REG - Churchill Mining plc - Final Results <Origin Href="QuoteRef">CHLL.L</Origin> - Part 2
19/10/2016 14:30
- Part 2: For the preceding part double click ID:nRSS9710Ma
(2.27c) (2.24c)
The accompanying notes form part of these financial statements.
STATEMENTS OF FINANCIAL POSITION
As at 30 June 2016
Consolidated Company
Note 2016 2015 2016 2015
$'000 $'000 $'000 $'000
ASSETS
Current assets
Cash and cash equivalents 1,466 2,050 1,452 2,029
Other receivables 9 61 145 51 135
Total current assets 1,527 2,195 1,503 2,164
Non-current assets
Property, plant and equipment 10 2 8 - 5
Total non-current assets 2 8 - 5
TOTAL ASSETS 1,529 2,203 1,503 2,169
LIABILITIES
Current Liabilities
Trade and other payables 12 453 777 443 769
Provisions 14 - 144 - 144
Total current liabilities 453 921 443 913
Non-current liabilities
Provisions 14 48 45 - -
Total non-current liabilities 48 45 - -
TOTAL LIABILITIES 501 966 443 913
NET ASSETS 1,028 1,237 1,060 1,256
CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital 16 2,595 2,381 2,595 2,381
Share premium 16 81,112 79,235 81,112 79,235
Other reserves 3,357 2,506 4,370 3,593
Retained deficit (86,036) (82,885) (87,017) (83,953)
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT 1,028 1,237 1,060 1,256
TOTAL EQUITY 1,028 1,237 1,060 1,256
The accompanying notes form part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 19 October 2016 and were
signed on its behalf by:
David Quinlivan
Director
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016
Other Reserves
Consolidated Share Capital Share premium reserve Retained deficit Foreign exchange Warrant Reserve Equity settled share options Total Equity attributable to equity holders of Company Non-controlling Interest Total Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Changes in equity for year to 30 June 2015
Balance at 1 July 2014 2,237 77,791 (81,246) (64) - 2,488 1,206 1,104 2,310
Loss for the period - - (2,793) - - - (2,793) - (2,793)
Other comprehensive expense - - - (9) - - (9) - (9)
Transfer of non-controlling interest to retained deficit - - 1,104 - - - 1,104 (1,104) -
Expiry of share options - - 50 - - (50) - - -
Recognition of share based payments - - - - - 141 141 - 141
Issue of shares 144 1,473 - - - - 1,617 - 1,617
Share issue costs - (29) - - - - (29) - (29)
Balance at 30 June 2015 2,381 79,235 (82,885) (73) - 2,579 1,237 - 1,237
Changes in equity for year to 30 June 2016
Balance at 1 July 2015 2,381 79,235 (82,885) (73) - 2,579 1,237 - 1,237
Loss for the period - - (3,151) - - - (3,151) - (3,151)
Other comprehensive expense - - - (262) - - (262) - (262)
Recognition of share based payments - - - - - 412 412 - 412
Issue of shares 214 2,671 - - - - 2,885 - 2,885
Issue of warrants - (701) - - 701 - - -
Share issue costs - (93) - - - - (93) - (93)
Balance at 30 June 2016 2,595 81,112 (86,036) (335) 701 2,991 1,028 - 1,028
The accompanying notes form part of these financial statements.
Company Share Capital Share premium reserve Retained deficit Foreign Exchange reserve Warrant Reserve Equity settled share options reserve Total Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Changes in equity for year to 30 June 2015
Balance at start of the year 2,237 77,791 (80,142) - - 2,488 2,374
Total comprehensive loss for the year - - (3,861) - - - (3,861)
Other comprehensive income - - - 1,014 - - 1,014
Expiry of share options - - 50 - - (50) -
Issue of shares 144 1,473 - - - - 1,617
Share issue costs - (29) - - - - (29)
Recognition of share based payments - - - - - 141 141
Balance at 30 June 2015 2,381 79,235 (83,953) 1,014 - 2,579 1,256
Changes in equity for year to 30 June 2016
Balance at start of the year 2,381 79,235 (83,953) 1,014 - 2,579 1,256
Total comprehensive profit/ (loss) for the year - - (3,064) - - - (3,064)
Other comprehensive expense - - - (336) - - (336)
Issue of shares 214 2,671 - - - - 2,885
Issue of warrants - (701) - - 701 - -
Share issue costs - (93) - - - - (93)
Recognition of share based payments - - - - - 412 412
Balance at 30 June 2016 2,595 81,112 (87,017) 678 701 2,991 1,060
The accompanying notes form part of these financial statements.
STATEMENT OF CASH FLOWS
For the year ended 30 June 2016
Consolidated Company
Note 2016 2015 2016 2015
$'000 $'000 $'000 $'000
Cash flows used in operating activities 18 (3,058) (2,042) (2,979) (1,867)
Net cash used in operating activities (3,058) (2,042) (2,979) (1,867)
Cash flows used in investing activities
Finance income - 1 - 1
Acquisition of property, plant and equipment - (4) - (3)
Advances to subsidiaries - - (101) (175)
Repayment of subsidiary loans - - - 13
Cash flows generated from/(used in) investing activities - (3) (101) (164)
Cash flows from financing activities
Proceeds from issue of share capital 16 2,715 1,346 2,715 1,346
Expense of share issue 16 (126) (20) (126) (20)
Cash flows from financing activities 2,589 1,326 2,589 1,326
Net decrease in cash and cash equivalents (469) (719) (491) (705)
Cash and cash equivalents at beginning of year 2,050 3,016 2,030 2,993
Effect of foreign exchange rate differences (115) (247) (87) (258)
Cash and cash equivalents at the end of year 1,466 2,050 1,452 2,030
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
IAS 8 requires that management shall use its judgement in developing and applying accounting policies that result in
information which is relevant to the economic decision-making needs of users; that are reliable, free from bias, prudent,
complete and represent faithfully the financial position, financial performance and cash flows of the entity.
BASIS OF PREPARATION
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies
have been consistently applied to all the years presented, unless otherwise stated. All amounts presented are in thousands
of US dollars ($'000) unless otherwise stated.
These financial statements have been prepared on a going concern basis and in accordance with International Financial
Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted
by the European Union and in accordance with applicable United Kingdom Law. The adoption of all of the new and revised
Standards and Interpretations issued by the IASB and the International Financial Reporting Interpretations Committee
(IFRIC) of the IASB that are relevant to the operations and effective for annual reporting periods beginning on 1 July 2015
are reflected in these financial statements.
As at 30 June 2016 the Group has cash funds of $1.46m. As detailed in the Chairman's Statement, the ICSID litigation is
progressing and the Group has successfully raised additional equity funding to pursue its claims against the Republic of
Indonesia. Subject to the ongoing progress of the claim, it is expected that additional funding will be needed in the form
of a further equity raise and/or debt funding. The Directors have a reasonable expectation that the Group will have access
to the necessary resources to continue its pursuit of the ICSID litigation and for this reason, they continue to adopt the
going concern basis in preparing these accounts.
Effective 1 May 2015 the Parent Company's functional currency changed from US dollar to pounds sterling ("GBP"). The change
was mainly due to the fundraisings and underlying expenditure being denominated in GBP and the Directors consider GBP to
most faithfully represent the economic effect of the underlying transactions, events and conditions in the parent Company.
NEW STANDARDS AND INTERPRETATIONS APPLIED
The IASB has issued no new standards, amendments to published standards and interpretations to existing standards with
effective dates on or prior to 1 July 2015 which have a material effect on the Group.
New standards and interpretations not yet effective
It is not anticipated that the adoption in the future of the new or revised standards or interpretations that have been
issued by the International Accounting Standards Board but are not yet effective will have a material impact on the Group's
earnings or shareholders' funds. The Company has not adopted any new standards in advance of the effective dates. The Group
is in the process of assessing the impact of these new standards and amendments on the financial statements.
SIGNIFICANT ACCOUNTING POLICIES
Finance income
Interest income is accrued on a time basis, by reference to the principal outstanding at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount.
