TIDMWTE
RNS Number : 2273S
Westmount Energy Limited
17 November 2011
Embargoed for 7am 17 November 2011
Westmount Energy Limited
("Westmount" or the "Company")
Final Results
The Company is pleased to announce its Final Results for the year ended 30 June 2011. A copy of the results is available on the Company's website, www.westmountenergy.com, and will be posted to shareholders by 18 November 2011.
Notice is hereby given that the Annual General Meeting of Westmount will be held at 26 New Street, St. Helier, Jersey, JE2 3RA Channel Islands on Wednesday 14 December 2011 at 11.45 am.
CHAIRMAN'S REVIEW
The past year has been a period of great financial turbulence which has seen a flight from what are perceived as Risk Assets and this has resulted in a reduction in the value of our holdings. Additionally the drilling results of our two major holdings namely Sterling Energy Plc and Desire Petroleum Plc have been disappointing.
Sterling:
Sterling has been fully funded for the exploration well in Kurdistan but after nearly eighteen months of problems and difficulties the well was plugged and abandoned. Sterling remains well financed with some $100 million of cash plus the cash flow from Mauritania which more than covers the overheads. Sterling has recently announced that they had sold 50% of their stake in the Cameroon field in return for a contribution to past costs and a commitment to fully fund the joint development including drilling one exploration well. The Border dispute has not yet been settled and so the programme remains suspended until further progress on this issue.
Desire:
Desire completed its five well programme on its North Falkland licence acreage without a discovery and has subsequently completed its Seismic logging programme to enhance its knowledge of the field's geology. Desire would need to raise further finance to drill any additional wells. On the 12 October Rockhopper announced that it had agreed a Farm In with Desire on their licence area adjacent to Rockhopper's Sea Lion discovery which for fully funding the drilling costs of one well will earn a forty per cent interest in that well. The recent Rockhopper drilling results give cause for optimism concerning Desire's acreage adjacent to the Sea Lion discovery.
Argos Resources Plc:
Argos, our remaining holding, has now completed the Seismic mapping of its Licences revealing a number of interesting targets and if it is to commence drilling will have to raise fresh capital, or find a partner to fund the exploration campaign in exchange for a stake in the acreage.
The Future:
In all my previous statements in both the Interim and Final Reports I have indicated that it was your Boards intention to investigate various alternatives that would create on-going value for our shareholders as an alternative to returning capital to our shareholders. We will continue with this policy during the coming year.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
30 June 30 June
2011 2010
Notes GBP GBP
Realised gain on disposal of investments 1,499,314 1,612,003
Unrealised (loss)/gain on financial
assets at fair value though profit
or loss (4,488,522) 3,046,569
Administrative expenses (334,523) (333,784)
Operating (loss)/profit (3,323,731) 4,324,788
Interest receivable 4,429 3,703
------------ ----------
(Loss)/profit before tax (3,319,302) 4,328,491
Taxation 3 - -
------------ ----------
Comprehensive (loss)/income for the
year (3,319,302) 4,328,491
============ ==========
Basic (loss)/gain per share (pence) 4 (46.06) 62.01
------------ ----------
Diluted (loss)/gain per share (pence) 4 - 58.76
------------ ----------
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
As at As at
30 June 30 June
2011 2010
Notes GBP GBP
ASSETS
Non Current Assets
Financial assets at fair value
through profit or
loss 5 1,298,215 5,485,350
---------- ----------
Current Assets
Trade and other receivables 6 7,228 7,015
Cash and cash equivalents 7 291,519 2,515,599
---------- ----------
298,747 2,522,614
---------- ----------
Total assets 1,596,962 8,007,964
========== ==========
LIABILITIES AND EQUITY
Current Liabilities
Trade and other payables 8 278,302 210,507
---------- ----------
EQUITY
Share capital 9 1,506,060 1,396,060
Share premium account 10 248,524 261,682
Share option account 10 334,205 277,210
Profit and loss account (770,129) 5,862,505
---------- ----------
Total equity 1,318,660 7,797,457
---------- ----------
Total liabilities and equity 1,596,962 8,007,964
========== ==========
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
Share capital Share Premium Share Option Retained Total
Account Account Account Earnings Equity
GBP GBP GBP GBP GBP
As at 1 July 2009 1,396,060 261,682 244,363 1,534,014 3,436,119
-------------- -------------- ------------- ------------ ------------
Comprehensive Income
Profit for the year ended
30 June 2010 - - - 4,328,491 4,328,491
-------------- -------------- ------------- ------------ ------------
Transaction with owners
Cost of share options - - 32,847 - 32,847
- - 32,847 - 32,847
At 30 June 2010 1,396,060 261,682 277,210 5,862,505 7,797,457
-------------- -------------- ------------- ------------ ------------
Comprehensive Income
Loss for the year ended
30 June 2011 - - - (3,319,302) (3,319,302)
-------------- -------------- ------------- ------------ ------------
Transaction with owners
Issue of ordinary shares 110,000 - - - 110,000
Premium on ordinary shares
issued - 89,250 - - 89,250
Issue of B shares 75,303 (75,303) - - -
Redemption of B shares (75,303) - - (3,313,332) (3,388,635)
Redemption costs - (27,105) - - (27,105)
Cost of share options - - 56,995 - 56,995
110,000 (13,158) 56,995 (3,313,332) (3,159,495)
At 30 June 2011 1,506,060 248,524 334,205 (770,129) 1,318,660
-------------- -------------- ------------- ------------ ------------
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
30 June 30 June
2011 2010
Note GBP GBP
Cash Flows from operating activities
Total comprehensive (loss)/income
for the year (3,319,302) 4,328,491
Adjustment for interest income (4,429) (3,703)
Adjustment for net unrealised
loss/(gain) on investments at
fair value through profit or loss 4,488,522 (3,046,569)
Adjustment for costs attributable
to share options 56,995 32,847
Adjustment for realised gains
on investments at fair value through
profit or loss (1,499,314) (1,612,003)
(Increase)/decrease in prepayments
and accrued income (213) 3,525
Increase in creditors and accrued
expenses 67,795 38,130
Net cash outflows from operating
activities (209,946) (259,282)
------------ ------------
Cash Flows from investment activities
Purchase of investments (1,024,786) (1,874,656)
Sale of investments 2,222,713 3,772,178
Interest received 4,429 3,703
------------ ------------
Net cash generated from investing
activities 1,202,356 1,901,225
------------ ------------
Cash flows from financing activities
Ordinary shares issued 199,250 -
Redemption of B class shares (3,415,740) -
------------ ------------
Net cash used in financing activities (3,216,490) -
Net (decrease)/increase in cash
and cash equivalents (2,224,080) 1,641,943
------------ ------------
Cash and cash equivalents at beginning
of year 2,515,599 873,656
Cash and cash equivalents at end
of year 7 291,519 2,515,599
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL
FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy
investment company. The investment strategy of the Company is to
provide seed capital to small companies that are identified as having
significant growth possibilities. These investments are usually
sold subsequent to flotation or when a significant third party offer
is available, which values such a stake as attractive both for price
and market reasons.
The Company was incorporated in Jersey on 1 October 1992 under the
Companies (Jersey) Law 1991, as amended, and is a public Company
with registered number 53623. The Company is listed on the London
Stock Exchange Alternative Investment Market (AIM).
Basis of Preparation
The financial statements have been prepared under the historical
cost convention with the exception of investments measured at fair
value and are in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union, including standards
and interpretations issued by the International Accounting Standards
Board (IASB).
The financial statements for the year ended 30 June 2011 (including
comparatives) were approved by the board of directors on 16 November
2011.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the
preparation of these financial statements are summarised below.
These accounting policies have been used throughout all periods
presented in the financial statements.
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been early adopted by the
Company
At the date of the authorisation of these financial statements,
the following new standards, amendments and interpretations to existing
standards have been published but are not yet effective and have
not been adopted early by the Company. The standards below are not
expected to affect the financial position of the Company, however
they will require additional disclosure in the future financial
statements.
* IAS 1 (improvements to IFRSs 2010) Presentation of
Financial Instruments, effective for annual periods
beginning on or after 1 January 2011
* IAS 1 Presentation of Financial Statements -
Amendments to revise the way other comprehensive
income is presented, effective for annual periods
beginning on or after 1 July 2011
* IFRS 7 Financial Instruments: Disclosure - Annual
improvements to IFRSs, effective for annual period
beginning on or after 1 January 2011.
* IFRS 7 Financial Instruments: Disclosure - Amendments
enhancing disclosures about transfer of financial
assets, effective for annual period beginning on or
after 1 July 2011.
* IFRS 9 (revised April 2009) Financial Instruments -
Classification and Measurement, effective for annual
periods beginning on or after 1 January 2013
* IFRS 13 Fair Value Measurement, effective for annual
period beginning on or after 1 July 2013.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and exercise of judgement
by the management while applying the Company's accounting policies
in relation to the value of options issued, as set out in note 10.
These estimates are based on the management's best knowledge of
the events which existed at the date of issue and the balance sheet
date however, the actual results may differ from these estimates.
Foreign currency
a) Functional and presentational currency
The functional currency of the Company is United Kingdom Sterling,
the currency of the primary economic environment in which the Company
operates. The presentation currency of the Company for accounting
purposes is also United Kingdom Sterling ("Sterling").
b) Transactions and balances
Foreign currency monetary assets and liabilities balances are translated
into Sterling at the rate of exchange ruling on the last day of
the Company's financial year. Foreign currency transactions are
translated at the exchange rate ruling on the date of the transaction.
Gains and losses arising on the currency translation are included
in administrative expenses in the statement of comprehensive income
in the year in which they arise.
Financial assets
The Company classifies its financial assets in the following categories:
* at fair value through profit or loss; and
* loans and receivables
The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
a) Financial assets at fair value through profit or loss
The Company designates its financial assets as at fair value through
profit or loss (FVTPL) as the financial assets are managed on and
their performance is evaluated on a fair value basis. Financial
assets carried at fair value through profit or loss are initially
recognised at fair value and any transactions costs are recognised
in the statement of comprehensive income. Regular purchases and
sales of financial assets are recognised on the trade date, the
date on which the Company commits to purchase or sell the investment.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has transferred
substantially all the risks and rewards of ownership. Financial
assets at fair value through profit or loss are subsequently carried
at fair value. Any gains or losses on derecognition of investments
is calculated after setting the proceeds against the fair value
and, in respect of a part disposal, against the fair value at the
date of sale. The surplus or loss on realisation is transferred
to the statement of comprehensive income.
Gains or losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' are presented in the
statement of comprehensive income in the period in which they arise.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
They are included in current assets and are stated at cost, which
is equivalent to their fair value. The Company's loans and receivables
comprise 'trade and other receivables'.
Financial liabilities
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest
in the assets of the Company after deducting all of its liabilities.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks. For the purpose of the Statement of Cash Flow,
cash and cash equivalents are considered to be all highly liquid
investments with maturity of three months or less at inception.
Trade and other payables
Trade and other payables are not interest bearing and are stated
at their cost, which is equivalent to fair value.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Share premium includes
any premiums received on issue of share capital. Transaction costs
associated with the issuing of shares are deducted from share premium.
Retained earnings include all current and prior period retained
profits. It also includes charges related to share-based employee
remuneration.
Revenue Recognition
Revenue comprises interest income from short term deposits and is
recognised on an accruals basis.
Expenditure
The expenses of the Company are recognised on an accruals basis
in the Statement of Comprehensive Income.
Share options
Awards of share options are recorded under IFRS 2: 'Share-based
Payment'. The cost of the share options are ascribed a fair value
at grant date and accounted for as an administration expense of
the Company with an equal Share Option Reserve being created in
the statement of changes in equity. The cost is recognised in the
statement of comprehensive income over the vesting period of the
award.
3. TAXATION
The Company is subject to income tax at a rate of 0%.
The Company is registered as an International Services Entity under
the Goods and Services Tax (Jersey) Law 2007 and a fee of GBP200
has been paid, which has been included in administrative expenses.
4. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on
the comprehensive loss for the year of GBP3,319,302 (2010: gain
GBP4,328,491). The weighted average number of shares in issue during
the year was 7,206,327 (2010: 6,980,300). As explained in note 10
there are share options in issue over the Company's ordinary shares.
As the exercise price of all these options at 30 June 2011 was below
the average market price of the ordinary shares during the year,
they would be deemed to have a dilution effect on earnings per share
if the Company had made a profit. However as the Company has made
a loss for the year this is not the case and therefore no diluted
earnings per share has occurred.
5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2011 2010
GBP GBP
Desire Petroleum plc ("Desire") 423,115 3,306,600
Sterling Energy plc ("Sterling") 592,500 2,178,750
Argos Resources plc ("Argos") 282,600 -
------------------ --------------
Total investments 1,298,215 5,485,350
------------------ --------------
Investments at fair value through profit or loss at 30 June 2011
Cost Unrealised Fair value
loss
GBP GBP GBP
Desire Petroleum plc 1,071,438 (648,323) 423,115
Sterling Energy plc 2,589,191 (1,996,691) 592,500
Argos Resources plc 310,775 (28,175) 282,600
---------- ------------------ --------------
3,971,404 (2,673,189) 1,298,215
---------- ------------------ --------------
Investments at fair value through profit or loss at 30 June 2010
Cost Unrealised Fair value
gain/(loss)
GBP GBP GBP
Desire Petroleum plc 1,080,826 2,225,774 3,306,600
Sterling Energy plc 2,589,191 (410,441) 2,178,750
-------------- ------------------ --------------
3,670,017 1,815,333 5,485,350
-------------- ------------------ --------------
On 30 June 2011 the market value of the Company's holding of 2,450,000
(2010: 3,674,000) ordinary fully paid shares in Desire, representing
0.72% (2010: 1.13%) of the issued share capital of the company was
GBP423,115 (2010: GBP3,306,000) (17.27p per share (2010: 90.00p
per share)). During the year, the Company disposed of 1,668,450
(2010: 2,456,610) ordinary shares in Desire, realising a profit
of GBP1,442,935 (2010: GBP1,869,406) (after expenses) which is included
in the Statement of Comprehensive Income.
On 30 June 2011 the market value of the Company's holding of 1,500,000
(2010: 1,500,000) ordinary fully paid shares in Sterling representing
0.68% (2010: 0.68%) of the issued share capital was GBP592,500 (2010:
GBP2,178,750) (39.50p per share, (2010 145.25p per share)). On 23
December 2009, Sterling consolidated its issued shares replacing
every 40 shares held in the company with one share.
During the year, the Company disposed of 290,322 ordinary shares
in Argos Resources plc, realising a profit of GBP56,379 (after expenses)
which is included in the Statement of Comprehensive Income. On 30
June 2011 the market value of the Company's holding of 1,000,000
(2010: nil) ordinary fully paid shares in Argos was GBP282,600 (28.26p
per share,).
6. TRADE AND OTHER RECEIVABLES
2011 2010
GBP GBP
Prepayments 7,228 7,015
------------------ --------------
The carrying value of trade and other receivables is considered
to be a reasonable approximation of its fair value.
7. CASH AND CASH EQUIVALENTS
2011 2010
GBP GBP
Cash at bank 291,519 2,515,599
------------------ --------------
Cash and cash equivalents are considered to be highly liquid, so
that book cost is considered equivalent to fair value.
8. TRADE AND OTHER PAYABLES
2011 2010
GBP GBP
Amounts due to shareholders from returns
of capital 149,827 124,437
Accrued expenses 128,475 86,070
------------------ --------------
278,302 210,507
------------------ --------------
The carrying value of trade and other payables is considered to
be a reasonable approximation of their fair value.
9. SHARE CAPITAL
2011 2010
GBP GBP
Authorised:
10,000,000 ordinary shares of 20p
each 2,000,000 2,000,000
------------------ --------------
15,100,000 redeemable "B" shares
of 1p each 151,000 151,000
------------------ --------------
Allotted, 2011 2010 2011 2010
called No. No. GBP GBP
up,
fully-paid:
'000' '000'
In issue:
Ordinary
shares 7,530.3 6,980.3 1,506,060 1,396,060
----------- -------- -------------- ----------
"B" Class
shares - - - -
----------- -------- -------------- ----------
Ordinary Ordinary
shares shares
Movement No. GBP
Balance at 1 July 2009 6,980,300 1,396,060
----------------- ----------------
Balance at 1 July 2010 6,980,300 1,396,060
Ordinary shares issued 550,000 110,000
Balance at 30 June 2011 7,530,300 1,506,060
On 31 January 2011, 550,000 ordinary shares (2010: nil) were issued
as a result of the exercise of options arising from the share options
granted to the Directors on 19 December 2007 and 22 December 2005.
The Directors exercise all of their share options with an exercise
price of 38.5p for 450,000 shares and 26p for 100,000 shares. Following
the exercise of share options, ordinary shares on issue totalled
7,530,300.
