Westmount Engy. Regulatory News (WTE)

14 Oct 2005 13:20

Westmount Energy Limited17 October 2005 14 October 2005 CONTACTS: Westmount Energy Limited Tel: 01534 814209 Derek G. Williams, Chairman Oriel Securities Limited Tel: 020 7710 7600 Andrew EdwardsScott Richardson Brown Merlin Tel: 020 7653 6620 Paul DownesTom Randell WESTMOUNT ENERGY LIMITED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2005 The Board of Westmount Energy Limited ("Westmount" or "the Company") todayannounces the preliminary results of the Company and its subsidiary ("theGroup") for the year to 30 June 2005. Highlights are as follows: • Turnover of £137,925 (2004: £137,092). • Profit after tax of £461,362 (2004: £6,549,225). • Basic and diluted earnings per share of 3.07p (2004: 45.62p). • The net profit for the year ended 30 June 2005 is after crediting profits of £639,751 realised on the disposal of investments (2004: £123,931). The net profit for the year ended 30 June 2004 also reflects the surplus arising on the sale of the Company's wholly owned subsidiary, Westmount Resources Limited, amounting to £6,635,500. • The indicated market value on 30 June 2005 of the Company's two AIM quoted investments, Sterling Energy plc ("Sterling") and Desire Petroleum plc together with the indicated value of the Company's unquoted investment, Eclipse Energy Company Limited ("Eclipse") based upon the subscription price of a recent share placing of Eclipse, totalled £16,993,750, compared with a carrying book value of £9,482,017, indicating an unrealised gross surplus of £7,511,733 at 30 June 2005. Profits are only brought to account when an investment is sold. • Since the Company was introduced to the AIM market in 1995 the directors have concentrated their efforts in securing capital growth for shareholders and as a consequence have not been in a position to recommend the payment of dividends. It has remained the directors' intention, however, to return capital to shareholders as and when any substantial profits are realised upon the sale of major assets for cash. Following the realisation of its North Sea interests, announced on 18 August2005 and the Sterling share sale, announced on 30 September 2005, the Companynow has approximately £9,000,000 of available funds in cash. The Board isexamining ways to return funds to shareholders, whilst retaining the flexibilityto make further investments. Further details of such arrangements will beannounced in due course. Commenting on the Company's outlook, Mr Derek Williams, Chairman, stated: "The Board of Westmount looks forward to the further development of the growthin value of the Company's investments over the coming months for the benefit ofshareholders." Attached: Full text of the Chairman's Review from the forthcoming Annual Report,plus Report of the Directors, Consolidated Profit and Loss Account, ConsolidatedBalance Sheet and Consolidated Cash Flow Statement. Note: Westmount Energy Limited is a Jersey, Channel Islands, based independentoil and gas investment company with its shares traded on AIM of which there arepresently 15,013,361 in issue, held by some 1,500 shareholders. There are nooutstanding share options. Copies of this Press Release will be available from the offices of OrielSecurities Limited, 125 Wood Street, London EC2V 7AN for a period of one monthfrom today's date. Registered in Jersey, Channel Islands. No. 53623 CHAIRMAN'S REVIEW The results for the year ended 30 June 2005 show profits before taxation of£485,867 (£461,362 after taxation) compared with profits before taxation of£6,552,701 (£6,549,225 after taxation) for the year ended 30 June 2004. Turnoverfor the year ended 30 June 2005, arising from the group's overriding royaltyinterest in the North Sea Buchan Oilfield, totalled £137,925 as compared with£137,092 for the previous year. For the year ended 30 June 2005 profits of £639,751 were included from thedisposal of investments during the year, compared with profits of £123,931 forthe previous year. The profits for the year ended 30 June 2004 also included theprofit arising from the disposal of the company's subsidiary undertaking,Westmount Resources Limited, including its indirect interests in West Africanassets to AIM quoted Sterling Energy plc ("Sterling") in exchange for 71,375,000fully paid ordinary shares of Sterling, which the company agreed to hold atleast until 25 September 2004. The indicated market value of the group's two AIM quoted investments, Sterlingand Desire Petroleum plc ("Desire"), together with the value of the group'sunquoted investment Eclipse Energy Company Limited ("Eclipse"), on the basis ofthe subscription price per share for the recent share issue of Eclipse, asreferred to further below, totalled £16,993,750 at 30 June 2005, compared with atotal carrying book value of £9,482,017 for these three investments at thatdate, indicating an unrealised gross surplus of £7,511,733. Profits are onlybrought to account when an investment is sold. There have been two significant events since the end of the financial year underreview: Firstly, as announced on 18 August 2005, the company's wholly owned subsidiary,Westmount Petroleum UK Limited has concluded an agreement with the payers of theoverriding royalty of 0.5% relating to its interest in Licence P241 North Seawhich includes the Buchan Oilfield. Future payment of royalty beyond the end ofthe first quarter of 2005 based on oil won and saved from the Licence area forthe overriding royalty was terminated by the payers making an immediate paymentin full settlement of any future royalty payable. After taking into account thecosts incurred in completing the transaction and allowing for United Kingdomcorporation tax payable in due course, the net return to the group to be takento profits in the financial year ending 30 June 2006 amounts to approximately£1.2 million. Secondly, on 30 September 2005 the company announced it had realised £8 million,before expenses from the sale of 40,000,000 ordinary shares of Sterling whichresulted in a net surplus of approximately £3.2 million, after taking intoaccount the cost of the shares in September 2003 and the expenses associatedwith the sale. It is the company's intention to hold the remaining 30,000,000ordinary shares of Sterling, representing 2.15% of Sterling's issued sharecapital, for the foreseeable future. The company has been pleased with the progress of Sterling and has everyconfidence in its prospects and management. However, our total holding of70,000,000 ordinary shares became too dominant in our portfolio, being almostequivalent to our entire market capitalisation. Our policy has always been to invest at an early stage in a companys'development and realise part of our financial investment when appropriate, as wehave in the past. Since the company was introduced to the AIM market in 1995 the directors haveconcentrated their efforts in securing capital growth for shareholders and as aconsequence have not been in a position to recommend the payment of dividends.Following the realisation of its North Sea interests and the Sterling share salethe company now has approximately £9 million of available funds in cash. TheBoard is examining ways to return funds to shareholders, whilst retaining theflexibility to make further investments. Further details of such arrangementswill be announced in due course. With regard to future investment policy, the company will continue to investselectively, mainly in the energy sector, in companies principally at an earlystage of their development, which the directors consider hold the possibilityfor considerable capital growth on the funds invested. This is where seedcapital can be provided for building up and enhancing assets prior to thosecompanies raising public funds for bringing forward and financing furtherdevelopment by the introduction to the market of their shares on a recognisedstock exchange. Set out below is further information on the company's investments: Desire Petroleum plc Since June 1996, the company has invested a total of £909,915 in the issuedshare capital of Desire for which it has acquired a total of 7,820,830 ordinaryshares. Desire's shares were admitted to AIM on 17 April 1998 and from June 1998the company has realised £996,442 from the sale of 2,329,830 ordinary shares.This has resulted in the return of all the funds invested along with a surpluscash flow of £86,527. The company has generated profits from the proceeds ofshares sold of £328,781, £50,211, £176,047, £24,365 and £204,140 respectively,in the five financial years ended 30 June 1998, 1999, 2000, 2002 and 2005,totalling £783,544. The company retains 5,500,000 ordinary shares representing2.51% of the issued share capital of Desire at 30 June 2005, with a carryingbook value of £697,017 equivalent to approximately 12.67p for each Desire shareheld. The middle market closing price on 30 June 2005 of a Desire share was40.25p. This shareholding provides the company with a significant indirectinvestment in the exploration of the North Falkland Basin, South Atlantic. Of the six wells drilled offshore in the North Falkland Basin in 1998, fiverecorded oil, or oil and gas, shows. The first phase of drilling hasdemonstrated that this basin contains a working hydrocarbon system. Desire holds a 100% interest in licences over tranches C, D, F, I and L in theNorth Falkland Basin. Rockhopper Exploration will earn up to a 15% interest intranches C and D by funding 30% of a three well drilling programme. In 2004 Desire acquired 804 square kilometres of 3D seismic data on tranches Cand D. Five major prospects have been identified in addition to two majorprospects mapped on the earlier 2D seismic data. Environmentally, the water isnot deep, 300-400 metres, and the weather is similar to the central North Sea.Heavy-duty deep-water rigs are not required to drill in the area. In addition,most of the targets are at reasonable depths, shallower than 3,000 metres. Desire raised £24.4 million by way of an open offer and share placing at 45p pershare in March 2005 to support a three well drilling programme on tranches C andD. The current worldwide rig market is very tight as a response to current highoil prices and Desire have not as yet been able to contract a suitable rig forthe three well programme. However, it is understood, essential work for theprogramme is progressing well in preparation for drilling in 2006. Eclipse Energy Company Limited By subscribing for 20% of the seed capital raised by Eclipse founded in February1999, the company acquired 130,000 ordinary shares at a subscription price of £1each in April 2000. The company also provided a secured loan facility. Thecompany has subscribed for a further 100,000 ordinary shares at a subscriptionprice of £5 each in satisfaction of the discharge of £500,000 of the outstandingloan, with effect from 31 December 2004. In addition the company subscribed for14,000 ordinary shares on 1 April 2005 at a subscription price of £7.50 pershare in satisfaction of the remainder of the loan outstanding. As a result thecompany now holds 244,000 ordinary shares of Eclipse, representing 13.96% of theissued share capital of Eclipse at a carrying book value of £735,000, being anaverage cost of approximately £3 per share. On 20 July 2005 Eclipse confirmed that it had completed a placing of new sharesat a price of £7.50 each to raise £4,950,000, before expenses. On 31 August 2005the shareholders of Eclipse approved a restructuring of the Eclipse group by theformation of a new public limited company, to be the holding company on a sharefor share basis. This to facilitate the ultimate intention of the board ofEclipse to apply for the shares of Eclipse to be admitted to the AIM market ofthe London Stock Exchange. Eclipse has developed an innovative concept for the hybrid production ofelectricity from offshore natural gas and wind resources. The first developmentof Eclipse is the Ormonde project located 10 kilometres offshoreBarrow-in-Furness, Cumbria, in the East Irish Sea. Eclipse operates theundeveloped Ormonde North and South gas fields located in blocks 113/28a and 113/29a held under licences P1032 and P1033. Eclipse announced on 13 July 2005 that it had submitted its EnvironmentalStatement to Government for the Ormonde project. This has completed theapplication process, including a field development programme and the productionoperator application, necessary to construct the world's first offshore gas/windhybrid energy generation development. It is anticipated the process will becompleted in six to nine months. When constructed Ormonde is expected to havethe ability to provide up to 200 megawatts of electricity from both gas turbinesfuelled by two previously undeveloped natural gas fields and an integraloffshore wind farm of up to thirty turbines. First energy is expected in 2007. Sterling Energy plc Since March 2002, the company has acquired 77,875,000 ordinary shares ofSterling at a total cost of £8,500,625. Of these shares, 6,500,000 were acquiredas a result of the sale of the company's wholly owned United States subsidiary,Westmount Resources, Inc. to Sterling in March 2002 for a total consideration of£495,000 of which £202,500 was paid in cash and the balance of £292,500 wassatisfied by the issue of 6,500,000 new fully paid ordinary shares of Sterlingat 4.5p per share. As a result of the sale of the company's wholly ownedsubsidiary, Westmount Resources Limited in September 2003 to Sterling for thetotal consideration of £8,208,125 satisfied by the issue of 71,375,000 new fullypaid ordinary shares of Sterling at 11.5p per share, this holding was increasedto 77,875,000 ordinary shares. The company up to 30 June 2005 realised £1,027,031 from the sale of 7,875,000ordinary shares. This has generated profits of £576,406 in the three financialyears ended 30 June 2003, 2004 and 2005 of £16,864, £123,931 and £435,611respectively. Following the sale of 40,000,000 ordinary shares since the end of the financialyear, as referred to above, the company's holding in Sterling is now 30,000,000ordinary shares, representing 2.15% of the issued ordinary share capital ofSterling, with a carrying book value of £3,450,000 equivalent to 11.5p per sharefor each Sterling share held. This shareholding provides the company with acontinuing significant indirect investment in Sterling's areas of operation,including production in the Gulf of Mexico and exploration and developmentoffshore West Africa. Sterling has achieved significant growth over the last two years, evidenced byits recent market capitalisation in excess of £275 million. Its results for 2004show revenues doubled to £11.5 million and pre-tax profit increased 130% to £4.2million. One of the highlights of the year was the successful acquisition of anapproximate 8% economic interest in the Chinguetti field offshore Mauritaniawhich lays the foundation for a leap in production and cash flow in 2006. Thefirst half unaudited results for 2005 show revenues of £6.7 million and pre-taxprofit of £3.3 million. Over the next year Sterling has an active exploration programme underway of upto ten wells in West Africa and the Gulf of Mexico, largely funded by thirdparties. Sterling will also benefit from the commencement of repayment of theUS$130 million letter of credit provided to fund the Mauritanian government'sexercising its back-in-rights over 12% of the Chinguetti field, after the fieldcomes on stream. First oil from the Chinguetti field is presently targeted inFebruary 2006 and it is anticipated that peak production of 75,000 barrels ofoil per day should be reached soon thereafter. Outlook Your company looks forward to the further development of the growth in value ofits investments over the coming months for the benefit of shareholders. Derek G. WilliamsChairman14 October 2005 REPORT OF THE DIRECTORSTO THE MEMBERS OF WESTMOUNT ENERGY LIMITED 1. The directors have pleasure in presenting the audited financial statements of the company and of the group for the year ended 30 June 2005. 