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CHL - Churchill Mining News Story

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Energy
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Micro Cap
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Position in Universe th / 1826

Churchill Mining plc - Final Results - Part 3

Tue 17th November, 2015 11:15am
- 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
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