Basis of consolidation
The financial statements incorporate a consolidation of the financial statements of the Company and entities controlled by
the Company (its subsidiaries). Control is achieved where the Company is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power over the investee. The
consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The financial statements of subsidiaries are included in the Group's financial statements from the date that control
commences until the date that control ceases.
Non-controlling interests are presented in the statement of financial position within equity, separately from equity
attributable to the equity shareholders of the Company and in respect of the statement of comprehensive income are
presented on the face as an allocation of the total profit or loss and other comprehensive income for the year between
non-controlling interests and the equity shareholders of the Company.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in
which they operate (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign
currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the statement of
comprehensive income.
On the 1st May 2015, the parent Company's ("Churchill Mining Plc") functional currency changed to GBP from USD as this
appropriately reflects the Company's primary economic environment, being the United Kingdom, in which it primarily
generates its funding and expends part of its operating cash. The consolidated and company financial information continues
to be presented in US dollars ($), which is the presentation currency of the Company to ensure consistency with prior
periods.
On consolidation, the results of the Group's and parent's operations are translated into $ at rates approximating to those
when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at
the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of
overseas operations at actual rate are recognised directly in the statement of changes in equity (the "foreign exchange
reserve"). Exchange differences recognised in the statement of comprehensive income of Group entities' separate financial
statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas
operation concerned are reclassified to the foreign exchange reserve if the item is denominated in the functional currency
of the Company or the overseas operation concerned. On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the profit or loss on disposal.
Financial instruments
Financial assets and financial liabilities and equity instruments are recognised when the Group and Company become party to
the contractual provisions of the instrument. Financial assets are derecognised when the contractual right to the cash
flow expires or when all the risks and rewards of ownership are substantially transferred. Financial liabilities are
derecognised when the obligations specified in the contract are either discharged or cancelled.
Financial assets
The Group and Company classify their financial assets into one category - Loans and Receivables. The Group's and Company's
accounting policy for each category is as follows:
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They incorporate various types of contractual monetary assets, such as advances made to affiliated entities which
give rise to other receivables and cash and cash equivalents includes cash in hand and deposits held at call with banks.
Other receivables are carried at cost less any provision for impairment. Impairment provisions are recognised when there
is objective evidence (such as significant financial difficulties on the part of the counterparty) that the Group will be
unable to collect all of the amounts due under the terms of the receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of the future expected cash flows associated with the
impaired receivable.
Financial liabilities
The Group's financial liabilities consist of trade payables, other short-term monetary liabilities and long term
liabilities which are initially stated at fair value and subsequently at their amortised cost.
Equity instruments
The warrants are recorded as an equity financial instrument as the Group will receive a fixed amount of cash on exercise of
the warrant in the functional currency of the relevant entity for issuing a fixed number of shares.
Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past transactions
and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks
specific to the liability.
Share-based payments
Where share options are awarded to Directors and employees, the fair value of the options at the date of grant is charged
to the statement of comprehensive income immediately or over the vesting period if applicable. Non-market vesting
conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so
that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with
the fair value of goods and services received or where this is not possible at the fair value of the equity instruments
granted. Fair value is measured by use of an option pricing model. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations. When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date
is recognised as an increase in the investment in subsidiaries, with a corresponding increase in equity over the vesting
period of the grant.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes
directly attributable costs and the estimated present value of any future costs of dismantling and removing items if
applicable. The corresponding liability is recognised within provisions. Depreciation is provided on all items of property
and equipment to write off the carrying value of items over their expected useful economic lives as follows:
Freehold land - not depreciated
Leasehold improvements - 5 years
Furniture and fixtures - 3 years
Office equipment - 3 years
Motor vehicles - 8 years
Taxation
Tax on the profit or loss from ordinary activities includes current and deferred tax.
