Cloudified Holdings Limited Regulatory News (CHL)

CHURCHILL MINING PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015

22 March 2016

Introduction

During the half year the Company continued to actively pursue its US$1.315 billion (plus interest) claim against the Republic of Indonesia ("Indonesia") for unlawful measures taken by Indonesia against Churchill's interests in the East Kutai Coal Project ("EKCP").

The unlawful measures taken by Indonesia include Indonesia's revocation (without justification, compensation or due process) of the mining licences that underpinned the EKCP (the "EKCP licences"), which were held by Churchill and its local partner in the project, the Ridlatama Group.

At the time the EKCP licences were illegally revoked, Churchill and its wholly owned subsidiary Planet Mining Pty Ltd's ("Planet") held a 75% interest in the EKCP. The area covered by the EKCP licences (i.e. the EKCP) contained a JORC Resource of 2.8 billion tonnes and incorporated a JORC Reserve of 980 million tonnes.

Churchill brings its claims against Indonesia under the United Kingdom-Indonesia Bilateral Investment Treaty (the "UK BIT"); Planet's claim - which is being run in consolidation with Churchill's case - is brought under the Australia-Indonesia Bilateral Investment Treaty (the "Australia BIT").

The consolidated Churchill/Planet arbitration is being conducted at the International Centre for Settlement of Investment Disputes ("ICSID"). The arbitral tribunal hearing the case comprises highly-credentialed arbitrators: Professor Gabrielle Kaufmann-Kohler (Chairperson) from Switzerland, Professor Albert Jan van den Berg from the Netherlands and Judge Michael Hwang SC from Singapore.

In legal terms, Churchill and Planet's causes of action are brought primarily under the expropriation and Fair and Equitable Treatment ("FET") provisions of the respective treaties.

Developments in the ICSID arbitration

On 25 September 2014, Indonesia filed an "Application for Dismissal of Claimants Claims" based on Forged and Fabricated Ridlatama Mining Licences" (the "Forgery Dismissal Application").

In the Forgery Dismissal Application, Indonesia's main contentions were as follows:

· The Ridlatama licences were never the property of either Ridlatama or Churchill;

· The areas of land covered by the Ridlatama licences were at all times the property of companies within the Nusantara Group;

· Ridlatama forged the licences for General Survey and Exploration (and related approvals and recommendations) as part of a "massive, systematic and sophisticated scheme to defraud the Republic";

· Ridlatama used its forged general survey and exploration licences to "trick" the Regent of East Kutai into signing and issuing the exploitation licences for the EKCP;

· By its conduct Ridlatama stole from the Nusantara Group property; and

· Churchill and Planet's claims should be dismissed because they arise out of measures allegedly taken by Indonesia against investments that themselves depend entirely on the rights conveyed by the Ridlatama licences.

(i) Document Authenticity Hearing

Pursuant to ICSID Procedural Order 15, Indonesia's Forgery Dismissal Application was heard in Singapore between 3 and 10 August 2015. Churchill and Planet were represented by (the international law firm) Clifford Chance LLP with members of the Churchill board and management also in attendance at the hearing.

The conduct of the hearing included fact witnesses, oral presentations and expert witnesses. All of the witnesses for Churchill whom Indonesia requested for cross-examination attended the hearing. With the exception of the very person responsible for the revocation of the Ridlatama mining licences in which Churchill held a 75% interest - former Regent of East Kutai, Mr Isran Noor - all of the witnesses for Indonesia whom Churchill requested for cross-examination attended the hearing.

Mr Noor refused to attend the hearing. In view of his refusal to attend, the Tribunal ordered that Mr Noor's witness statement be struck out and all his evidence disregarded.

(ii) Post- Hearing Briefs

Shortly after the conclusion of the August hearing on document authenticity, the Tribunal ordered the parties to file "Post-Hearing Briefs" answering certain questions.

In accordance with the Tribunal's orders, Churchill and Planet filed the first of their two Post-Hearing Briefs on 20 October 2015 and the second of their two Post Hearing Briefs (being a reply to Indonesia's first round Post Hearing Brief) on 17 November 2015.

Recapping the two Post Hearing Briefs submitted by the Company.

