REG - Churchill Mining plc - Final Results <Origin Href="QuoteRef">CHLL.L</Origin> - Part 2
17/11/2015 11:11
- Part 2: For the preceding part double click ID:nRSQ9916Fa
combination and at the
time of the transaction affects neither accounting or taxable profit; and
· Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax liabilities/ (assets) are settled/ (recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets
and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
· The same taxable Group company; or
· Different Group entities which intend either to settle current tax assets and liabilities on a net basis or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of
deferred tax assets or liabilities are expected to be settled or recovered.
Tax consolidation
The Company and its 100% Australian controlled entities have formed a tax consolidation Group. Members of the tax
consolidated Group intend to enter into a tax sharing arrangement which will allow for the allocation of income tax expense
to the wholly controlled entities on a pro rata basis. The arrangement will provide for the allocation of income tax
liabilities between the entities should the head entity default on its tax payment obligations. The head entity of the tax
consolidated Group is Churchill Mining Plc.
Impairment of non-financial assets
Impairment tests on intangible assets and tangible assets with indefinite useful economic lives are undertaken annually on
30 June or when a trigger for impairment is identified. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on
the asset's cash-generating unit (i.e. the lowest level Group of assets in which the asset belongs for which there are
separately identifiable cash flows).
Impairment charges are included within total administration expenses in the statement of comprehensive income, except to
the extent that they reverse gains previously recognised in the statement of changes in equity.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is the Managing Director, under his delegated board authority, is
responsible for allocating 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
2015 2014
$'000 $'000
Finance income - foreign exchange gains 3 304
Finance income - Bank interest 1 2
Total finance income 4 306
NOTE 3: LOSS FROM OPERATIONS
Consolidated
2015 2014
$'000 $'000
Loss before tax includes the following expense items:
Administrative expenses
Audit & accounting and other fees 71 91
Consulting & professional fees 454 252
Legal fees 1,176 1,462
VAT costs unrecovered 3 6
Depreciation & amortisation 4 13
Employee salaries and benefits 286 336
Operating lease expense 51 60
Travel expenses 67 45
Public relations consultancy 27 58
Other administrative costs 285 139
Equity settled share based payment expense 130 249
Loss from sale of financial assets - 46
2,554 2,757
Finance expenses
Foreign exchange losses 243 7
Total administrative and finance expenses 2,797 2,764
During the year the following fees were paid or payable for services provided by the Auditors of the parent entity and subsidiaries:
Consolidated
2015 2014
$'000 $'000
Fees payable to the Company's Auditor for the audit of the Company's annual accounts 30 31
Other services - interim review 6 10
Fees payable for the audit of the subsidiaries 8 12
Total 44 53
NOTE 4: SALARIES
Consolidated
2015 2014
Note $'000 $'000
Staff costs (including Directors' fees) comprise:
Employee salaries and benefits 69 144
Superannuation/pension costs - 7
Directors' fees and benefits 218 186
Share-based payments 17 130 249
417 586
Number
Average number of employees (including Directors) 9 11
2015 2014
Directors' remuneration and Other Key Management disclosures $'000 $'000
Directors' short term benefits
Directors' fees and benefits 218 186
Consultancy fees/Salaries 186 18
Sub-Total 404 204
Directors' long term benefits
Share based payments (options) 96 171
Total Director Remuneration 500 375
Other Key management short term benefits
Consultancy fees 212 209
Sub-Total 212 209
Key management long term benefits
Share based payments (options) 28 39
Total Other Key Management Remuneration 240 248
Total Director and Key Management Remuneration 740 623
The amounts set out above include emoluments for the highest paid Director as follows:
Short term benefits 146 43
Long term benefits 36 57
Total 182 100
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 $25,069 (2014: $38,125). 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 2015 and 2014 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 2015 and 2014 is as follows:
Accounting loss before income tax (2,793) (2,450)
At the statutory income tax rate of 30% (838) (735)
Effects of:
Non-deductible expenses 514 566
Temporary differences and tax losses not brought to account as a deferred tax asset 330 158
Less:
Tax rate differential (6) 11
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 $21,347,000
(2014: $18,405,000) 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
2010/2011 2016 4,351
2011/2012 2017 3,680
2012/2013 2018 1,086
2013/2014 2019 277
*2014/2015 2020 140
*Estimate based on the actual loss for 2014/2015
NOTE 6: LOSS PER SHARE
Consolidated
2015 2014
$'000 $'000
Loss attributable to owners of the parent company (2,793) (2,450)
Number
Weighted average number of shares used in the calculation of basic loss per share 124,755,382 123,383,315
Cents
Basic and diluted loss per share (2.24c) (1.99c)
The effect of all potential ordinary shares arising from the exercise of options and warrants is considered to be anti-dilutive. 15,202,192 (2014: 13,318,493) potential ordinary shares have been excluded from the above calculations 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 $3,860,532
(2014: Loss $2,390,597).