Current tax is based on the profit or loss adjusted for items that are non-assessable or disallowed and is calculated using
tax rates that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the statement of comprehensive income, except when the tax relates to items credited or
charged directly to equity, in which case the tax is also dealt with in equity.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of
financial position differs to its tax base, except for differences arising on:
· The initial recognition of goodwill;
· The initial recognition of an asset or liability in a transaction which is not a business 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
2016 2015
$'000 $'000
Finance income - foreign exchange gains 128 3
Finance income - Bank interest - 1
Total finance income 128 4
NOTE 3: LOSS FROM OPERATIONS
Consolidated
2016 2015
$'000 $'000
Loss before tax includes the following expense items:
Administrative expenses
Audit & accounting and other fees 60 71
Consulting & professional fees 645 454
Legal fees 1,538 1,176
VAT costs unrecovered - 3
Depreciation & amortisation 5 4
Employee salaries and benefits 279 286
Operating lease expense 44 51
Travel expenses 171 67
Public relations consultancy 15 27
Other administrative costs 118 285
Equity settled share based payment expense 400 130
3,275 2,554
Finance expense
Foreign exchange losses 4 243
Total administrative and finance expenses 3,279 2,797
During the year the following fees were paid or payable for services provided by the Auditors of the parent entity and subsidiaries:
Consolidated
2016 2015
$'000 $'000
Fees payable to the Company's Auditor for the audit of the Company's annual accounts 28 30
Other services - interim review 6 6
Fees payable for the audit of the subsidiaries 5 8
Total 39 44
NOTE 4: SALARIES
Consolidated
2016 2015
Note $'000 $'000
Staff costs (including Directors' fees) comprise:
Employee salaries and benefits 57 69
Directors' fees 223 218
Share-based payments 354 130
634 417
Average number of employees Number
Administration and Finance 4 3
Directors 6 6
2016 2015
Directors' remuneration and Other Key Management disclosures $'000 $'000
Directors' short term benefits
Directors' fees and benefits 223 218
Consultancy fees/Salaries 338 186
Sub-Total 561 404
Directors' share based payments
Share based payments (options) 271 96
Total Director Remuneration 832 500
Other Key management short term benefits
Consultancy fees 232 212
Sub-Total 232 212
Key management share based payments
Share based payments (options) 83 28
Total Other Key Management Remuneration 83 28
Total Director and Key Management Remuneration 1,147 740
The amounts set out above include emoluments for the highest paid Director as follows:
Short term benefits 227 146
Long term benefits 91 36
Total 318 182
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 $25,897 (2015: $25,069). 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 2016 and 2015 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 2016 and 2015 is as follows:
Accounting loss before income tax (3,151) (2,793)
At the Australian statutory income tax rate of 28.5% (2015 - 30%) (898) (838)
Effects of:
Non-deductible expenses 677 514
Tax losses not brought to account as a deferred tax asset 221 324
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
approximately $22,941,000 (2015: $21,347,000) 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
2011/2012 2017 3,680
2012/2013 2018 1,086
2013/2014 2019 277
2014/2015 2020 140
2015/2016* 2021 120
*Estimate based on the actual loss for 2015/2016
NOTE 6: LOSS PER SHARE
Consolidated
2016 2015
$'000 $'000
Loss attributable to owners of the parent company (3,151) (2,793)
Number
Weighted average number of shares used in the calculation of basic loss per share 138,922,131 124,755,382
Cents
Basic and diluted loss per share (2.27c) (2.24c)
26,929,515 (2015: 15,202,192) potential ordinary shares have been excluded from the above calculations as the exercise price is higher than the average share price. The effect of the potential ordinary shares is also considered to be anti-dilutive, as it will result in decrease in the loss per share.
NOTE 7: PARENT COMPANY PROFIT 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 $3,063,884
(2015: Loss $3,860,532).
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 2016 Australia - Corporate office Indonesia - Administration Office Total
$'000 $'000 $'000
Administration expenses (3,172) (103) (3,275)
Exchange differences (finance income) 105 23 128
Exchange differences (finance expense) (4) - (4)
Loss for the year after taxation (3,071) (80) (3,151)
Non current assets - 2 2
Other receivables 51 10 61
Cash and cash equivalents 1,452 14 1,466
Segment assets 1,503 26 1,529
Trade and other payables 443 10 453
Provisions - 48 48
Segment liabilities 443 58 501
Segment net assets 1,060 (32) 1,028
Consolidated 2015 Australia - Corporate office Indonesia - Administration Office Total
$'000 $'000 $'000
Administration Expense
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