Final Results

17 October 2013

AIM: CHL

CHURCHILL MINING PLC

("Churchill" or "the Company")

Full Year Results for the 12 Months ended 30 June 2013

Churchill Mining (AIM: CHL) reports its full year results for the 12 months ended 30 June 2013.

Chairman's Statement

Dear Shareholder,

I present Churchill Mining Plc's ("Churchill" or the "Company") Full Year Report for the 12 months ended 30 June 2013.

During the year the Company continued actively to seek recovery of shareholder value by progressing the international arbitration against the Republic of Indonesia ("ROI") at the International Centre for Settlement of Investment Disputes ("ICSID") in Washington DC (the "Churchill Arbitration").

Churchill's Australian subsidiary Planet Mining Pty Ltd ("Planet"), which via its 5% shareholding in PT Indonesia Coal Development also held an interest in the East Kutai Coal Project, filed a separate arbitration at the ICSID against the ROI pursuant to the Australia-Indonesia Bilateral Investment Treaty (the "Planet Arbitration"). The Churchill Arbitration and Planet Arbitration have subsequently been consolidated into a single proceeding.

As with the Churchill Arbitration, the claims by Planet were preceded by attempts to negotiate a settlement with the ROI (as both the UK/Indonesia and the Australia/Indonesia Investment Treaties require), but the ROI has not shown any interest in engaging in discussions.

Churchill and Planet have filed their Memorials setting out their case against ROI supported by witness statements and expert and documentary evidence. Key elements within the Memorial include:-

· The ROI initially supported and encouraged Churchill/Planet to invest in the East Kutai Coal Project;

· Churchill/Planet invested in the ROI in compliance with applicable laws and regulations;

· After Churchill/Planet's discovery of substantial coal deposits, the ROI took a series of unlawful actions that resulted in the destruction of Churchill/Planet's valuable investment;

· The actions of the ROI constitute clear violations of its obligations under the Bilateral Investment Treaties with the United Kingdom and Australia; and

· Churchill/Planet presently quantify their losses and seek damages in the amount of USD 1,054 million (excluding interest) based on an industry-standard Discounted Cash Flow analysis.

In May 2013 a hearing took place with the Arbitration Tribunal in Singapore at which the ROI challenged the ICSID's jurisdiction to hear Churchill's and Planet's claims. Churchill and Planet were represented by the international law firm Quinn Emanuel Urquhart & Sullivan, LLP. Members of the Churchill board were also in attendance at the hearing. There is no fixed date for the Arbitral Tribunal to deliver its decision on jurisdiction.

Aside from a minority interest in ASX listed Spitfire Resources Limited ("Spitfire") and a direct minority interest in some tenements in Western Australia, Churchill has no business interests or activities other than its and Planet's claims against the ROI, which remain Churchill's principal activity and focus.

On behalf of the Board, I would like to thank shareholders, staff and my fellow board members for their continued support. We will update shareholders on the progress of the Arbitrations during the course of the next year.

David Quinlivan

Chairman

17 October 2013

For further information, please contact:

REVIEW OF OPERATIONS AND FINANCE

COMPANY BACKGROUND

Churchill Mining Plc ("Churchill" or "the Company") listed on AIM in April 2005. Churchill's growth path accelerated following the discovery of a world-class thermal coal deposit (the East Kutai Coal Project "EKCP") in the East Kutai Regency of Kalimantan, Indonesia, through an intensive and targeted exploration program. 

Churchill's investments and operations culminated in the completion of a feasibility study in readiness for funding and the commencement of construction of the necessary infrastructure to support the exploitation of the coal resource. The Company's operations were subsequently halted by a decision by the East Kutai Regent revoking the licences to mine held by Churchill's Indonesian partners, the Ridlatama group of companies ("Ridlatama"). The East Kutai Regent's decision was challenged before the Indonesian courts, resulting initially in a negative ruling from the Samarinda Administrative Tribunal that upheld the East Kutai Regent's decision to revoke Ridlatama's licences. The Samarinda Administrative Tribunal's decision was appealed, first to the Administrative High Court in Jakarta and then to the Supreme Court of Indonesia, but both of those appeals were unsuccessful.