Post Hearing Brief No 1

Churchill's submission focused on:

· the very large and diverse body of evidence showing that the allegedly forged mining licenses were in fact authorized by the Regency of East Kutai;

· the legal and factual consequences of Indonesia's refusals and failures to provide many documents ordered by the Tribunal (for which Churchill has asked that the Tribunal to draw a number of adverse inferences against Indonesia); and

· the consequences of Indonesia's failure to call as witnesses a number of key Regency officials who were directly involved in the events in question.

In responding to the specific question posed by the ICSID Tribunal as to the consequences of the refusal of the former Regent of East Kutai, Isran Noor, to attend the hearing, Churchill has submitted that without Mr Noor's testimony there is no clear or convincing evidence to support, amongst other things, Indonesia's case that the exploitation licenses were the product of deceit (let alone deceit by Churchill or Ridlatama).

In its first Post Hearing Brief, Indonesia on the other hand did a complete volte-face and made fresh allegations against Churchill which were not part of the case it presented at the August hearing.

In June 2015, by way of an RNS announcement the Company noted the fact that Indonesia no longer alleged that Churchill participated in the alleged scheme to defraud Indonesia. In its first Post Hearing Brief however, and in spite of the fact that on two prior occasions Indonesia represented that it was not and had never accused Churchill or its officers of forgery or fraud, Indonesia once again changed its case such that it once again made allegations of forgery and fraud against Churchill (rather than Ridlatama alone).

These new allegations by Indonesia were not part of the case Indonesia presented at the August Document Authenticity hearing and focused on a former Company executive who was not present at the August hearing and who Indonesia did not request for cross examination.

Post Hearing Brief No 2

Churchill responded to Indonesia's new allegations by:

· asking the Tribunal to declare that Indonesia is barred (as a consequence of its prior representations to the contrary) from changing its case in this respect; and

· noting (amongst other things) that despite many years of police investigations (the records of which Indonesia was ordered to produce, but refused to do so) not one Churchill or Ridlatama employee or officer has ever been charged in connection with this matter.

For the avoidance of doubt, Churchill and Planet:

· expressly deny that they (or any of their officers or directors) have ever engaged in any of the acts of criminality described by Indonesia; and

· dispute Indonesia's allegations that Ridlatama engaged in any of the acts of criminality described by Indonesia.

(iii) Submission on Costs

In accordance with ICSID Procedural Order No. 20, Churchill filed it submission on costs on 11 December 2015 and its reply to Indonesia's submission on costs on 23 December 2015.

Fundraising

On 2 October 2015, the Company raised £750,000 before expenses through a placing and subscription of 4,166,664 new Ordinary Shares of 1p each at a price of 18p per share together with the issue of warrants over Ordinary Shares on the basis of one warrant for every two Shares exercisable at a price of 27p per Ordinary Share expiring on 31 October 2018.

Events Post 31 December 2015

The following significant events have occurred post 31 December 2015.

Fundraising

On 11th March 2016, the Company raised £800,000 before expenses through a placing of 7,272,727 new Ordinary Shares of 1p each at a price of 11p per share 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 20p per Ordinary Share expiring on 31 March 2019.

Disciplinary Action

During March 2016, a hearing was held in relation to the Statement of Case served on the Company by the London Stock Exchange ("Exchange") in July 2015 alleging breaches of AIM rules 11 and 31 during the period from August 2010 to March 2011. The Company disputes the contentions raised by the Exchange and is defending this action. The Company has maintained the £90,000 (US$133,000) provision made in the accounts in relation to any potential fine as a matter of prudence however we note that the ultimate level of any fine may be materially higher or materially lower than the current provision.

Financial Summary

The loss for the half year was $1,858,975 or 1.39c per ordinary share (half year Dec 2014: $1,055,727 or 0.85c per share and 12 months to June 2015: $2,792,570 or 2.24c per share). Other administrative expenses totalled $1,909,428 (Dec 2014: $933,067 and June 2015: $2,553,370).

Significant expenditure items during the period include:

· Legal and professional fees of $1,005,219 (Dec 2014: $228,023 and June 2015: $1,175,834) reflecting ongoing expenditure for the Company's arbitral claim against the Republic of Indonesia and the costs of preparing its defence to the London Stock Exchange's Statement of Claim as referred to in the Company's 2015 Annual Report.

· Consulting, directors, staff and professional fees of $598,434 (Dec 2014: $218,916 and June 2015: $739,814).