2. The result for the year is set out on page 11 in the profit and loss account. The directors do not recommend the payment of a dividend in respect of these accounts. 3. Development of the group's activities and its prospects are reviewed in the chairman's review on pages 4 to 6. It remains the directors intention to return capital to shareholders as and when any substantial profits are realised upon the sale of major assets for cash. 4. The directors during the year were as follows: D G Williams (USA) P J Richardson M S D Yates Biographical Information Derek G Williams, Chairman, age 74, a founding director of the company, appointed 18 November 1992, has many years experience in the international oil industry and is a chartered accountant. He was appointed to the board of Charterhall PLC in 1965 and became chairman and chief executive in 1969, a position he held for seventeen years. Charterhall was a British independent oil company and a member of the consortium which discovered the North Sea producing Buchan Oilfield in 1974. Charterhall was active in the UK offshore and onshore areas and in the USA, Canada and Australia with offices in London, Denver, Calgary and Melbourne. Derek retired as chief executive of Charterhall in July 1986, upon the change in control of Charterhall and left the board in July 1988. Upon leaving Charterhall and until he joined the company in 1992, he acted as an international petroleum consultant. After living for several years in Houston, he became a US citizen in March 1994. Peter J Richardson, age 49, a Jersey resident, is an associate of the Chartered Institute of Bankers and a diploma qualified member of the Securities Institute. A director of the company since 25 June 1998, he is a director of fund management and special purpose vehicle administration companies. He was formerly for six years Corporate Trust Manager of The Royal Bank of Scotland Trust Company (Jersey) Limited and for the previous twenty years held senior positions with four major international banking groups. He also holds a number of public company directorships. Marc S D Yates, age 45, a Jersey resident, and a director of the company since 1 October 1998, is a partner in the offshore legal and fiduciary services Ogier Group Partnership. He practices in the area of corporate and finance law and has been an advocate of the Royal Court of Jersey since 1985, as well as being an English barrister of twenty three years standing. He also holds a number of public company directorships. 5. The secretary of the company throughout the year was Bedell Secretaries Limited. 6. The principal activity of the company is, and continues to be, investment holding and of the group, investment holding and investment in oil and gas exploration and production. 7. The directors and their families have the following interests in the shares of the company. Ordinary shares of 10p each 14 October 30 June 30 June 2005 2005 2004 D G Williams (a) 2,011,879 2,011,879 2,011,879P J Richardson 279,977 279,977 279,977M S D Yates 279,977 279,977 279,977 a) Including non-beneficial holdings of 1,176,879 shares at 30 June 2005 (1,176,879 at 30 June 2004). 8. At 14 October 2005 notification had been received of the following holdings ofmore than 3% of the issued capital of the company: Number % --------- ----- D G Williams 2,011,879 13.40Amodeo Investments Limited 1,105,000 7.36 9. There are no service contracts with directors. However, Ridge House Resources Limited, a company in which D G Williams is interested, is entitled to a commission of 3% of profits arising from the group's current interest held through Desire Petroleum plc and any future interests in the Falkland Islands. In order to secure loan finance from The Royal Bank of Scotland plc, D G Williams provided a personal guarantee to the bank amounting to £500,000. In consideration of D G Williams providing that guarantee the company has agreed to pay him a fee of 3% of profits realised by the company on the investment in Eclipse Energy Company Limited. In 2003 it was resolved that the directors at that time be entitled to a bonus calculated at 5% of the gross profit realised from any potential sale of 71,375,000 shares in Sterling Energy plc, received following the disposal of the group's investments in Fusion Oil & Gas plc and Fusion Oil & Gas NL. 10. The company is not resident in the United Kingdom and is, therefore, not a close company within the meaning of the United Kingdom Income and Corporation Taxes Act 1988. 11. The movements in fixed asset investments are shown in notes 7 and 8 to the financial statements on pages 21 and 22. 