On 1 February 2011 following sales of the Company's shares in Desire
Petroleum plc, together with the proceeds from the exercise of the
share options, the Company issued 7,530,300 fully paid redeemable
"B" shares of 1p to each existing ordinary shareholder on the Company's
register at 31 January 2011, with each share ranking parri passu
with existing shareholdings to enable the return of capital to shareholders
of the Company equivalent to 45p per ordinary share (GBP3,388,635
in aggregate). These "B" shares were redeemed on 2 February 2011.
10. SHARE PREMIUM AND SHARE OPTIONS
Share Premium Share option
Account Account
GBP GBP
1 July 2009 261,682 244,363
----------------- ----------------
Cost of share options - 32,847
At 30 June 2010 261,682 277,210
----------------- ----------------
Cost of share options - 56,995
Premium on ordinary shares issued 89,250 -
B Class shares issued (75,303) -
Redemption costs (27,105) -
----------------- ----------------
At 30 June 2011 248,524 334,205
----------------- ----------------
As at 30 June 2011, options were outstanding over 250,000 (2010:
800,000) ordinary 20p shares, with a weighted average exercise price
of 17p (2010: 44.28p). The options are exercisable at the election
of the option holder, expiring 31 December 2016.
As at 30 June 2011 250,000 (2010: 250,000) of the options were exercisable
at a weighted average exercise price (adjusted) of 17p. At 30 June
2010 450,000 of the options were exercisable at a price of 38.5p
and 100,000 of the options were exercisable at a price (adjusted)
of 26p. These options were exercised in February 2011 as discussed
in note 9.
The options granted in September 2009, were re-priced by a deduction
of 45 pence from the original grant price to take into account the
return of capital made to shareholders by the issue and redemption
of B shares made during the financial year. The deduction of 45
pence accorded with the advice received by the Board from Ogier.
There were no share options granted during the year. Share options
were granted during the year ended 30 June 2010 over 250,000 shares
at a weighted average price of 62p, now adjusted to 17p as discussed
above. The fair value of those options granted was GBP128,111 and
was calculated using the Black Scholes valuation model. At the date
of grant the volatility of the Company was estimated as 40.2651%
and was calculated as the standard deviations of daily historical
continuously compounded returns over a period commensurate with
the expected life of the options, back from the date of grant, and
annualised by the factor of square root 252, assuming 252 trading
days per year. The risk-free rate was 2.81815% and is the yield
to maturity on the date of grant of a UK Gilt Strip, with term to
maturity equal to the life of the option. The expected life of the
options is 5.14 years and is estimated as the mid-point between
the date of grant and the date of expiry of the option.
On 28 January 2011 the options were re assessed as a result of the
re pricing. The incremental fair value was assessed at GBP56,479
such that the total value of the options was GBP184,590. The incremental
value was allocated over the remaining vesting period. The share
options are ascribed a total expense for the year ended 30 June
2011 of GBP56,995 (2010: GBP32,847).
11. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk,
cash flow interest rate risk and price risk), credit risk and liquidity
risk. The Company's overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Company's financial performance.
a) Market Risk
i) Foreign exchange risk
The Company is not exposed directly to foreign exchange risk as
it invests in companies listed on the London Stock Exchange, denominated
in Sterling and has cash balances denominated in Sterling.
ii) Price Risk
Price risk is the risk that the fair value of the future cash flows
of a financial instrument will fluctuate due to changes in market
prices. The Company is exposed to price risk on the investments
held by the Company and classified by the Company on the Statement
of Financial Position as fair value through profit or loss. To manage
its price risk Management closely monitor the activities of the
underlying investments.
The Company's exposure to price risk is as follows:
Cost Fair Value
Fair Value Through Profit or Loss, as
at 30 June 2011 3,971,404 1,298,215
Fair Value Through Profit or Loss, as
at 30 June 2010 3,670,017 5,485,350
The Company's investments are all publicly traded and listed on
the Alternative Investment Market ("AIM").
The Company's sensitivity to a 15% increase/(decrease) in market
price would be GBP194,732 /(GBP194,732) (2010: GBP822,803/(GBP822,803)).
A positive number indicates an increase in the net assets attributable
to ordinary share holders and a negative number indicated a decrease.
The 15% increase/(decrease) on the net assets attributable to ordinary
share holders would have the same impact on the post tax profit
for the year. 15% represents management's assessment of a reasonably
possible change in the market prices.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not significantly exposed
to interest rate risk as it does not have any borrowings, however,
the Company does have short term (