The Groups Net cash from operating activities for the period ending 31 December 2015 with comparatives for the half year 31 December 2014 and 12 months to 30 June 2015 are summarised below:

The Group's statement of financial position as at 31 December 2015 with comparatives at 31 December 2014 and 30 June 2015 are summarised below:

I would like to conclude by thanking our shareholders, my fellow Directors and our staff for their continued support and patience and can assure you the Board continues actively to seek a suitable outcome in the ICSID proceedings for shareholders.

David Quinlivan

Chairman

22 March 2016

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2015 which comprises of consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2015 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants and Registered Auditors

Location

United Kingdom

Date 22 March 2016

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 December 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 31 December 2015

NOTE 1: BASIS OF PREPARATION

The consolidated interim financial statements of the Group for the six months ended 31 December 2015 which comprise the Company and its subsidiaries (together referred to as the "Group") were approved by the Board.  The interim results have not been audited, but were subject of an independent review carried out by the Company's auditors BDO LLP.

As at 31 December 2015 the group has cash funds of $1.29m. On 11 March 2016, the Company raised additional funds of £800,000 before expenses through a placing and subscription of 7,272,727 new Ordinary Shares. As detailed in the Chairman's Statement, the ICSID litigation is progressing and whilst the group is fully funded for more than 12 months from the sign-off date of this report, additional funding will be needed in the form of a further equity raise and/or debt funding. The group remains fully committed to its ICSID litigation against the Republic of Indonesia. The group is in discussions with a number of interested parties and the Directors have a reasonable expectation that the group will have access to the necessary resources to continue its pursuit of the ICSID litigation and for this reason, they continue to adopt the going concern basis in preparing these accounts.

The interim financial information has been prepared on the basis of a going concern and in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union.

The accounts have been prepared in accordance with the accounting policies that are consistent with the June 2015 Report and Accounts and that are expected to be applied in the Report and Accounts of Churchill Mining Plc for the year ended 30 June 2016. The financial information for the six months to 31 December 2015 does not constitute statutory accounts of the Company or the Group. The statutory accounts for the year ended 30 June 2015 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

The consolidated financial statements incorporate the results of Churchill Mining Plc and its subsidiary undertakings as at 31 December 2015. The corresponding amounts are for the year ended 30 June 2015 and the 6 month period ended 31 December 2014.

NOTE 2: LOSS PER SHARE

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

NOTE 3: NOTES TO THE CASH FLOW STATEMENT

NOTE 4: TAXATION

No taxation has been provided due to losses in the period. No deferred tax asset has been recognised for past or current losses as the recoverability of any such asset is not considered probable in the foreseeable future.

NOTE 5: EVENTS AFTER THE REPORTING PERIOD

On the 6th January 2016, the Company issued 510,963 new ordinary shares of 1 pence at a deemed issue price of 28.66p per share. The shares were issued to Directors and Executives who had agreed to subscribe for fully paid ordinary shares in lieu of receiving cash in respect of fees payable for the 2015 year.

On 11th March 2016, the Company raised £800,000 before expenses through a placing of 7,272,727 new Ordinary Shares of 1p each at a price of 11p per share 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 20p per Ordinary Share expiring on 31 March 2019.

NOTE 6: CONTINGENCIES

The Group is involved in various litigation disputes including an International arbitration claim against the Republic of Indonesia and defending a statement of case served on the company by the London Stock Exchange alleging breaches of AIM rules 11 and 31 during the period from August 2010 to March 2011. The Company disputes the contentions raised by the Exchange and is defending this action. The Company has maintained the £90,000 (US$133,000) provision made in the accounts in relation to any potential fine as a matter of prudence however we note that the ultimate level of any fine may be materially higher or materially lower than the current provision.

Further detail can be referenced in the Chairman's Statement. As at the date of this report the disclosure of any further information about these matters would be prejudicial to the interests of the Group.

NOTE 7: FORWARD LOOKING STATEMENTS

This report contains certain forward looking statements, which include assumptions with respect to future plans and results. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties which are beyond the Company's control. Please refer to the Company's Annual Report available from the Company's web site for a list of risk factors. The Company's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this report are made as at the date of this report.

NOTE 8: INTERIM REPORT

Copies of the interim report for the six months ended 31 December 2015 will be available from the offices of Churchill Mining PLC, Unit1/346 Barker Road Street Subiaco, WA, 6008 and on the Company's website www.churchillmining.com 

For further information, please contact: