REG - Churchill Mining plc - Final Results <Origin Href="QuoteRef">CHLL.L</Origin> - Part 3
29/10/2014 12:06
- Part 3: For the preceding part double click ID:nRSO3467Ub
3,000,000 - 3,000,000 09/12/2018
Total 11,650,000 3,000,000 - 14,650,000
Weighted average exercise price Number Weighted average exercise price Number
2014 2014 2013 2013
Outstanding at beginning of the year 40p 11,650,000 60p 8,850,000
Expired during the year 72p - 72p (4,150,000)
Issued during the year 33p 3,000,000 33p 6,950,000
Outstanding at end of the year 42p 14,650,000 40p 11,650,000
Exercisable at the end of the year 40p 11,650,000 40p 11,650,000
The weighted average share price during the year was 20.31p (2013: 19.89p).
Fair value
The fair value of the share options granted has been derived using the Black-Scholes model that takes into account factors
such as the option life, the volatility of share price and expected early exercise of share options. Volatility has been
based on an estimate of comparable listed companies to Churchill.
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%
2013
Grant date 29/10/2012 21/3/2013 3/5/2013
Granted to Key Management Personnel Key Management Personnel Key Management Personnel
Number granted 1,500,000 5,400,000 50,000
Fair value at grant date 1.80c 3.07c 11.26c
Assumptions used
Share price 18.00c 15.86c 40.43c
Exercise price 80.51c 42.30c 74.64c
Expected volatility 70% 70% 70%
Average Option life 2.65 2.65 2.65
Risk free interest rate 2% 2% 2%
Equity settled share based payment expense
The share based payment for the year ended 30 June 2014 was US$249,297 (2013: $73,759).
NOTE 19: NOTES TO THE CASH FLOW STATEMENT
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Reconciliation of (loss) after tax to cash from operating activities
(Loss) after tax (2,450) (11,601) (2,391) (9,335)
Share option expense 249 73 249 73
Shares issue expense 157 - 157 -
Depreciation expense 13 45 5 35
Impairment expense - 399 218 3,175
Impairment of land - 1,757 - -
Impairment of other financial assets - 2,258 - -
(Gain)/ Loss on exchange rates (297) 96 (287) 160
Loss on subsidiary loans & investment 46 - - 216
Net gain on disposal of property, plant and equipment - (4) - -
Finance income (2) (16) (2) (14)
Decrease / (Increase) in receivables 167 237 138 (42)
(Decrease) / Increase in payables (238) (261) (144) 412
Cash flow from operating activities (2,355) (7,017) (2,057) (5,320)
NOTE 20: FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies in respect of financial instruments are disclosed in Note 1 of the financial
statements.
Financial risk management
The Board seeks to minimise its exposure to financial risk by reviewing and agreeing policies for managing each financial
risk and monitoring them on a regular basis. No formal policies have been put in place in order to hedge exposure of the
Group's and Company's activities to the exposure to currency risk or interest risk. No derivatives or hedges were entered
into during the year.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group and Company's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group's finance function.
The Group is exposed through its operations to the following financial risks:
· Liquidity risk;
· Credit risk;
· Cashflow interest rate risk;
· Foreign exchange risk.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting
the Group and Company's competitiveness and flexibility. There have been no substantive changes in the Group and Company's
exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used
to measure them from previous periods unless otherwise stated in this note. Further details regarding these policies are
set out below:
Principal financial instruments
The principal financial instruments used by the Group and Company, from which financial instrument risk arises are as
follows:
· Loans and receivables;
· Other receivables;
· Cash and cash equivalents;
· Trade and other payables; and
· Loans and borrowings.
Categories of financial assets
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Current financial assets classified as loans and receivables
Other receivables 2,543 3,024 51 2
Cash and cash equivalents 3,016 4,848 2,993 4,821
Total current financial assets 5,559 7,872 3,044 4,823
Non-current financial assets classified as loans and receivables
Intergroup receivables - - 49,040 48,980
Impairment for non-recovery - - (49,040) (48,980)
Non-current financial assets classified as available for sale
Other financial assets - 274 - -
Total non-current financial assets - 274 - -
Total financial assets 5,559 8,146 3,044 4,823
Categories of financial liabilities
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Current financial liabilities measured at amortised cost
Trade and other payables 739 974 681 832
Loans and borrowings 2,483 2,993 - -
Total current financial liabilities 3,222 3,967 681 832
Total financial liabilities 3,222 3,967 681 832
At the year end, the Group had a cash balance of US$3,015,620 (2013: US$4,848,872) which was made up as follows:
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Great British Pound 1,355 3,942 1,355 3,942
United States Dollar 1,429 844 1,407 831
Australian Dollar 231 52 231 48
Indonesian Rupiah 1 10 - -
3,016 4,848 2,993 4,821
There is no material difference between the book value and fair value of the Group's financial instruments.
The Group and Company received interest for the year as follows:
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Interest from bank deposits 2 16 2 15
Total interest from bank deposits 2 16 2 15
LIQUIDITY RISK
The Group's and Company's policy is to ensure that it has sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain readily available cash balances to meet expected requirements for a
period of at least 60 days.
Cash forecasts identifying the liquidity requirements of the Group and Company are produced frequently. These are reviewed
regularly by management and the Board to ensure that sufficient financial headroom exists for at least a 12 month period.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
Consolidated Carrying amount Contractual cash flows 6 months or less Greater than 6 months
2014 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 739 739 739 -
Loans and borrowings 2,483 2,483 - 2,483
3,222 3,222 739 2,483
Company Carrying amount Contractual cash flows 6 months or less Greater than 6 months
2014 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 681 681 681 -
681 681 681 -
Consolidated Carrying amount Contractual cash flows 6 months or less Greater than 6 months
2013 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 974 974 974 -
Loans and borrowings 2,993 2,993 - 2,993
3,967 3,967 974 2,993
Company Carrying amount Contractual cash flows 6 months or less Greater than 6 months
2013 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 832 832 832 -
832 832 832 -
CREDIT RISK
Credit risk arises principally from the Group's other receivables and investments in cash deposits. It is the risk that
the counterparty fails to discharge its obligations in respect of the instrument.
As detailed in Note 22, the group is awaiting a decision on the appeal in relation to a dispute with the Ridlatama Group.
Should PT ICD and PT TCUP be unsuccessful in all avenues of appeal then the receivables in the Statement of Financial
Position before impairment would be reduced by $1.67 million due to these companies no longer being consolidated in the
Group accounts. In addition the payables in the Statement of Financial Position would be reduced by $1.24 million.
The Group holds its cash balances across several bank accounts. The Groups seeks to deposit its cash with reputable
financial institutions with strong credit ratings.
The Group and Company's maximum exposure to credit risk by class of individual financial instrument is shown in the table
below:
Consolidated 2014 2013
Carrying value Maximum exposure Carrying value Maximum exposure
$'000 $'000 $'000 $'000
Current assets
Cash and cash equivalents 3,016 3,016 4,848 4,848
Other receivables 2,543 2,543 3,024 3,024
5,559 5,559 7,872 7,872
Company 2014 2013
Carrying value Maximum exposure Carrying value Maximum exposure
$'000 $'000 $'000 $'000
Current assets
Cash and cash equivalents 2,933 2,933 4,821 4,821
Non - current assets
Loans to subsidiaries 49,040 49,040 48,980 48,980
Impairment for non-recovery (49,040) (49,040) (48,980) (48,980)
2,933 2,933 4,821 4,821
CASH FLOW INTEREST RATE RISK
The Group and Company is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with banks.
The cash balances maintained by the Group and Company are managed in order to ensure that the maximum level of interest is
received for the available funds without affecting the working capital flexibility the Group and Company require.
The Group and Company is not at present exposed to cash flow interest rate risk on borrowings as they are not interest
bearing. No subsidiary company of the Group is permitted to enter into any borrowing facility or lease agreement without
prior consent of the Company.
Interest rates on financial assets and liabilities
The Group and Company's financial assets consist of cash and cash equivalents and other receivables. The interest rate
profile at 30 June 2014 of these assets was as follows:
Consolidated Floating interest rate Fixed interest maturing in 1 year or less Fixed interest maturing over 1 to 5 years Non-interest bearing Total
2014 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 844 510 - - 1,355
Australian Dollar 46 185 - - 231
United States Dollar - 1,430 - 60 1,490
Indonesian Rupiah 1 - - 2,483 2,483
891 2,125 - 2,543 5,559
Weighted average interest rate 0% 0.17%
Financial liabilities
Great British Pound - - - 31 31
Australian Dollar - - - 26 26
United States Dollar - - - 682 682
Indonesian Rupiah - - - 2,483 2,483
- - - 3,222 3,222
Company Floating interest rate Fixed interest maturing in 1 year or less Fixed interest maturing over 1 to 5 years Non-interest bearing loan Total
2014 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 844 511 - - 1,355
Australian Dollar 46 185 - 51 282
United States Dollar - 1,407 - 48,980 50,387
Impairment for non-recovery - - - (48,980) (48,980)
890 2,103 - 51 3,044
Weighted average interest rate 0% 0.17%
Financial liabilities
Great British Pound - - - 31 31
Australian Dollar - - - 26 26
United States Dollar - - - 624 624
- - - 681 681
Consolidated Floating interest rate Fixed interest maturing in 1 year or less Fixed interest maturing over 1 to 5 years Non-interest bearing Total
2013 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 493 3,449 - - 3,942
Australian Dollar 36 15 - - 51
United States Dollar 89 759 - 32 880
Indonesian Rupiah 6 - - 2,993 2,999
624 4,223 - 3,025 7,872
Weighted average interest rate 0% 0.22%
Financial liabilities
Great British Pound - - - 149 149
Australian Dollar - - - 32 32
United States Dollar - - - 777 777
Indonesian Rupiah - - - 3,009 3,009
- - - 3,967 3,967
Company Floating interest rate Fixed interest maturing in 1 year or less Fixed interest maturing over 1 to 5 years Non-interest bearing loan Total
2013 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 493 3,449 - - 3,942
Australian Dollar 32 15 - - 47
United States Dollar 73 759 - 48,980 49,812
Impairment for non-recovery - - - (48,980) (48,980)
598 4,223 - - 4,821
Weighted average interest rate 0% 0.22%
Financial liabilities
Great British Pound - - - 149 149
Australian Dollar - - - 32 32
United States Dollar - - - 651 651
- - - 832 832
Sensitivity Analysis
Interest Rate Risk
The Group and Company have performed sensitivity analysis relating to its exposure to their interest rate risk at reporting
date. The sensitivity analysis demonstrates the effect on the current financial year results and equity which could result
from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2014, the effect on loss and equity as a result of changes in the interest rate, with all other variables
remaining constant, would be as follows:
Consolidated Company
2014 2013 2014 2013
$'000 $'000 $'000 $'000
Change in profit
- Increase in interest rate by 1% 13 72 13 65
- Decrease in interest rate by 1% (2) (16) (2) (14)
Change in equity
- Increase in interest rate by 1% 13 72 13 65
- Decrease in interest rate by 1% (2) (16) (2) (14)
FOREIGN EXCHANGE RISK
The Group has overseas subsidiaries, in Australia and Indonesia, whose expenses are mainly denominated in US dollars with
some expenses in Australian Dollars and Indonesian Rupiah. In addition, the Parent Company incurs some expenses in British
Pounds. Foreign exchange risk is inherent in the Group's activities and is accepted as such. The Group mitigates foreign
exchange risk by transferring appropriate amounts to match the budgeted spend in each currency. Although its geographical
spread reduces the Group's operational risk, the Group's net assets arising from such overseas operations are exposed to
currency risk resulting in gains and losses on retranslation into US dollars. No formal arrangements have been put in place
in order to hedge the Group and Company's activities to the exposure to currency risk or interest risk. It is the Group's
policy to ensure that individual Group entities enter into local transactions in their functional currency wherever
possible. The Group considers that this policy minimises any unnecessary foreign exchange exposure.
In order to monitor the continuing effectiveness of this policy, the Board, through its approval of both corporate and
capital expenditure budgets, and review of the currency profile of cash balances and management accounts, considers the
effectiveness of the policy on an on-going basis.
The following table discloses the exchange rates of the major currencies utilised by the Group:
Pounds Sterling Australian Dollar Indonesian Rupiah
Foreign currency units to US $1
Average for 2013/2014 0.6156 1.0895 11,374
At 30 June 2014 0.5866 1.0594 11,990
Average for 2012/2013 0.6378 0.9747 9,679
At 30 June 2013 0.6572 1.0934 9,901
Currency exposures & Sensitivity analysis
The monetary assets and liabilities of the Group that are not denominated in US dollars and therefore exposed to currency
fluctuations are shown below. The amounts shown represent the US dollar's equivalent of local currency balances.
Australian Dollar Pound Sterling Indonesian Rupiah Total
$'000 $'000 $'000 $'000
US Dollar equivalent of exposed net monetary assets and liabilities
At 30 June 2014 204 1,374 11 1,589
At 30 June 2013 302 4,208 27 4,537
A 10% strengthening of the US dollar against the Australian dollar at 30 June would have reduced loss by $2,921 (2013:
reduced loss by $2,655) and reduced equity by $34,690 (2013: $17,687). This analysis assumed that all other variables, in
particular interest rates, remain constant.
A 10% weakening of the US dollar against the above currency at 30 June would have had approximately the equivalent but
opposite effects on the above currencies to the amounts shown above, on the basis that all other variables remain
constant.
A 10% strengthening of the US dollar against the Great British Pound at 30 June would have increased loss by $123,184
(2013: $394,180) and decrease equity by $123,184 (2013: $394,180). This analysis assumed that all other variables, in
particular interest rates, remain constant
A 10% weakening of the US dollar against the above currency at 30 June would have had approximately the equivalent but
opposite effects on the above currencies to the amounts shown above, on the basis that all other variables remain
constant.
Capital
The objective of the Directors is to maximise Shareholder returns and minimise risks with the Group being mainly equity
financed. In managing their capital, the Group and Company's primary objective is to ensure their ability to provide a
sufficient return for their equity Shareholders, principally though the ICSID damages claim. In order to achieve and
maximise this return objective, the Group and Company will, in future, seek to maintain a gearing ratio that balances risks
and returns at an acceptable level while also maintaining a sufficient funding base to enable the Group and Company to meet
their working capital and strategic investment needs. In making decisions to adjust their capital structure to achieve
these aims, either through new share issues, increases or reductions in debt, or altering a dividend or share buyback
policies, the Group considers not only its short term position but also its medium and longer term operational and
strategic objectives.
NOTE 21: RELATED PARTY TRANSACTIONS
The Group had the following material transactions (excluding Directors' salaries and fees) with related parties during the
year ended 30 June 2014.
a) As at 30 June 2014 US$1,670,983 (2013: US$2,014,301) was receivable from and US$1,312,975 (2012: US$ 1,582,737) was
payable to Ms Florita who is the partner of Mr Anang Mudjiantoro. Both Ms Florita and Mr Mudjiantoro are related parties of
Churchill by way of their Directorships in Indonesian subsidiary companies. The amount of the receivable has been impaired
to equal the amount of the payable US$1,312,975. These amounts remain outstanding at 30 June 2014.
b) As at 30 June 2014 US$1,670,983 (2013: US$2,104,301) was receivable from and US$1,169,688 (2013: US$ 1,410,011) was
payable to Ms Ani Setiawan who is the partner of Mr Andreas Rinaldi. Ms Ani Setiawan is a related party of Churchill as she
holds the position of Commissioner with some of the Indonesian subsidiary companies. The amount of the receivable has been
impaired to equal the amount of the payable US$1,169,688.These amounts remain outstanding at 30 June 2014.
The Key Management personnel disclosures are included in Note 4 to the financial statements.
NOTE 22: CONTINGENCIES
On 28th November 2012 the South Jakarta District Court held that the deeds of grant by which members of the Ridlatama Group
transferred 75% of the issued share capital in two of the four licence companies that made up the East Kutai Coal Project
(PT Ridlatama Tambang Mineral and PT Ridlatama Trade Powerindo) to PT TCUP are null and void on the basis that the
requirements for a valid grant under Indonesian laws had not been satisfied. On 6th Dec 2012 PT ICD and PT TCUP filed a
notice of appeal with the High Court in respect of the South Jakarta District Court's decision. In May/June 2014 the High
Court ruled in favour of Ridlatama. In June/July 2014 PT ICD and PT TCUP filed a memoranda of appeal with the Supreme Court
of Indonesia. The decision of the South Jakarta District Court is therefore not final and binding. Should PT ICD and PT
TCUP be unsuccessful in all avenues of appeal then the receivables in the Statement of Financial Position before impairment
would be reduced by $1.67 million due to these companies no longer being consolidated in the Group accounts. In addition
the payables in the Statement of Financial Position would be reduced by $1.24 million. It remains the Group's position that
the receivable and payable in the Statement of Financial Position are able to be offset. In the event that the balances
cannot be offset the payable owing by the Group would not be settled until members of the Ridlatama group settled the
receivable.
The Group is involved in litigation as detailed in the Chairman's Statement and Strategic Report. As at the date of this
report the disclosure of any further information about the above matters would be prejudicial to the interests of the
Group.
NOTE 23: EVENTS AFTER THE REPORTING PERIOD
On the 1st October 2014 Mr Rachmat Gobel resigned as a Director and on the same day Mr Nikita Rossinsky was appointed a
Director.
There has not been any other matter or circumstance occurring subsequent to the end of the financial year, that has
significantly affected or may significantly affect the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial years.
This information is provided by RNS
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