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Parkmead Group (the) Plc LSE:PMG London Ordinary Share GB00BGCYZL73 ORD 1.5P
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Parkmead Group (The) PLC Interim Results for six months ended 31 Dec 2019

27/03/2020 7:00am

UK Regulatory (RNS & others)


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TIDMPMG

RNS Number : 7982H

Parkmead Group (The) PLC

27 March 2020

27 March 2020

The Parkmead Group plc

("Parkmead", "the Company" or "the Group")

Interim Results for the six-month period ended 31 December 2019

Parkmead, the UK and Netherlands focused energy group, with four business areas, is pleased to report its interim results for the six-month period ended 31 December 2019.

HIGHLIGHTS

Strong financial position and robust producing assets, despite current low gas price environment

 
      --   Well capitalised, with cash balances of US$33.6 million (GBP25.9 
            million) as at 31 December 2019 (2018: GBP23.6 million), equivalent 
            to 23.9 pence per share 
      --   Total asset base increased by 11% to GBP88.8 million at 31 December 
            2019 (2018: GBP79.9 million) 
      --   Net assets increased to GBP70.1 million at 31 December 2019 
            (2018: GBP66.6 million) 
      --   In September 2019 the Company issued 9,645,669 new ordinary 
            shares as part of the renewable energy acquisition of Pitreadie 
            Farm Limited ("Pitreadie") 
      --   Parkmead maintains strict financial discipline with very low 
            operating costs 
      --   Revenue for the period was GBP2.1 million (2018: GBP5.3 million), 
            principally due to the considerable reduction in gas prices 
      --   Gross profit achieved of GBP0.8 million (2018: GBP3.8 million) 
      --   Gas prices have fallen from highs of approximately EUR25.7/MWh 
            in October 2018 to lows not seen in over a decade of around 
            EUR8.6/MWh in February 2020 due to the oversupply of Liquefied 
            Natural Gas (LNG) into the European market 
      --   Parkmead's Netherlands assets remain very low cost to operate 
      --   Netherlands gas production, plus benchmarking & economics consultancy, 
            provides positive operating cash flow to Parkmead of GBP0.9 
            million in the period 
 

Strategic move into renewable energy opportunities; significant wind farm potential

 
      --   Studies are being conducted on the Group's acquired onshore 
            land for the potential development of a large wind farm 
      --   One of the large areas of land acquired by Parkmead lies adjacent 
            to the Mid Hill Wind Farm which encompasses 33 Siemens wind 
            turbines with a generating capacity of around 75MW 
      --   Other renewable opportunities exist within the acquired land 
            base 
      --   Renewable energy opportunities accessed through strategic acquisition 
            of Pitreadie, where a gain on purchase was recorded of GBP0.36 
            million 
      --   Parkmead's early commitment to building a balanced energy business 
            through its focus on gas, widely seen as the primary transition 
            fuel, pre-empted the recent energy transition debate 
      --   Member of Vision 2035 which aims to provide a roadmap to a lower 
            carbon energy mix 
 

Increased activity across Netherlands portfolio; multiple new opportunities identified

 
      --   Exit gross production at the Group's Netherlands assets averaged 
            39.9 million cubic feet per day ( "MMscfd") for December 2019 
            , approximately 6,868 barrels of oil equivalent per day ("boepd") 
      --   The Brakel field was brought back to full production during 
            the period following the completion of a work programme 
      --   Gross Brakel production reached 3.0 MMscfd , approximately 516 
            boepd, during the period 
      --   Concept selection planning at the Papekop oil and gas discovery 
            has begun, a proven field with 24.2 million barrels ("MMBbl") 
            of oil-in-place and 39.4 billion cubic feet ("Bcf") of gas-in-place 
      --   Further production enhancement work planned on Parkmead's Netherlands 
            portfolio, including compression optimisation work at Grolloo 
            during 2020 to maximise production, plus development planning 
            at the Ottoland oil and gas discovery 
      --   Multiple exploration opportunities exist around Diever West, 
            such as the Boergrup and De Bree prospects, both of which contain 
            stacked targets with similar characteristics to Diever West 
      --   A new seismic reprocessing project began in Q4 2019, which will 
            help define and high-grade the extensive prospectivity around 
            Diever West 
      --   Dynamic reservoir modelling suggests Diever West held initial 
            gas-in-place of approximately 108 Bcf, more than double the 
            post-drill static volume estimate of 41 Bcf 
 