FILING OF INTERNATIONAL ARBITRATION CLAIM

In May 2012 Churchill filed a Request for Arbitration at the International Centre for Settlement of Investment Disputes ("ICSID") against the Republic of Indonesia ("ROI") alleging breaches by ROI of ROI's obligations under the UK-Indonesia Bilateral Investment Treaty. In addition, Churchill's Australian subsidiary, Planet Mining Pty Ltd ("Planet"), also filed a Request for Arbitration at ICSID against the ROI pursuant to the Australia-Indonesia Bilateral Investment Treaty. The Churchill and Planet arbitrations have subsequently been consolidated into a single proceeding.

During May 2013 a hearing took place to determine whether the Arbitral Tribunal has jurisdiction to hear Churchill's and Planet's claims, following a challenge to jurisdiction made by ROI. At the date of this report, ICSID's decision on jurisdiction has not been received.

RIDLATAMA GROUP

Two years ago the Company's Indonesian subsidiary, PT Indonesia Coal Development ("ICD"), commenced arbitration proceedings in Singapore under the rules of the International Chamber of Commerce against members of Ridlatama for their alleged breaches of Investor's Agreements entered into between Ridlatama and ICD. During this past year, ICD and Ridlatama agreed to withdraw these proceedings. In addition, a separate claim by Ridlatama at the Singapore International Arbitration Centre was also withdrawn.

Separately, In November 2011, ICD received notices that members of Ridlatama had filed two unlawful act claims in the South Jakarta District Court seeking orders that ICD's 75% interest in PT Ridlatama Tambang Mineral and PT Ridlatama Trade Powerindo, held through PT Techno Coal Utama Prima ("TCUP"), be declared null and void. In November 2012 the South Jakarta District Court issued a decision in favour of Ridlatama. ICD/TCUP has appealed this decision to the Jakarta High Court. A hearing to determine this appeal has not yet taken place. 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 US$2.01 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 US$1.49 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.

OTHER ASSETS

In addition to the EKCP, Churchill continued to maintain its direct interest in the original South Woodie Woodie Manganese Project in Western Australia, with the balance held by ASX listed Spitfire Resources Limited (ASX: SPI). During the year, the Group's direct shareholding in Spitfire Resources Limited was diluted from 15.99% to 9.80% by additional equity issues by Spitfire in which the Company did not participate.

OUTLOOK

The Company is awaiting the ICSID Tribunal's decision on the jurisdiction objections raised by the ROI. Should Churchill/Planet be successful in the jurisdiction challenge, the proceedings will continue to a merits hearing.

The cash position at 30 June 2013 of US$4.8 million is anticipated to be sufficient for the Company and Planet to continue Arbitrations over the coming year as Churchill seeks to recover value for shareholders.

CORPORATE

FINANCIAL SUMMARY

Results of Operations

The Group incurred a loss for the year attributable to equity shareholders of the parent of US$11,601,978 compared to a loss of US$10,443,956 for the previous year. The basic loss per ordinary share for the year was 9.45c compared with the loss per share of 8.61c for the previous year.

Significant expenditure items during the period include:

· Legal and professional fees of US$4.2 million (2012: US$2.64 million) incurred to progress the Arbitrations against the ROI;

· Impairment of the carrying value of the proposed EKCP Port Land of US$1.76 million;

· Impairment of the carrying value of financial assets of US$2.26 million;

· Consulting, directors and professional fees of US$0.8 million (2012: US$2.18 million);

· Public relations and media outreach programs of US$0.62 million (2012: US$1.26 million).

The balance of operating expenditure is in line with the Company's expectations and resources allocated to progressing the ICSID legal proceedings.

Selected Annual Information

The Group's statement of financial position at 30 June 2013 and comparatives at 30 June 2012 and 30 June 2011 are summarised as follows:

Liquidity & Capital

The Group began the year with US$12 million in cash and ended the year with US$4.8 million cash holdings. Total operating cash expenditure was US$7.01 million (2012: US$8.97 million). During the year the Company made advances to subsidiaries of US$1,343,335. The Group has engaged experienced lawyers Quinn Emanuel Urquhart & Sullivan in connection with the international arbitration proceedings against the ROI on a fixed fee basis. The Group remains sufficiently funded to pursue the international arbitration at ICSID against the ROI which has now become the main focus for the Group. 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2013

The accompanying notes form part of these financial statements.