NOTE 8: 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 2015 Australia - Corporate office Indonesia - Administration Office Total
$'000 $'000 $'000
Finance income 6 3 9
Administration expenses (2,429) (313) (2,742)
Exchange differences (60) - (60)
Loss for the year after taxation (2,483) (310) (2,793)
Non current assets 5 3 8
Other receivables 135 10 145
Cash and cash equivalents 2,029 21 2,050
Segment assets 2,169 34 2,203
Trade and other payables 724 53 777
Provisions 144 45 189
Segment liabilities 868 98 966
Segment net assets 1,301 (64) 1,237
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
NOTE 9: OTHER RECEIVABLES
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current
Related party receivables 3,000 3,342 - -
Impairment for non-recovery (3,000) (859) - -
Prepayments and other receivables 145 66 135 56
145 2,549 135 56
The Group's exposure to credit and currency risk related to other receivables is disclosed in Note 19.
NOTE 10: PROPERTY, PLANT AND EQUIPMENT
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Plant & Equipment
Cost
Balance at start of year 243 255 111 110
Written off (82) (12) - -
Additions 4 - 1 1
Effects of movements in exchange rates (5) - 3 -
Balance at end of year 160 243 115 111
Accumulated Depreciation
Balance at start of year 236 234 105 101
Depreciation expense for the year 3 13 2 4
Reversal of accumulated depreciation - Written off (82) (11) - -
Effects of movements in exchange rates (5) - 3 -
Balance at end of year 152 236 110 105
Net book value at end of the year 8 7 5 6
Net book value at start of year 7 21 6 10
NOTE 11: INVESTMENT IN SUBSIDIARIES
The 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
2015 2014
$'000 $'000
Loans to subsidiaries - Non-current assets
- Opening Balance - -
- Loans to subsidiaries 175 60
- Repayment of loans from subsidiaries (13) -
- Impairment of subsidiary carrying value (162) (60)
Total loans to subsidiaries - non-current assets - -
Equity investment in subsidiaries
- Opening Balance - 158
- Impairment of subsidiary carrying value - (158)
Total equity investment in subsidiaries - -
Total investment in subsidiaries - -
The total of subsidiary loans at 30 June 2015 is $49,201,733 (2014: $49,039,912), 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 12: TRADE AND OTHER PAYABLES
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current
Trade payables 418 67 415 67
Accruals and other payables 359 672 354 614
777 739 769 681
The Group's exposure to credit and currency risk related to trade and other payables is disclosed in Note 19.
NOTE 13: LOANS AND BORROWINGS
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current
Related party payables 2,229 2,483 - -
Reassessment of related party loan payable (2,229) - - -
- 2,483 - -
Included in the loans and borrowings are amounts potentially payable of $2,228,848 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. During the year ended 30 June 2015 the loan payable has been reassessed to nil.
NOTE 14: PROVISIONS
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current
Provision for fine 144 - 144 -
144 - 144 -
Non-current
Employee benefits 45 40 - -
45 40 - -
Current
During the year, Churchill was made aware of an intention by the London Stock Exchange plc ("the Exchange") to commence
proceedings against the Company under the AIM Disciplinary Procedures in relation to alleged breaches of AIM rules 11 and
31 during the period from August 2010 to March 2011.
Whilst the Company disputes the contentions raised by the Exchange and will be defending the disciplinary action which is
based upon alleged breaches of the AIM rules which are disputed and alleged to have occurred over 5 years ago, the Company
has included a provision of $144,000 (£90,000) in relation to any potential fine. The ultimate level of any fine, which
will be determined by the AIM Disciplinary Committee if they find the case in favour of the Exchange, may be materially
higher or lower than the current provision of $144,000 (£90,000).
Non-Current
The Non-current provision relates to the estimated liability for post-employment benefits at year end for staff engaged by
PT Indonesia Coal Development.