Significant progress on Skerryvore, GPA and Platypus oil and gas projects

 
      --   New seismic purchased in Q3 2019 covering the Skerryvore prospect 
            and surrounding area, which is being reprocessed throughout 
            2020 to mature the collection of prospects 
      --   Skerryvore's main prospects are three stacked targets, at Mey 
            and Chalk level, which together could contain 157 million barrels 
            of oil equivalent ("MMBoe") 
      --   Parkmead is in commercial discussions with the Scott field partnership, 
            including CNOOC, in order to potentially agree terms for a tie-back 
            of the Greater Perth Area ("GPA") to the Scott facilities 
      --   Parkmead is also holding discussions with a number of leading, 
            internationally-renowned service companies in relation to the 
            GPA project 
      --   Field Development Plan draft and Environmental Statement submitted 
            to the OGA and OPRED, respectively, for the development of the 
            Platypus gas project in the UK Southern North Sea 
      --   Selected development concept is a subsea tie-back to the Cleeton 
            platform and commercial discussions are ongoing 
 

Substantial oil and gas reserves and resources

 
      --   2P reserves of 45.7 MMBoe as at 1 March 2020 (46.0 MMBoe as 
            at 1 March 2019) 
 

Well positioned for further acquisitions and opportunities

 
      --   Eight acquisitions, at both asset and corporate level, have 
            been completed to date 
      --   Parkmead is actively evaluating further growth opportunities, 
            including wider energy-related opportunities 
 

Parkmead's Executive Chairman, Tom Cross, commented:

"I am pleased to report excellent progress in the six-month period to 31 December 2019 across the Group, despite our revenues being impacted by the low gas price environment. Parkmead has delivered growth in its asset base whilst retaining financial strength. This creates a very good foundation from which to build and gives us confidence that we will remain robust in the context of broader global uncertainty brought about by the COVID-19 pandemic.

Through a strategic acquisition, we are evaluating a number of renewable energy opportunities. Renewable energy is directly in line with Parkmead's business plan, broadening and enhancing the Group's energy asset base.

Potential has been identified for a large wind farm project on the Group's newly acquired land.

We are also pleased with the advances made within the Greater Perth Area project. The Group is in discussions with a number of leading, international service companies and oil companies in relation to driving forward the GPA project.

The team at Parkmead continues to work intensively to evaluate and execute further value-adding opportunities which could provide additional upside for the Group.

Parkmead is well positioned for the future. We have excellent UK and Netherlands regional expertise, significant cash resources, and a growing portfolio of high-quality assets. The Group will continue to build upon the inherent value in its existing interests with a balanced, acquisition-led, growth strategy securing opportunities that maximise long-term value for our shareholders."

For enquiries please contact:

 
 
         The Parkmead Group plc                                               +44 (0) 1224 622200 
         Tom Cross (Executive Chairman) 
         Ryan Stroulger (Chief Financial Officer) 
 
         Arden Partners plc                                                   +44 (0) 20 7614 5900 
          (Financial Adviser, NOMAD and Corporate 
          Broker to Parkmead) 
         Ciaran Walsh 
         Victoria Hodge 
         Tim Dainton 
 
         Instinctif Partners Limited (PR Adviser                              +44 (0) 20 7457 2020 
          to Parkmead) 
         Mark Garraway 
         Sarah Hourahane 
          Dinara Shikhametova 
 

Review of Activities

Parkmead has delivered significant growth in its asset base across the UK and the Netherlands, continuing to build a high-quality portfolio.

In August 2019, Parkmead announced that it had signed a Share Purchase Agreement to acquire the entire issued share capital of Pitreadie, a company owning extensive land in Scotland with interesting and varied renewable energy potential. The completion of the acquisition was announced in September 2019.

As part of a broader strategic shift, the acquisition provides Parkmead with its first renewable energy opportunities, with potential already identified for the installation of a large wind farm project.

The acquisition also broadens Parkmead's operations and will add a third revenue-generating business area to the Group.

One of the large areas of land acquired spans 1,238 acres and is located some 15 miles west of Aberdeen. Excellent average wind speeds exist on the site of between 7-10 m/s. This site lies adjacent to the Mid Hill Wind Farm which contains 33 Siemens wind turbines with a generating capacity of around 75MW. Woodland planting has already been undertaken on part of this large site, which has the potential for a commercial biomass supply operation. Parkmead will be conducting a detailed analysis for optimising the land use of the various sites within the Pitreadie portfolio throughout 2020.

The consideration for the acquisition was satisfied by the issue of 9,645,669 new ordinary Parkmead shares. As part of the Acquisition, Parkmead assumed GBP3.6 million of Bank of Scotland debt held by Pitreadie. The land and property assets acquired, assuming no upside from renewable opportunities, were valued at GBP7.59 million by CKD Galbraith LLP, a leading independent property consultancy.

The renewables sector is a natural expansion of Parkmead's energy operations and is fully in line with the Group's strategy to re-balance Parkmead's energy portfolio. Parkmead recognises the transition that is taking place in the energy market, supported by legislation, from fuels with a higher carbon content to lower carbon alternatives such as natural gas and renewables. Natural gas and renewables play increasingly key roles in the generation of electricity.