STATEMENTS OF FINANCIAL POSITION

As at 30 June 2013

The accompanying notes form part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 17 October 2013 and were signed on its behalf by:

David Quinlivan

Director

STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2013

The accompanying notes form part of these financial statements.

The accompanying notes form part of these financial statements.

STATEMENT OF CASH FLOWS

For the year ended 30 June 2013

The accompanying notes form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

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 2012 are reflected in these financial statements.

Given the year end cash balance of $4.8m, the Directors confirm that, after making enquiries, they have a reasonable expectation that the Group has adequate resources to continue its operational existence and for this reason, they continue to adopt the going concern basis in preparing these accounts.

NEW STANDARDS AND INTERPRETATIONS APPLIED

The IASB has issued the following new standards, amendments to published standards and interpretations to existing standards with effective dates on or prior to 1 July 2012 which have been adopted by the Group for the first time this year and which have not had a material effect:

New standards and interpretations not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning after 1 July 2012 or later periods and which the Group has decided not to adopt early or which are yet to be EU endorsed. These are:

* Not yet adopted by the European Union.

The above standards are not expected to have a significant impact on the Group.

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

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. 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.

Business combinations

The consolidated financial statements incorporate the results of the business combinations using the acquisition method of accounting.

In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained.

Associates

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. The Group's share of post-acquisition profits and losses is recognised in the consolidated statement of comprehensive income, except that losses in excess of the Group's investment in the associate are not recognised unless there is an obligation to make good those losses.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Any premium paid for an associate above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. The carrying amount of investment in an associate is subject to impairment.Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

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.

The consolidated financial information is presented in US dollars ($), which is the functional and presentation currency of the Company. On consolidation, the results of overseas operations are translated into US$ 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 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 of the following categories, depending on the purpose for which the asset was acquired. The Group's and Company's accounting policy for each category is as follows:

(i) Available-for-sale

Financial assets designated as available for sale are initially recognised at fair value, being the consideration given including, where appropriate, acquisition costs associated with the investment. The Group's investments in quoted shares are designated as 'available-for-sale' financial assets and are included in non-current assets. Such investments are subsequently carried at fair value, with any gains or losses arising from changes in fair value being recognised in equity. Financial assets are derecognised when the rights to receive cashflows from the investments have expired or have been transferred and the Group has substantially transferred all risks and rewards of ownership. Fair value is based on market value at the date of the Statement of Financial Position.

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of a financial asset classified as available-for-sale, a significant or prolonged decline in the fair value of the financial asset below its cost is considered an indicator that the financial asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on financial assets which are equity instruments are not reversed through the income statement.

(ii) 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.

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.

Fair value measurement hierarchy

IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. The fair value hierarchy has the following levels:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

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.

Exploration, evaluation and development expenditure

In line with IFRS 6 'Exploration for and Evaluation of Mineral Resources', exploration and evaluation expenditure can be capitalised as an intangible asset in respect of each area of interest. This expenditure includes:

· Acquisition of rights to explore;

· Topographical, geological, geochemical and geophysical studies;

· Exploratory drilling;

· Trenching;

· Sampling; and

· Activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.

Capitalisation of exploration and evaluation expenditure commences on the acquisition of a right to explore a specific area or evaluate a mineral resource, either by means of the acquisition of an exploration licence or an option to a mineral right and ceases either on the acquisition of a mining lease or mineral production right in respect of that specific area or mineral resource or the making of a decision by management of the Group as to the technical feasibility or economic viability of conducting mining operations in that specific area or extracting the mineral resource being evaluated.

Where management of the Group decides that it is not technically feasible or economically viable to conduct mining operations in a specific area or to extract the mineral resource being evaluated, then capitalised exploration and evaluation expenditure attributable to the exploration and evaluation of that specific area or mineral resource, as the case may be, capitalised up to the date of making such a decision, is written off and any further exploration and evaluation expenditure incurred in respect thereof is charged to profit or loss as and when incurred. Management reviews the levels of capitalised exploration and evaluation expenditure for each area of interest on a regular basis and where deemed appropriate either continues to carry forward costs or impair expenditure based on management estimates of recoverable values for each area of interest.