NOTE 15: COMMITMENTS
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Operating lease commitments
The total future aggregate minimum lease payments under non-cancellable operating leases:
Within one year 19 20 19 20
Within two to five years - 18 - 18
19 38 19 38
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 321 204 321 204
321 204 204 204
NOTE 16: SHARE CAPITAL, SHARE PREMIUM AND RESERVES
Company Company
2015 2014 2015 2014
Number Number $'000 $'000
Allotted, called up and fully paid
At start of year 123,619,562 123,168,095 2,237 2,230
Additions 9,156,051 451,467 144 7
At end of year 132,775,613 123,619,562 2,381 2,237
Allotted, called up and fully paid Share premium
Date Details Number $'000 $'000
30/6/2013 Closing balance at 30 June 2013 123,168,095 2,230 77,641
07/01/2014 Issue of shares to directors @ 22.23p per share 451,467 7 150
30/6/2014 Closing balance at 30 June 2014 123,619,562 2,237 77,791
15/1/201514/5/201514/5/201516/6/2015 Issue of shares to directors @ 27.09p per shareIssue of shares for cash @ 10p per shareShare issue expensesConversion of options @ 15p per share 606,0518,500,000-50,000 9134-1 2611201(29)11
132,775,613 2,381 79,235
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) 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.
(ii) 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 17: SHARE BASED PAYMENTS AND WARRANTS GRANTED
Share options issued as compensation
The Company has issued share options, some of which have vested immediately on grant and others with vesting periods. The
options are unlisted. 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
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 - 3,000,000 - 3,000,000 09/12/2018
Total 11,650,000 3,000,000 - 14,650,000
2015
50p 19/08/2011 4,700,000 - (800,000) 3,900,000 19/08/2016
50p 29/10/2012 1,500,000 - (250,000) 1,250,000 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 3,000,000 - - 3,000,000 09/12/2018
25p 02/04/2015 - 5,000,000 - 5,000,000 02/04/2020
15p 20/05/2015 - 100,000 - 100,000 30/06/2018
Total 14,650,000 5,100,000 (1,050,000) 18,700,000
Weighted average exercise price Number Weighted average exercise price Number
2015 2015 2014 2014
Outstanding at beginning of the year 42p 14,650,000 40p 11,650,000
Expired during the year 50p (1,050,000) - -
Issued during the year 25p 5,100,000 33p 3,000,000
Outstanding at end of the year 37p 18,700,000 42p 14,650,000
Exercisable at the end of the year 41p 13,700,000 40p 11,650,000
The weighted average share price during the year was 30.61p (2014: 20.31p).
Warrants granted
On 14th May 2015 the Company raised £850,000 before expenses through a placing and subscription of 8,500,000 new Ordinary
Shares of 1p each at a price of 10p per share together with the issue of 4,250,000 warrants exercisable at a price of 15p
per Ordinary Share and expiring on 30 June 2018. 100,000 broker warrants were also issued as part of the fund raise.
Fair value
The fair value of the share options and warrants granted as compensation has been derived using the Black-Scholes model
that takes into account factors such as the option/warrant life, the volatility of share price and expected early exercise
of share options/warrants. Volatility has been based on an estimate of comparable listed companies to Churchill.
2015
Grant date 2/04/2015 20/05/2015
Granted to Key Management Personnel Broker warrants
Number granted 5,000,000 100,000
Fair value at grant date 2.77c 8.76c
Assumptions used
Share price 16.12c 24.34c
Exercise price 37.00c 22.81c
Expected volatility 65% 71%
Average Option life 2.50 1.50
Risk free interest rate 0.5% 0.5%
2014
Grant date 9/12/2013
Granted to Key Management Personnel
Number granted 3,000,000
Fair value at grant date 7.47c
Assumptions used
Share price 34.32c
Exercise price 81.72c
Expected volatility 70%
Average Option life 2.65
Risk free interest rate 2%
Equity settled share based payment expense
The share based payment for the year ended 30 June 2015 was US$130,000 (2014: $249,297).
Shares
On 15th January 2015, the Company issued 606,051 new Ordinary shares to directors, executives and the company secretary at
a deemed issue price of 27.09 pence per share in lieu of the payment of cash fees.
NOTE 18: NOTES TO THE CASH FLOW STATEMENT
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Reconciliation of (loss) after tax to cash from operating activities
(Loss) after tax (2,793) (2,450) (3,861) (2,391)
Share option expense 130 249 130 249
Shares issue in lieu of fees 271 157 271 157
Depreciation expense 4 13 2 5
Impairment expense - - 162 218
(Gain)/ Loss on exchange rates 240 (297) 1,276 (287)
Loss on subsidiary loans & investment - 46 - -
Finance income (1) (2) (1) (2)
Reassessment of loan payable 2,229 - - -
Impairment of receivables (2,229) - - -
Decrease / (Increase) in receivables 2,150 167 (78) 138
(Decrease) / Increase in payables
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