Gas is widely seen as the primary transition fuel as the UK targets a net zero carbon position by 2050. Parkmead identified gas as a major growth market in 2011 and acquired its Netherlands gas portfolio a year later. The acquisition has been a tremendous success for Parkmead and the Group has increased its production almost tenfold since 2014.

Parkmead remains of the strong belief that oil and gas will have a very important role to play in the energy mix in future years. This is evidenced by a range of forecasts showing robust and increased demand for oil and gas going forward.

Parkmead's early commitment to building a balanced energy business has pre-empted much of the recent debate on energy transition, positioning the Company well in this new investment arena.

Parkmead has an exceptional team of scientific and commercial experts, who have a track record of good decision making and successful delivery of projects over many years. Within our team of economists, engineers and geoscientists there is a deep reservoir of energy knowledge that we believe can be applied to the fast-growing renewables sector.

Development studies work is progressing on Parkmead's GPA project, which has the potential to deliver 75-130 MMBoe on a P50 basis. The Company is in commercial discussions with the Scott field partnership, led by China National Offshore Oil Corporation (CNOOC) International, in order to explore terms for a tie-back of the GPA oil hub project to the Scott facilities. Scott lies just 10km southeast of the GPA project and a tie-back could yield a number of mutually beneficial advantages for both the Scott partnership and Parkmead. A tie-back to Scott is one path to potentially unlock the substantial value of the GPA project. Parkmead is also holding discussions with a number of leading, internationally-renowned service companies in relation to the GPA project.

New seismic was purchased covering Parkmead's Skerryvore prospect and surrounding area in Q3 2019. This new data will be reprocessed and interpreted during 2020 in order to mature the growing collection of prospects across this licence. The Skerryvore Mey prospect overlies two stacked Chalk prospects (Skerryvore Ekofisk and Skerryvore Tor) which are associated with a Zechstein salt diapir. The Chalk in these prospects is thought to have been re-worked, which significantly improves permeability over conventional Chalk reservoirs. These three stacked prospects have the potential to contain 157 million barrels of recoverable oil equivalent on a P50 basis.

In October 2019, Parkmead announced that a Field Development Plan draft and Environmental Statement for the Platypus gas project were submitted to the OGA and OPRED, respectively. These two documents were submitted on behalf of the co-venturers by Dana Petroleum, a subsidiary of the Korean National Oil Corporation (KNOC). Parkmead's co-venturers in the Platypus project are CalEnergy Gas (15%), Zennor Petroleum (11%) and Dana Petroleum (59%). Parkmead's equity in the project is 15%.

The Platypus field is located in the UK Southern North Sea in Blocks 47/5b and 48/1a, approximately 18 km north west of the West Sole gas field and 15 km south west of the Babbage field. The Platypus gas field was discovered in 2010 and was successfully appraised with a horizontal well in 2012 which was flow tested at a rate of 27 million cubic feet of gas per day (approximately 4,600 barrels of oil per day on an equivalent basis).

As a result of the successful appraisal well, the field development studies have been progressed leading to confirmation of concept selection and submission of the Field Development Plan draft and Environmental Statement. These are subject to the standard regulatory review and approvals.

The selected development concept will consist of two wells connected to a subsea manifold, with gas export to the Cleeton platform via a 23km pipeline. Produced fluids will arrive at the Cleeton facilities before being routed directly to the Dimlington Terminal for separation and processing.

Increased activity across the Netherlands asset base

Exit gross production at the Group's Netherlands assets averaged 39.9 MMscfd for December 2019, approximately 6,868 boepd. A planned two week maintenance programme was carried out at the Garijp treatment centre in September 2019, taking Diever West offline during this short time period.

The Brakel field was brought back to full production during the period following the completion of a work programme. Gross production at Brakel reached 3.0 MMscfd, approximately 516 boepd, during the period.

The Diever West field has performed above expectations since first production. Dynamic reservoir modelling suggests that the field holds approximately 108 Bcf gross gas-in-place, this is more than double the earlier, post-drill static volume estimate of 41 Bcf.

A number of further exploration opportunities exist within the Drenthe VI concession, which contains the Diever West field. Two of these are the Boergrup and De Bree prospects, both of which have stacked independent targets in the Vlieland and Rotliegendes (Boergrup) and Rotliegendes and Carboniferous (De Bree). A new seismic reprocessing project commenced in Q4 2019, which will help define and high-grade the extensive prospectivity around Diever West.

Parkmead's Netherlands portfolio includes producing gas fields with a very low operating cost. Despite the current low gas price environment, this provides important cash flow to the Group via profitable gas production.

Detailed work has begun on the Ottoland oil and gas discovery, located on the same Andel Va block as the Brakel gas field. Seismic interpretation and depth migration studies have been completed, followed by the construction of a dynamic simulation model used to analyse well locations and scenarios. Further modelling work will be undertaken ahead of development concept selection.

New structural and static modelling has been completed at the Papekop oil and gas discovery, refining the volume estimates. Concept selection planning has begun at Papekop and compression optimisation work will be carried out at the Group's Grolloo field during 2020.

Results

During the six-month period to 31 December 2019, the Group generated revenues of GBP2.1 million (2018: GBP5.3 million). This reduction is mainly a result of the considerable fall in gas prices. Gas prices have fallen from highs of approximately EUR25.7/MWh in October 2018 to lows not seen in over a decade of around EUR8.6/MWh in February 2020 due to the oversupply of Liquefied Natural Gas (LNG) into the European market. Gross profit for the period was GBP0.8 million (2018: GBP3.8 million). Detailed technical work undertaken across the wider Parkmead portfolio has allowed the Group to release non-core acreage, such as licence P.2218, considerably reducing licence costs. The release of this acreage led to a non-cash impairment charge of GBP1.3 million which contributed to the net loss of GBP1.7 million for the period (2018: GBP2.2 million profit).

Parkmead's Netherlands portfolio remains very low cost to operate, demonstrating the robust nature of these high-quality assets.

Administrative expenses/credits amounted to a GBP0.8 million expense (2018: GBP0.3 million credit). Underlying administrative expenses (not including non-cash share based payment credits/charges) are continually being monitored and reviewed to ensure that Parkmead maintains a strong balance sheet.

Parkmead's total assets as at 31 December 2019 stood at GBP88.8 million (2018: GBP79.9 million). Parkmead is very carefully managed and retains an excellent financial positon. Cash and cash equivalents at year end were GBP25.9 million (2018: GBP23.6 million). Interest bearing loan assets were GBP2.9 million (2018: GBP3.0 million). GBP3.6 million of debt was held during the period (2018: GBPnil), assumed through the purchase of Pitreadie. The Group's net asset value was GBP70.1 million (2018: GBP66.6 million). Parkmead is therefore well positioned for growth. This positive position is a direct result of experienced portfolio management and a strong focus on the Company's capital discipline.

Development of the Senior Management Team

As Parkmead grows, the board continuously plans for the developing needs of the Group. The last 12 months have seen significant progress across our key projects in oil and gas, plus a strategic move into renewable energy opportunities. Therefore, the board has recruited a number of experienced new staff to ensure Parkmead can deliver the maximum value from its enhanced, high-quality asset base.

The Company has made a carefully integrated series of appointments to firstly increase the team's capabilities, and secondly to prepare for planned retirements. This has included appointing a new Managing Director for the North Sea, a new Group Financial Controller and a new Managing Director for Aupec Ltd. Given the continual renewal of expertise and independent thinking outlined above, Parkmead is well positioned for future growth with a strong and balanced portfolio of assets and an experienced team focused on delivery.

Outlook

Parkmead has delivered significant growth in its asset base in the six-month period to 31 December 2019, whilst maintaining the Group's healthy financial position. The acquisition of Pitreadie expands the Group's asset base and provides Parkmead access to renewable energy opportunities.

Despite the current low oil and gas price environment, the Directors of Parkmead are pleased with the Group's continuing progress in building a high-quality business of increasing breadth and scale. Parkmead has a strong core of profitable gas production and a balanced portfolio with significant upside. Therefore, we believe Parkmead is well positioned to build further on the progress to date and to capitalise on new opportunities.

Parkmead clearly benefits from increasing balance within the Group, with four complementary arms of the business: Netherlands Gas, UK Oil and Gas, Benchmarking and Economics, and Future Opportunities. The combination of these components adds strength and value to Parkmead's operations.

As we move further into 2020, Parkmead maintains its appetite for acquisitions and is looking carefully at a number of opportunities. The Board of Directors is confident that Parkmead is well positioned to drive the business forward and to build upon the achievements already made to date.

COVID-19

The health and safety of the Company's employees and stakeholders is a priority, and the Company is ensuring that best-practice procedures are followed. Parkmead continues to monitor the ongoing COVID-19 pandemic and we do not currently anticipate material disruptions to our production in the Netherlands. Given the Group's healthy financial position and strong asset base, the Board believes Parkmead is well-placed to withstand the challenges brought about by COVID-19.

Tom Cross

Executive Chairman

27 March 2020

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014. Upon the publication of this announcement, the information contained herein is now considered to be in the public domain.

Notes:

1. Tim Coxe, Parkmead Group's Managing Director, North Sea, who holds a First-Class Master's Degree in Engineering and over 20 years of experience in the oil and gas industry, has overseen the review and approval of the technical information contained in this announcement. Reserves and contingent resource estimates are stated as at 1 March 2020. Parkmead's evaluation of reserves and resources was prepared in accordance with the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers and reviewed and jointly sponsored by the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers.

Glossary of key terms

 
  boped                          Barrels of oil equivalent per day 
  Bcf                            Billions of cubic feet of gas 
  Gas in place                   The total quantity of gas that is estimated to exist originally in naturally 
                                 occurring reservoirs 
  Oil in place                   The total quantity of oil that is estimated to exist originally in naturally 
                                 occurring reservoirs 
  Contingent Resources           Those quantities of petroleum estimated, as of a given date, to be potentially 
                                 recoverable 
                                 from known accumulations by application of development projects but which are not 
                                 currently 
                                 considered to be commercially recoverable due to one or more contingencies. 
                                 Contingent Resources 
                                 are a class of discovered recoverable resources 
  Recoverable resources          Those quantities of hydrocarbons that are estimated to be producible from discovered 
                                 or undiscovered 
                                 accumulations 
  Proved and Probable or "2P"    Those additional Reserves which analysis of geoscience and engineering data indicate 
                                 are less 
                                 likely to be recovered than Proved Reserves but more certain to be recovered than 
                                 Possible 
                                 Reserves. It is equally likely that actual remaining quantities recovered will be 
                                 greater 
                                 than or less than the sum of the estimated Proved plus Probable Reserves (2P). In 
                                 this context, 
                                 when probabilistic methods are used, there should be at least a 50 per cent. 
                                 probability that 
                                 the actual quantities recovered will equal or exceed the 2P estimate 
  Reserves                       Reserves are those quantities of petroleum anticipated to be commercially recoverable 
                                 by application 
                                 of development projects to known accumulations from a given date forward under 
                                 defined conditions. 
                                 Reserves must further satisfy four criteria: they must be discovered, recoverable, 
                                 commercial, 
                                 and remaining (as of the evaluation date) based on the development project(s) 
                                 applied. Reserves 
                                 are further categorized in accordance with the level of certainty associated with the 
                                 estimates 
                                 and may be sub-classified based on project maturity and/or characterized by 
                                 development and 
                                 production status 
  P50                            Reflects a volume estimate that, assuming the accumulation is developed, there is a 
                                 50% probability 
                                 that the quantities actually recovered will equal or exceed the estimate. This is 
                                 therefore 
                                 a median or best case estimate 
  2C                             Denotes the best estimate scenario, or P50, of Contingent Resources 
  FEED                           Front End Engineering Design 
 
 
 Group statement of profit or loss 
 for the six months ended 31 December 2019 
 
 
                                                                Six months        Six months           Twelve 
                                                            to 31 December    to 31 December           months 
                                                                      2019              2018            to 30 
                                                                                                    June 2019 
                                                Notes          (unaudited)       (unaudited)        (audited) 
                                                                   GBP'000           GBP'000          GBP'000 
 
 Revenue                                                             2,111             5,274            8,269 
 Cost of sales                                                     (1,308)           (1,432)          (2,524) 
 Gross profit                                                          803             3,842            5,745 
 Exploration and evaluation expenses              2                (1,475)             (162)            (171) 
 Administrative (expenses)/credit                 3                  (836)               304            (436) 
---------------------------------------------  ------  -------------------  ----------------  --------------- 
 Operating (loss) / profit                                         (1,508)             3,984            5,138 
 Gain on bargain purchase                         8                    362                 -                - 
 Finance income                                                         95                76              209 
 Finance costs                                                       (362)             (269)            (546) 
 (Loss) / profit before taxation                                   (1,413)             3,791            4,801 
 Taxation                                                            (303)           (1,586)          (2,385) 
---------------------------------------------  ------  -------------------  ----------------  --------------- 
 (Loss) / profit for the period attributable 
  to the equity holders of the Parent                              (1,716)             2,205            2,416 
---------------------------------------------  ------  -------------------  ----------------  --------------- 
 
 (Loss) / earnings per share (pence) 
 Basic                                            6                 (1.65)              2.23             2.44 
 Diluted                                                            (1.65)              2.04             2.43 
 
 
 
 Group statement of profit or loss and other comprehensive income 
 for the six months ended 31 December 2019 
 
 
 
                                                                    Six months       Six months       Twelve 
                                                                         to 31            to 31       months 
                                                                      December         December        to 30 
                                                                          2019             2018         June 
                                                                                                        2019 
                                                     Notes         (unaudited)      (unaudited)    (audited) 
                                                                       GBP'000          GBP'000      GBP'000 
 
 (Loss) / profit for the period                                        (1,716)          2,205         2,416 
--------------------------------------------------  ------  ------------------  ---------------  ----------- 
  Other comprehensive income 
 
 Items that will not be reclassified subsequently 
  to profit or loss 
 Gain on disposal of financial assets                  5                     -              130            - 
 Fair value gain on financial assets                   5                     -               15            - 
--------------------------------------------------  ------  ------------------  ---------------  ----------- 
                                                                             -              145            - 
 
