2,549 3,227 56 202
The Group's exposure to credit and currency risk related to other receivables is disclosed in Note 20. Contingencies in
relation to the recovery of related party receivables are detailed in Note 22.
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Plant & Equipment
Cost
Balance at start of year 255 409 111 110
Disposals (12) (156) - -
Additions - 1 - 1
Effects of movements in exchange rates - 1 - -
Balance at end of year 243 255 111 111
Accumulated Depreciation
Balance at start of year 234 324 101 66
Depreciation expense for the year 13 45 4 35
Reversal of accumulated depreciation - disposal (11) (134) - -
Effects of movements in exchange rates - (1) - -
Balance at end of year 236 234 105 101
Net book value at end of the year 7 21 6 10
Freehold land
Cost
Balance at start and end of year - 1,757 - -
Impairment - (1,757) - -
Balance at the end of year - - - -
Net book value at end of year - - - -
Total
Cost
Balance at start of year 255 2,166 111 110
Impairment - (1,757) - -
Disposals (12) (156) - -
Additions 1 - 1
Effects of movements in exchange rates 1 - -
Balance at end of year 243 255 111 111
Accumulated Depreciation
Balance at start of year 234 324 101 66
Depreciation expense for the year 13 45 4 35
Reversal of accumulated depreciation - disposal (11) (134) - -
Effect of movements in exchange rates (1) - -
Balance at end of year 236 234 105 101
Net book value at end of year 7 21 6 10
Net book value at start of year 21 1,842 10 44
NOTE 12: INVESTMENT IN SUBSIDIARIES
The principal subsidiaries of Churchill Mining Plc, all of which have been included in these consolidated financial
statements, are as follows:
Name Country of Incorporation Proportion of ownership interest
Planet Mining Pty Ltd Australia 100%
PT Indonesia Coal Development Indonesia 100%
PT Techno Coal Utama Prima* Indonesia 100%
PT Ridlatama Tambang Mineral* Indonesia 75%
PT Ridlatama Trade Powerindo* Indonesia 75%
PT Ridlatama Steel* Indonesia 75%
PT Ridlatama Power* Indonesia 75%
*Undertaking held indirectly by the Company.
Churchill Mining Plc owns 95% of the shares in PT Indonesia Coal Development with the balance (5%) held by Planet Mining
Pty Ltd.
Movements of investments in subsidiaries during the period are:
Company
2014 2013
$'000 $'000
Loans to subsidiaries - Non-current assets
- Opening Balance - -
- Loans to subsidiaries 60 1,343
- Impairment of subsidiary carrying value (60) (1,343)
Total loans to subsidiaries - non-current assets - -
Equity investment in subsidiaries
- Opening Balance 158 2,205
- Impairment of subsidiary carrying value (158) (2,047)
Total equity investment in subsidiaries - 158
Total investment in subsidiaries - 158
The total of subsidiary loans at 30 June 2014 is $49,039,912 (2013: $48,979,805), the recovery of which has been impaired
in full. The intercompany loans are unsecured, non-interest bearing and repayable on demand. Following impairment of the
underlying assets held within the relevant subsidiaries, Churchill Mining Plc has accordingly reduced the carrying value of
investments held at a parent company level.
NOTE 13: TRADE AND OTHER PAYABLES
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Current
Trade payables 67 847 67 721
Accruals and other payables 672 127 614 111
739 974 681 832
The Group's exposure to credit and currency risk related to trade and other payables is disclosed in Note 20.
NOTE 14: LOANS AND BORROWINGS
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Current
Related party payables 2,483 2,993 - -
2,483 2,993 - -
Included in the loans and borrowings are amounts potentially payable of $2,482,664 due to the non-controlling shareholders of the IUP Companies PT Ridlatama Tambang Mineral, PT Ridlatama Trade Powerindo, PT Ridlatama Steel and PT Ridlatama Power. Contingencies in relation to the payment of related party loans are detailed in Note 22.
NOTE 15: PROVISIONS
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Non-current
Employee benefits 40 44 - -
40 44 - -
The provision relates to the estimated liability for post-employment benefits at year end for staff engaged by PT Indonesia
Coal Development.
NOTE 16: COMMITMENTS
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Operating lease commitments
The total future aggregate minimum lease payments under non-cancellable operating leases:
Within one year 20 18 20 16
Within two to five years 18 - 18 -
38 18 38 16
The above amount relates to a property sub-lease for 41 York Street, Subiaco Western Australia with the term expiring on 31 May 2016 with rent payable monthly in advance.
Consultant and Key Management compensation commitments
Commitments under consulting contracts not provided for in the financial statements and payable:
Within one year 204 249 204 249
204 249 204 249
Other commitments
In February 2013 the Company entered into an engagement letter with Quinn Emanuel Urquhart & Sullivan ("Quinn Emanuel")"in connection with the ICSID international arbitration proceedings against the Republic of Indonesia. As part of this engagement the Group is committed to pay Quinn Emanuel a success fee of 3% of the value of the first $50 million recovered and 5% of all recovered amounts greater than $50 million.
NOTE 17: SHARE CAPITAL, SHARE PREMIUM AND RESERVES
Company Company
2014 2013 2014 2013
Number Number $'000 $'000
Allotted, called up and fully paid
At start of year 123,168,095 122,520,368 2,230 2,220
Additions 451,467 647,727 7 10
At end of year 123,619,562 123,168,095 2,237 2,230
Allotted, called up and fully paid Share premium
Date Details Number $'000 $'000
30/6/2012 Closing balance at 30 June 2012 122,520,368 2,220 77,537
11/1/2013 Issue of shares to directors @ 11p per share 647,727 10 104
30/6/2013 Closing balance at 30 June 2013 123,168,095 2,230 77,641
7/1/2014 Issue of shares to directors @ 22.23p per share 451,467 7 150
123,619,562 2,237 77,791
Share premium
The share premium reserve amount arises from subscriptions for or issue of shares in excess of nominal value.
Other Reserves
Other Reserves include
(i) Merger reserve
During the 2013 year, the merger reserve which arose previously from the availability of merger relief in connection with
the acquisition of PT Indonesia Coal Development by a share for share exchange that represented the difference between the
fair value of consideration given for the shares and the nominal value of those instruments, was transferred to retained
deficit due to the impairment of the investments in the subsidiary companies.
(ii) Foreign exchange reserve
The amount represents gains/losses arising from the translation of the financial statements of foreign operations, the
functional currency of which is different from the presentation currency of the Group. The reserve is dealt with in
accordance with the accounting policy set out in note 1 to these financial statements.
(iii) Equity settled share options reserve
The amount relates to the fair value of the share options that have been expensed through the statement of comprehensive
income less amounts, if any, that have been transferred to the retained earnings/deficit upon exercise.
Retained deficit
Retained deficit represents the cumulative net gains and losses recognised in the statement of comprehensive income less
any amounts reflected directly in other reserves.
NOTE 18: SHARE BASED PAYMENTS
Share options
The Company has issued share options, some of which have vested immediately on grant and others with vesting periods. The
options are not listed. Share options are exercisable for ordinary shares which when exercised rank equally with existing
ordinary shares.
Exercise price Grant date Outstanding at start of year (Exercised)/Granted during the year (Lapsed/ Expired) during the year Outstanding at end of year Final exercise date
2013
60p 17/12/2007 250,000 - (250,000) - 17/12/2012
70p 17/12/2007 250,000 - (250,000) - 17/12/2012
80p 17/12/2007 250,000 - (250,000) - 17/12/2012
75p 09/05/2008 3,100,000 - (3,100,000) - 09/05/2013
50p 19/08/2011 5,000,000 - (300,000) 4,700,000 19/08/2016
50p 29/10/2012 - 1,500,000 - 1,500,000 29/10/2017
28p 21/03/2013 - 5,400,000 - 5,400,000 21/03/2018
48p 03/05/2013 - 50,000 - 50,000 03/05/2018
Total 8,850,000 6,950,000 (4,150,000) 11,650,000
2014
50p 19/08/2011 4,700,000 - - 4,700,000 19/08/2016
50p 29/10/2012 1,500,000 - - 1,500,000 29/10/2017
28p 21/03/2013 5,400,000 - - 5,400,000 21/03/2018
48p 03/05/2013 50,000 - - 50,000 03/05/2018
50p 09/12/2013 -
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