Assets used exclusively in activities in respect of the exploration for and evaluation of mineral resources are classified as property, plant and equipment. Depreciation charges reflecting the consumption of these assets in carrying out such activities are included in exploration and evaluation expenditure.

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.

Leased assets

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability.

Lease payments are analysed between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis. The land and buildings elements of property leases are considered separately for the purposes of lease classification.

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

NOTE 3: LOSS FROM OPERATIONS

NOTE 4: SALARIES

Key management consists of the Board of Directors, the Company Secretary/Chief Financial Officer and the Community Development Manager (part-year).

The Company provides Directors' & Officers' liability insurance at a cost of $38,821 (2012: $40,278). This cost is not included in the above table.

NOTE 5: TAXATION ON LOSS FOR THE YEAR

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 domestic tax losses being $18,176,000 (2012: $18,897,000) 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:

*Estimate based on the actual loss for 2012/2013

NOTE 6: LOSS PER SHARE

NOTE 7: PARENT COMPANY LOSS FOR THE FINANCIAL YEAR

The Company has taken advantage of the exemption as allowed by Section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these financial statements. The Company loss for the year was $9,335,223 (2012: Loss $11,424,707). In addition the amount of $6,827,771 in the Merger Reserve was transferred to Retained Deficit during the financial year.

NOTE 8: OTHER FINANCIAL ASSETS

Spitfire Resources Limited ("Spitfire") shares are listed on the Australian Securities Exchange ("ASX") and are classified as a listed investment. The fair value of the investment using the closing prices at 30 June 2013 of A$0.012 (US$0.011) (2012: A$0.079 (US$0.080) was $273,984 (2012: $2,006,403). Based on the sustained deterioration in equity markets in the Resources sector, the Group considers that the decline in Spitfire's share price represents a diminution in value and therefore an impairment has been recorded in the Statement of Comprehensive Income.

NOTE 9: 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 budgeted reporting provided to the board.

NOTE 10: OTHER RECEIVABLES

The Group's exposure to credit and currency risk related to other receivables is disclosed in Note 21. Contingencies in relation to the recovery of related party receivables are detailed in Note 23.

NOTE 11: PROPERTY, PLANT AND EQUIPMENT

* During the year a review of the Freehold land was undertaken. Management are of the opinion that at present, it is unlikely that the carrying value of the land will be realised through a sale or via generation of future economic benefits. Therefore, the cost of the land has been impaired in full.

NOTE 12: INTANGIBLE ASSETS

* During the year the Group incurred $145,750 in staff redundancies and costs associated with ceasing operations for the East Kutai Coal Project. This amount was impaired in full during the year.

** After a review by management, an amount of US$225,445 which relates to the Group's 20% interest in the original South Woodie Woodie Manganese Project has been impaired in full. The Group is "free-carried" on its share of exploration costs in respect of its 20% interest until a decision to mine is made in relation to the project.

NOTE 13: INVESTMENT IN SUBSIDIARIES

The principal subsidiaries of Churchill Mining Plc, all of which have been included in these consolidated financial statements, are as follows:

*Undertaking held indirectly by the Company.

Churchill Mining Plc owns 95% of the shares in PT Indonesia Coal Development with the balance (5%) held by Planet Mining Proprietary Ltd. 

Movements of investments in subsidiaries during the period are:

The total of subsidiary loans at 30 June 2013 is $48,979,805 (2012: $47,851,915), the recovery of which has been impaired in full. The intercompany loans are unsecured, non-interest bearing and repayable on demand. Following impairment of the underlying assets held within the relevant subsidiaries, Churchill Mining Plc has accordingly reduced the carrying value of investments held at a parent company level.

NOTE 14: TRADE AND OTHER PAYABLES

The Group's exposure to credit and currency risk related to trade and other payables is disclosed in Note 21.

NOTE 15: LOANS AND BORROWINGS