 Items that may be reclassified subsequently 
  to profit or loss 
 Fair value gain on financial assets                                         -                -          651 
--------------------------------------------------  ------ 
                                                                             -                -          651 
 Income tax relating to components of other                                  -                -            - 
  comprehensive income 
                                                            ------------------  ---------------  ----------- 
 Other comprehensive income for the period, 
  net of tax                                                                 -              145          651 
 Total comprehensive (loss) / profit for 
  the period attributable to the equity holders 
  of the Parent                                                        (1,716)            2,350        3,067 
--------------------------------------------------  ------  ------------------  ---------------  ----------- 
 
 
 Group statement of financial position 
 as at 31 December 2019 
 
 
                                                     At 31 December            At 31          At 30 
                                                               2019         December           June 
                                                                                2018           2019 
                                          Notes         (unaudited)      (unaudited)      (audited) 
                                                            GBP'000          GBP'000        GBP'000 
 Non-current assets 
 Property, plant and equipment: development 
  & production                                               11,589           12,442         11,657 
 Property, plant and equipment: other                         9,491              154            165 
 Intangible assets                                               42                -              - 
 Goodwill                                                     2,174            2,174          2,174 
 Exploration and evaluation assets                           34,918           31,381         34,052 
 Financial assets                           5                     -            5,715              - 
 Interest bearing loans                                       2,937            2,967              - 
 Deferred tax assets                                              3                3              3 
 Total non-current assets                                    61,154           54,836         48,051 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Current assets 
 Trade and other receivables                                  1,419            1,466            658 
 Interest bearing loans                                           -                -          2,900 
 Stock                                                          320                -              - 
 Cash and cash equivalents                                   25,880           23,552         30,666 
 Total current assets                                        27,619           25,018         34,224 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Total assets                                                88,773           79,854         82,275 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Current liabilities 
 Trade and other payables                                   (4,988)          (4,774)        (4,560) 
 Current tax liabilities                                          -            (576)        (1,563) 
 Total current liabilities                                  (4,988)          (5,350)        (6,123) 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Non-current liabilities 
 Other liabilities and accrued income                         (645)             (32)            (5) 
 Lease liabilities                                          (1,192)                -              - 
 Bank loan                                                  (3,600)                -              - 
 Deferred tax liabilities                                   (1,404)          (1,284)        (1,284) 
 Decommissioning provisions                                 (6,873)          (6,598)        (6,607) 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 Total non-current liabilities                             (13,714)          (7,914)        (7,896) 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Total liabilities                                         (18,702)         (13,264)       (14,019) 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Net assets                                                  70,071           66,590         68,256 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 Equity attributable to equity holders 
 Called up share capital                                     19,678           19,533         19,533 
 Share premium                                               91,181           87,805         87,805 
 Revaluation reserve                                              -            (310)              - 
 Retained deficit                                          (40,788)         (40,438)       (39,082) 
---------------------------------------  ------                      ---------------  ------------- 
 Total equity                                                70,071           66,590         68,256 
---------------------------------------  ------  ------------------  ---------------  ------------- 
 
 
 Group statement of changes in equity 
 for the six months ended 31 December 2019 
 
 
 
                         Share capital   Share premium   Revaluation reserve     Retained deficit                Total 
                               GBP'000         GBP'000               GBP'000              GBP'000              GBP'000 
 
 At 1 July 2018                 19,533          87,805                 (325)             (42,789)               64,224 
 Profit for the period               -               -                     -                2,205                2,205 
 Gain on disposal of 
  financial assets                   -               -                     -                  130                  130 
 Fair value gain on 
  financial assets                   -               -                    15                    -                   15 
 Total comprehensive 
  income for the 
  period                             -               -                    15                2,335                2,350 
 Share-based payments                -               -                     -                   16                   16 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 At 31 December 2018            19,533          87,805                 (310)             (40,438)               66,590 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 
 
 Profit for the period               -               -                     -                  211                  211 
 Fair value gain on                  -               -                     -                    -                    - 
 financial assets 
----------------------  --------------  --------------  --------------------  ------------------- 
 Total comprehensive 
  loss for the period                -               -                     -                  211                  211 
 Transfer revaluation 
  reserve on disposal 
  of financial assets 
  at fair value 
  through other 
  comprehensive 
  income                             -               -                   310                (310)                    - 
 Gains arising on 
  repayment of 
  employee share based 
  loans                              -               -                     -                  941                  941 
 Share-based payments                -               -                     -                    8                    8 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 At 30 June 2019                19,533          87,805                     -             (39,082)               68,256 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 
 Loss for the period                 -               -                     -              (1,716)              (1,716) 
 Total comprehensive 
  income for the 
  period                             -               -                     -              (1,716)              (1,716) 
 Issue of share 
  capital                          145           3,376                     -                    -                3,521 
 Share-based payments                -               -                     -                   10                   10 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 At 31 December 2019            19,678          91,181                     -             (40,788)               70,071 
----------------------  --------------  --------------  --------------------  -------------------  ------------------- 
 
 
  Group statement of cashflows 
  for the six months ended 31 December 2019 
                                                           Six months          Six months         Twelve 
                                                                to 31      to 31 December         months 
                                                             December                2018          to 30 
                                                                 2019                               June 
                                                                                                    2019 
                                                          (unaudited)         (unaudited)      (audited) 
                                            Notes             GBP'000             GBP'000        GBP'000 
 
 Cashflows from operating activities 
 Cashflows from operations                    7                   921               3,164          4,733 
 Taxation paid                                                (2,592)             (1,949)        (1,779) 
-----------------------------------------  ------                      ------------------  ------------- 
 Net cash (used in) / generated from 
  operating 
  activities                                                  (1,671)               1,215          2,954 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 
 Cash flow from investing activities 
 Interest received                                                 37                  40            239 
 Acquisition of exploration and 
  evaluation 
  assets                                                      (2,154)             (1,633)        (3,744) 
 Proceeds from sale of financial assets 
  at fair value through other 
  comprehensive income                                              -                   -          6,351 
 Acquisition of property, plant and 
  equipment: 
  development and production                                     (39)                   -           (63) 
 Disposal of property, plant and 
  equipment: 
  development and 
  production                                                        -                   -            211 
 Acquisition of property, plant and 
  equipment: 
  other                                                         (393)               (144)          (190) 
 Other liabilities 
 Proceeds from financial assets                                     -                 130              - 
 Net cash from Pitreadie                                           24                   -              - 
 Loans issued                                                       -                   -              - 
 Net cash (used in) / generated by 
  investing 
  activities                                                  (2,525)             (1,607)          2,804 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 
 Cash flow from financing activities 
 Issue of ordinary shares                                           -                   -              - 
 Interest paid                                                   (20)                (22)           (45) 
 Proceeds from loans and borrowings                                 -                   -            941 
 Net cash (used in) / generated by 
  financing 
  activities                                                     (20)                (22)            896 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 
 Net (decrease) / increase in cash and 
  cash equivalents                                            (4,216)               (414)          6,654 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 
 Cash and cash equivalents at beginning 
  of period                                                    30,666              23,804         23,804 
 Effect of foreign exchange rate 
  differences                                                   (570)                 162            208 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 Cash and cash equivalents at end of 
  period                                                       25,880              23,552         30,666 
-----------------------------------------  ------  ------------------  ------------------  ------------- 
 
 

Notes to the Interim financial statements

   1     Accounting policies 

Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union and IFRS Interpretations Committee (IFRIC) interpretations. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and IFRIC and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 30 June 2020.

The Group has chosen not to adopt IAS 34 - Interim Financial Statements, in preparing these financial statements.

The accounting policies applied in this report are the same as those applied in the consolidated financial statements for the year ended 30 June 2019, with the exception of IFRS 16 "leases" which is the new standard applicable and mandatory for the year ending 30 June 2020. The new standard does not have a material impact on the financial statements on a net basis. However, the standard does increase the assets and liabilities of the group through the recognition of right of use assets and corresponding lease liabilities. No new material accounting standards have been adopted due to the acquisition of Pitreadie Farm Limited, which occurred in the period.

Non-statutory accounts

The financial information set out in this interim report does not constitute the Group's statutory accounts.

The financial information for the year ended 30 June 2019 has been extracted from the audited statutory accounts. The statutory accounts for the year ended 30 June 2019 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The financial information for the 6 months ended 31 December 2019 and 31 December 2018 is unaudited.

   2     Exploration and evaluation expenses 

Exploration and evaluation expenses includes impairment charges of GBP1,287,000 recorded in respect of exploration licences relinquished in the period (Six months to 31 December 2018: GBPnil, Twelve months to 30 June 2019: GBPnil).

   3     Administrative (expenses)/credit 

Administrative (expenses)/credit include a credit in respect of a non-cash revaluation of share appreciation rights (SARs) totalling GBP349,000 (Six months to 31 December 2018: GBP704,000 credit, Twelve months to 30 June 2019: GBP1,079,000 credit). The SARs may be settled by cash or shares and are therefore revalued with the movement in share price. The valuation was impacted by the decrease in The Parkmead Group plc share price between 30 June 2019 and 31 December 2019.

Administrative (expenses)/credit also includes a foreign exchange expense of GBP560,000 (Six months to 31 December 2018: GBP177,000 credit, Twelve months to 30 June 2019: GBP181,000 credit).

   4     Interest bearing loans 

On 27 July 2017, The Parkmead Group plc entered into a credit facility with Energy Management Associates Limited, whereby Parkmead agreed to lend up to GBP2,900,000 to Energy Management Associates Limited.

The Loan has a period of two years, with a fixed interest rate of 2.5 per cent. Interest charged during the period amounted to GBP37,000 (Six months to 31 December 2018: GBP37,000, Twelve months to 30 June 2019: GBP73,000).

On 27 July 2019, The Parkmead Group plc entered into a 24-month extension of the interest-bearing loan to Energy Management Associates Limited.

   5     Financial assets 

In January 2019, a recommended cash offer for Faroe Petroleum was received from DNO ASA of 160 pence for each share in Faroe Petroleum. This offer was successful and Parkmead received GBP6.2 million at the end of January 2019.

   6     (Loss) / earnings per share 

Earnings / (loss) per share attributable to equity holders of the Company arise as follows:

 
                                                                                   Twelve 
                                               Six months        Six months        months 
                                           to 31 December    to 31 December    to 30 June 
                                                     2019              2018          2019 
                                              (unaudited)       (unaudited) 
 
   (Loss) / earnings per 1.5p ordinary 
   share (pence) 
   Basic                                           (1.65)              2.23          2.44 
 Diluted                                           (1.65)              2.04          2.43 
---------------------------------------  ----------------  ----------------  ------------ 
 

The calculations were based on the following information:

 
                                                                                Twelve 
                                            Six months        Six months        months 
                                        to 31 December    to 31 December    to 30 June 
                                                  2019              2018          2019 
                                           (unaudited)       (unaudited) 
                                               GBP'000           GBP'000       GBP'000 
 
 (Loss) / earnings attributable 
  to ordinary shareholders                     (1,716)             2,205         2,416 
 
 Weighted average number of shares 
  in issue 
 Basic weighted average number of 
  shares                                   104,014,105        98,929,160    98,929,160 
------------------------------------  ----------------  ----------------  ------------ 
 
 Dilutive potential ordinary shares 
 Share options                               9,314,068         9,314,068     9,314,068 
------------------------------------  ----------------  ----------------  ------------ 
 

Basic (loss) / earnings per share is calculated by dividing the profit or loss for the period by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

Diluted loss per share

Loss per share requires presentation of diluted loss per share when a company could be called upon to issue shares that would decrease net profit or net loss per share. When the Group makes a loss the outstanding share options are anti-dilutive and so are not included in dilutive potential ordinary shares.

   7     Notes to the statement of cashflows 

Reconciliation of operating (loss) / profit to net cash flow from operations

 
                                                         Six months          Six months          Twelve 
                                                              to 31               to 31          months 
                                                           December            December           to 30 
                                                               2019                2018            June 
                                                                                                   2019 
                                                        (unaudited)         (unaudited) 
                                                            GBP'000             GBP'000         GBP'000 
 Operating (loss) / profit                                  (1,508)               3,984           5,138 
 Depreciation                                                   240                 173             217 
 Amortisation and exploration write-off                       1,475                   -               - 
 Disposal of development and production assets                    -                   -              22 
 Provision for share based payments                               -                  16              24 
 Currency translation adjustments                               570               (162)           (208) 
 Increase in receivables                                      (237)               (171)             636 
 Decrease in stock                                               41                   -               - 
 Increase/(decrease) in payables                                340               (676)         (1,096) 
 Net cash flow from operations                                  921               3,164           4,733 
------------------------------------------------  -----------------  ------------------  -------------- 
 
   8      Business Combination 

On 26 September 2019, the Group completed the acquisition of 100% of the share capital of Pitreadie Farm Limited ("Pitreadie") to purchase a company with extensive farmland and sites in Scotland with significant renewable energy potential. This acquisition constituted a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The valuations presented below are based on current available information. If new information becomes available within the next 12 months from 26 September 2019, the Group may change the fair values in the purchase price allocation in accordance with IFRS 3. The provisional fair values of the identifiable assets and liabilities of Pitreadie at the acquisition date are shown below:

 
                                                          GBP 000 
--------------------------------------  ------------------------- 
 Non current assets 
 Intangible assets                                             52 
 Property, plant and equipment: other                       8,101 
 
 Current assets 
 Stock                                                        361 
 Debtors                                                      103 
 Prepayments and accrued income                                10 
 Cash                                                          24 
 
 Current creditors 
 Trade creditors                                             (37) 
 Other creditors and accruals                                (68) 
 Lease liabilities                                          (289) 
 
 Non current liabilities 
 Bank loan                                                (3,600) 
 Accruals and deferred income                               (654) 
 Deferred tax liability                                     (120) 
 Net assets                                                 3,883 
 Non cash consideration                                   (3,521) 
--------------------------------------  ------------------------- 
 Gain on bargain purchase                                   (362) 
--------------------------------------  ------------------------- 
 

The land and buildings, being acquired, assuming no upside from renewable opportunities, were valued at GBP7.59 million by CKD Galbraith LLP, a leading independent property consultancy. Based on this valuation the group has made a bargain purchase gain of GBP362,000.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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