12. The group does not follow any specified code or standard on payment practice. However, it is group policy to settle all debts owing on a timely basis, taking account of the credit period given by each supplier. The group has few trade creditors and the majority of year end credit was due to professional advisers. For this reason, the directors consider that the publication of the number of creditor days would not provide meaningful information. On 16 August 2005, the company's wholly owned subsidiary, Westmount Petroleum UK Limited, concluded an agreement with the payers of the overriding royalty of 0.5% relating to its interest in Licence P241 North Sea which includes the Buchan Field. Further details of this transaction can be found in the chairman's review and in note 15 of the financial statements on page 25. On 30 September 2005, the company announced that it had realised £8 million, before expenses, from the sale of 40,000,000 ordinary shares of Sterling Energy plc. Further details can be found in the chairman's review and in note 15 of the financial statements on page 25. 15. Company law requires the directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the company and of the group and of the profit or loss of the group for that year. In preparing these financial statements, the directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgements and estimates that are reasonable and prudent; • State whether applicable accounting standards have been followed; • Prepare the financial statements on the going concern basis unless it is inappropriate to assume that the company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and of the group and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with laws and regulations. The directors confirm that they have complied with these requirements and, at the time of approving these financial statements, have a reasonable expectation that the group has adequate resources to continue in operational existence as a going concern for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. 16. A resolution to re-appoint the auditors, Moore Stephens, and authorising the directors to fix their remuneration will be submitted to the forthcoming annual general meeting. By Order of the Board For and on behalf ofBedell Secretaries Limited P R ANDERSON Secretary 26 New StreetSt HelierJerseyJE2 3RAChannel Islands 14 October 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2005 (Expressed in United Kingdom Sterling) 2005 2004 £ £ £ £ TurnoverContinuing operations - -Discontinued operations 137,925 137,092 -------- -------- 137,925 137,092 Operating costs (5,927) (10,576) -------- --------Operating profit beforeadministrativeexpensesContinuing operations - -Discontinued operations 131,998 126,516 -------- -------- 131,998 126,516Administrative expenses (280,841) (277,235) Profit on disposal ofsubsidiaryundertaking - 6,635,500Profit on disposal of 639,751 123,931investmentsInterest and similar feesreceivable 27,584 94,417Bank loan interest andchargespayable (32,625) (150,428) -------- -------- 634,710 6,703,420 -------- --------Net profit on ordinaryactivitiesbefore taxation 485,867 6,552,701Taxation (24,505) (3,476) -------- ----------Profit for the year 461,362 6,549,225 -------- ---------- Basic and dilutedearnings pershare 3.07p 45.62p -------- ---------- There were no other gains or losses in the above two financial years other thanthe profit as stated above. CONSOLIDATED BALANCE SHEET AT 30 JUNE 2005 (Expressed in United Kingdom Sterling) 2005 2004 £ £ £ £ FIXED ASSETSTangible fixed assets 32,563 38,490Investments 9,482,017 9,020,469 -------- -------- 9,514,580 9,058,959 CURRENT ASSETS Debtors 11,779 762,839Cash at bank 34,791 39,695 -------- -------- 46,570 802,534CREDITORS: amountsfalling duewithin one year (71,060) (832,765) -------- -------- NET CURRENT (24,490) (30,231)LIABILITIES -------- -------- TOTAL ASSETS LESSCURRENT LIABILITIES 9,490,090 9,028,728 -------- -------- SHARE CAPITAL ANDRESERVES Equity share capital 1,501,336 1,501,336Share premium account 974,248 974,248Profit and loss 7,014,506 6,553,144account -------- -------- EQUITY SHAREHOLDERS' 9,490,090 9,028,728FUNDS -------- -------- These financial statements were approved by the board of directors on 14 October2005 D G WILLIAMSChairman CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2005 (Expressed in United Kingdom Sterling) 2005 2004 £ £ Net cash outflow from operatingactivities (64,519) (136,989) Returns on investments and servicingof finance 63,813 707 Taxation (19,605) (19,832) Capital expenditure and financial investment 779,581 208,306 Disposals - (66,244) -------- -------- Cash outflow before financing 759,270 (14,052) Financing (764,174) - -------- --------Decrease in cash in the year (4,904) (14,052) -------- -------- Reconciliation of cash flow to movement in net funds/(debt) Decrease in cash in the year (4,904) (14,052) Cash outflow from decrease in debt 764,174 - Cash inflow from decrease in current asset (94,332) - -------- --------Change in net funds/(debt) resulting from cashflows 664,938 (14,052) Non-cash movements on debt (575,900) (57,019) -------- -------- Movement in net funds/(debt) in the year 89,038 (71,071) Net (debt)/funds brought forward (54,247) 16,824 -------- --------Net funds/(debt) carried forward 34,791 (54,247) -------- -------- This information is provided by RNS The company news service from the London Stock Exchange