REG - Churchill Mining plc - Final Results <Origin Href="QuoteRef">CHLL.L</Origin> - Part 3
17/11/2015 11:11
- Part 3: For the preceding part double click ID:nRSQ9916Fb
(2,043) (238) 232 (144)
Cash flow from operating activities (2,042) (2,355) (1,867) (2,057)
NOTE 19: 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
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current financial assets classified as loans and receivables
Other receivables 97 2,543 86 51
Cash and cash equivalents 2,050 3,016 2,029 2,993
Total current financial assets 2,147 5,559 2,115 3,044
Non-current financial assets classified as loans and receivables
Intergroup receivables - - 49,202 49,040
Impairment for non-recovery - - (49,202) (49,040)
Total financial assets 2,147 5,559 2,115 3,044
Categories of financial liabilities
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Current financial liabilities measured at amortised cost
Trade and other payables 777 739 769 681
Loans and borrowings - 2,483 - -
Total current financial liabilities 777 3,222 769 681
Total financial liabilities 777 3,222 769 681
At the year end, the Group had a cash balance of US$2,049,728 (2014: US$3,015,620) which was made up as follows:
Consolidated Company
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Great British Pound 396 1,355 396 1,355
United States Dollar 1,225 1,429 1,209 1,407
Australian Dollar 424 231 424 231
Indonesian Rupiah 5 1 - -
2,050 3,016 2,029 2,993
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
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Interest from bank deposits 1 2 1 2
Total interest from bank deposits 1 2 1 2
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
2015 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 777 777 777 -
777 777 777 -
Company Carrying amount Contractual cash flows 6 months or less Greater than 6 months
2015 $'000 $'000 $'000 $'000
Current financial liabilities
Trade and other payables 769 769 769 -
769 769 769 -
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 -
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.
The Group holds its cash balances across several bank accounts. The Group 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 2015 2014
Carrying value Maximum exposure Carrying value Maximum exposure
$'000 $'000 $'000 $'000
Current assets
Cash and cash equivalents 2,050 2,050 3,016 3,016
Other receivables 97 97 2,543 2,543
2,147 2,147 5,559 5,559
Company 2015 2014
Carrying value Maximum exposure Carrying value Maximum exposure
$'000 $'000 $'000 $'000
Current assets
Cash and cash equivalents 2,029 2,029 2,933 2,933
Non - current assets
Loans to subsidiaries 49,202 49,202 49,040 49,040
Impairment for non-recovery (49,202) (49,202) (49,040) (49,040)
2,029 2,029 2,933 2,933
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 2015 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
2015 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 396 - - - 396
Australian Dollar 409 15 - - 424
United States Dollar - 1,225 - 96 1,321
Indonesian Rupiah 5 - - - 5
810 1,240 - 96 2,146
Weighted average interest rate 0.25% 0.25%
Financial liabilities
Great British Pound - - - 96 96
Australian Dollar - - - 140 140
United States Dollar - - - 685 685
Indonesian Rupiah - - - - -
- - - 921 921
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
2015 $'000 $'000 $'000 $'000 $'000
Financial assets
Great British Pound 396 - - - 396
Australian Dollar 495 15 - - 510
United States Dollar - 1,209 - 49,202 50,411
Impairment for non-recovery - - - (49,202) (49,202)
891 1,224 - - 2,115
Weighted average interest rate 0.25% 0.25%
Financial liabilities
Great British Pound - - - 96 96
Australian Dollar - - - 140 140
United States Dollar - - - 677 677
- - - 913 913
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 1430 - 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
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 2015, 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
2015 2014 2015 2014
$'000 $'000 $'000 $'000
Change in profit
- Increase in interest rate by 1% 5 13 5 13
- Decrease in interest rate by 1% (1) (2) (1) (2)
Change in equity
- Increase in interest rate by 1% 5 13 5 13
- Decrease in interest rate by 1% (1) (2) (1) (2)
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 and raises its equity finance 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 2014/2015 0.6477 1.2194 12,549
At 30 June 2015 0.6234 1.3330 13,332
Average for 2013/2014 0.6156 1.0895 11,374
At 30 June 2014 0.5866 1.0594 11,990
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 2015 421 417 3 841
At 30 June 2014 204 1,374 11 1,589
A 10% strengthening of the US dollar against the Australian dollar at 30 June would have reduced loss by $179,750 (2014:
reduced loss by $2,921) and reduced equity by $179,750 (2014: $34,690). 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 $35,986 (2014:
$123,184) and decrease equity by $35,986 (2014: $123,184). 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.
The Parent Company held US$1.2 million at the year-end which is translated to Company's function currency (Pound Sterling-
GBP). A 10% weakening of the US dollar against GBP at 30 June would have increased the Company loss by $119,951 and
decrease equity by $119,951. A 10% increase against GBP at 30 June would have had approximately equivalent but opposite
effects on the above currencies to the amount of $119,951, 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 any 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 20: RELATED PARTY TRANSACTIONS
The Group had the following material transactions (excluding Directors' salaries and fees) with related parties during the
year ended 30 June 2015.
a) During the year the amount of US$1,114,424 receivable from to Ms Florita was impaired in full. The Group also
reassessed the loan amount payable to Ms Florita of US$1,178,743 (2014: US$ 1,312,975) to nil. Ms Florita is the partner
of Mr Mudjiantoro who are both related parties of Churchill by way of their Directorships in Indonesian subsidiary
companies.
b) During the year the amount of US$1,114,424 (2014: US$1,670,983) receivable from Ms Ani Setiawan was impaired in full.
The Group also reassessed the loan amount payable to Ms Setiawan of US$1,050,105 (2014: US$ 1,169,698) to nil. Ani
Setiawan 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 Key Management personnel disclosures are included in Note 4 to the financial statements.
NOTE 21: 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 with that decision still pending. The decision of the South Jakarta District Court is therefore not final and
binding. During the year as a matter of prudence, the Group impaired the remaining receivable of $2,228,848 and also
reassessed the loan payable of $2,228,848 to nil. It remains the Group's position that this receivable and payable are
able to be offset in the future if required.
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 22: EVENTS AFTER THE REPORTING PERIOD
On the 25th August 2015 Mr Kiran Vadlamani was appointed as a Director of the Company.
On the 2nd October 2015 the Company raised £750,000 before expenses through a placing and subscription of 4,166,664 new
Ordinary Shares of 1p each (the "Placing Shares") at a price of 18p per share (the "Placing") together with the issue of
warrants over Ordinary Shares on the basis of one warrant for every two Placing Shares exercisable at a price of 27p per
Ordinary Share expiring on 31 October 2018 (the "Placing Warrants"). The Placing Shares represented approximately 3 per
cent of the enlarged issued share capital of the Company. In connection with the Placing, the Company granted Northland
Capital Partners Limited warrants to subscribe for 70,739 new Ordinary Shares on the same terms as the Placing Warrants.
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
The company news service from the London Stock Exchange