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The Parkmead Group plc
4 Queen’s Terrace
Aberdeen
AB10 1XL
United Kingdom
www.parkmeadgroup.com
ENERGY
REFOCUSED
Annual Report 2022
In keeping with Parkmead’s ESG vision and commitment to minimise the environmental impact of our activities this year’s Annual Report mailing was packaged using fully recyclable materials.Communiqué Associates Limited, Edinburgh am@communique-associates.co.ukThe Parkmead Group plc Annual Report 2022 I 1 DELIVERING ENERGYThe Parkmead Group is a UK and Netherlands focused independent energy group listed on AIM of the London Stock Exchange. The Group produces natural gas from a portfolio of four fields across the Netherlands, and holds significant additional oil and gas interests across the UK and Dutch sectors. The Group also benefits from a portfolio of renewable energy assets including an operational wind farm and a range of complementary renewable energy opportunities.ContentsHighlights 2Chairman’s Statement 4Renewables 8UK Oil and Gas 10Netherlands Gas 12Assets 14Board of Directors 15Strategic Report 16Directors’ Report 18Corporate Governance 20Independent Auditor’s Report 24Financial Statements 30Notes to the Financial Statements 36Officers and Professional Advisors 75 Highlights
Parkmead has delivered record
revenue and operational profit in 2022
alongside the acquisition of a wind
power company to complement our
high-quality, low-carbon portfolio.
“ Parkmead continues to
make exciting progress on
key projects throughout
our developing portfolio”
Tom Cross
Executive Chairman
Record revenue
of £12.1m
£5.2m
operating profit
82% increase in gross
profit margin
Skerryvore stake
increased from 30% to 50%1
Operational wind farm
acquired for £3.3m
Two-well Netherlands
drilling campaign Q4 2022
245% increase
in PPA price 2
2 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 3
1 - Effective from 01/10/2022
2 - Average increase across 12 month period to 31/07/2023
i
n
g
r
a
m
t
fi
o
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p
s
s
o
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G
89%
49%
31%
2020
2021
2022
Chairman’s
Statement
“ We have added value through a
number of important steps across
our portfolio this year. These included
increasing our stake in the Skerryvore
project, acquiring Kempstone Hill Wind
Farm and completing the Netherlands
gas royalty transaction.”
Tom Cross
Executive Chairman
22 November 2022
2022 has been an important year of delivery for Parkmead.
Building on the solid foundations established in recent years,
the Group increased its revenue by 236% in the period to
£12.1 million and generated strong profits at both operating
and pre-tax levels. Parkmead achieved an operating profit of
£5.2 million and a record profit before tax of £4.0 million.
We also delivered a number of important, value-adding steps
across our projects this year, including increasing our stake
in Skerryvore, acquiring the Kempstone Hill wind farm and
completing the Netherlands gas royalty transaction.
Financial Performance
The Group’s revenue for the year to 30 June 2022 was £12.1m
(2021: £3.6m), generating a substantial increase in gross profit
to £10.8m (2021: £1.8m). The gross margin improved from 49%
to 89%, showing the high-quality nature of Parkmead’s onshore
production in the Netherlands and strong operating leverage.
The increased revenue in the year reflected the good operating
performance and substantially higher gas prices during 2021,
which increased further in 2022 following Russia’s invasion
of Ukraine. This strength in gas prices has continued since
the financial year end, with prices reaching approximately
€350/MWh in August 2022. Since then, prices have softened
and are now trading at more normalised levels as seen during
the financial year. The spike in pricing has resulted in revenue
from the Netherlands in the four-month period to 31 October
2022 in excess of €9.0 million. Parkmead remains 100%
unhedged and therefore benefits from these higher prices.
2022 Revenue
£12.1m
Operating profit for the year was £5.2m (2021: £12.8m loss)
and an adjusted EBITDA was delivered of £9.0m (2021: £1.0m
loss). A record profit before tax was recorded of £4.0m (2021:
£13.4m loss).
Taxation paid of £4.8m (2021: £0.4m) relates primarily to
Parkmead’s Netherlands assets and reflects high revenue
and very low operating costs across the onshore portfolio.
Accordingly, the Group’s net loss for the period fell significantly
to £0.8m (2021: £13.8m). Parkmead maintains a strong
balance sheet with total assets of £86.3m (2021: £78.7m) at
30 June 2022. Cash and cash equivalents at year-end were
£23.3m (2021: £23.4m) and interest bearing loans receivable
were £2.9m (2021: £2.9m). The Group’s net asset value was
£57.0m (2021: £57.7m). Debt within the Group remains minimal
and was £0.9m at 30 June 2022 (2021: £0.5m). This prudent
approach to external debt is an important part of our financial
discipline.
An impairment of goodwill was recorded in the year of £2.2m
(2021: £nil) relating to historic contracts held by the Group’s
benchmarking and economics subsidiary company, Aupec
Limited. Aupec is undergoing a growth strategy change that
will focus the company’s offering to a more interactive, cloud-
based system for clients. This will also allow Aupec to offer
a benchmarking analytics service to clients outside of the
energy sector.
As a result of the excellent cash flow received from the
Netherlands this year, we decided to move forward with legacy
decommissioning activities that are required to be carried out
in the UKCS. Completing this work will position Parkmead well
ahead of its next phase of growth, with no major abandonment
liabilities going forward. Decommissioning provisions for
the period were £19.2m (2021: £0.4m). The Group is also
capitalising on lower costs, agreed before the significant inflation
in the offshore market.
Group administrative expenses were £2.2m (2021: £3m).
Underlying staff costs, before share based payments, were
reduced to £1.7m (2021: £2.0m).
4 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 5
Netherlands Gas Projects
In July 2021, Parkmead completed the acquisition of a gas
royalty associated with the Group’s existing interests in the
Drenthe IV, Drenthe V and Andel Va licences in the Netherlands
from Vermilion Energy. These licences contain the Grolloo,
Geesbrug and Brakel onshore gas fields, respectively.
The acquisition doubled the Group’s effective financial interest
from 7.5% to 15% (in line with Parkmead’s working interest in
the licences). This royalty was previously held by NAM (a Shell
and ExxonMobil joint venture) and came with the licences when
they were acquired by Parkmead. The consideration for the
royalty was €565k.
The acquisition is already proving to be of significant benefit to
Parkmead as it was completed ahead of the recent increase
in energy prices. It is expected that the royalty deal will also
significantly extend the producing life of these fields, through
greater partner alignment.
Our Netherlands production was some of the most efficient
and profitable in Europe during 2022, on a per-barrel basis.
Average gross production for the financial year across the
Group’s Netherlands assets was 21.7 MMscfd, approximately
3,740 barrels of oil equivalent per day (“boepd”).
We recently announced the spudding of the ‘LDS’ two-well
drilling campaign in the Netherlands. The LDS wells are
being drilled from the existing Diever well site and will target
a combined mid-case gas-in-place of 37.2 billion cubic feet
(“Bcf”) in the prolific Rotliegendes reservoirs within this licence.
The production tie-in period for these onshore targets is very
short and, provided success at LDS, would result in significant
additional revenue and cash flow for Parkmead.
The operating cost of the combined fields is very low at just
$8.6 per barrel of oil equivalent. These high-quality assets,
combined with the operating leverage from a fixed cost base,
underpin the healthy gross profit margin during the year and
allows us to invest in further opportunities. Parkmead’s onshore
gas production continues to form a key part of the Group
and plays an important role in our transition to a lower-carbon
environment. On our Drenthe VI licence, the Diever gas field
remains one of the most prolific producing onshore fields
in the Netherlands. Given the production from Parkmead’s
Netherlands assets, especially in the context of current gas
prices, a key near term focus for the Company will be to
maximise the opportunities within these licences. The LDS
two-well drilling campaign is part of this strategy.
UK Oil and Gas Projects
Skerryvore
Following consultation with its joint venture partners in Licence
P.2400 (which encompasses the Skerryvore prospects) and
having received approvals from the regulatory authorities,
post period end Parkmead reached agreement to increase its
stake in the Skerryvore project from 30% to 50%. Parkmead
will continue as Operator on the licence, which is testament
to the efforts and capability of the Parkmead team. Skerryvore
will be Parkmead’s first operated exploration well. Parkmead’s
joint venture partners in the licence going forward will be Serica
Energy (UK) Limited (20%) and CalEnergy (Gas) Limited (30%).
In addition, Parkmead has received approval from the North
Sea Transition Authority (NSTA) to enter the next phase of
this licence with agreement to drill the high-impact Skerryvore
prospects. The Company’s geotechnical work programme has
confirmed the considerable multi-interval potential of Skerryvore.
The planned well will target the main stacked exploration
prospects, at Mey and Chalk level, which studies indicate
could contain 157 million barrels of oil equivalent (“MMboe”) in
the P50, most likely case. The licence also contains additional
prospectivity at the Ekofisk and Jurassic levels. A successful
discovery could be tied into existing and planned infrastructure
in the vicinity.
The area around Skerryvore is currently seeing important
activity on several fronts, with Harbour Energy progressing
the adjacent Talbot discovery, NEO Energy proceeding with
the redevelopment of Affleck and TotalEnergies appraising the
Isabella discovery. Development activity is also taking place
in the Norwegian sector in close proximity to Skerryvore at
Tommeliten A, a licence operated by ConocoPhillips.
Greater Perth Area (“GPA”)
Parkmead has engaged a leading energy corporate finance
advisory firm, Gneiss Energy Limited, to manage the process
to find a suitable industry partner (or partners) in relation to the
Company’s 100% interest in the Greater Perth Area (“GPA”)
development project.
The core Perth field holds approximately 55 MMboe on a most
likely, P50 basis. The wider GPA project has the potential
to deliver between 75 and 130 MMboe on a P50 basis and
could provide material value-adding volumes to surrounding
infrastructure through field life extension.
GPA is one of the North Sea’s largest undeveloped oil projects
and has been fully appraised, so no further appraisal drilling is
needed. The constituent wells have been flow tested at rates
of up to 6,000 barrels of oil per day and have produced good
quality, light crude oil of between 37° and 32° API.
Parkmead has continued dialogue on commercial terms with
the nearby Scott field partnership for the potential tie-back
of the GPA project to Scott. Scott lies just 6 miles southeast
of GPA and a tie-back could yield a number of mutually
beneficial advantages for both the Scott partnership and the
Perth owners.
Transportation studies for the base case GPA development
concept have previously been completed. These have confirmed
there are no technical showstoppers that would prevent
the transportation and processing of fluids from the Perth
production wells, all the way through the offshore infrastructure
Average Realised Gas Price
100
80
60
40
20
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2020
2021
Financial Year
2022
and onshore facilities. Parkmead continues to align potential
project development concepts with the UK government’s net
zero commitment and has therefore initiated a net zero study
for GPA. Encouraging industry interest has also been received
with regards to the GPA farm out and constructive dialogue
continues across all three GPA licences with NSTA.
Parkmead believes that projects like GPA play an important
role in underpinning the supply of energy that the UK needs
during its transition to net zero. As a fuel that is primarily
used for transportation, manufacturing and petrochemicals,
oil will continue to feature as a vital commodity in the UK
over the coming years. Therefore, it is very important that
the UK continues to develop projects such as GPA in order
to reduce the UK’s reliance on less-regulated, more carbon-
intensive imports. Parkmead believes that production of
hydrocarbons from GPA can be done in a sustainable fashion,
in alignment with the UK Government’s most recent targets on
carbon emissions.
Russia’s invasion of Ukraine has increased the UK Government’s
focus on energy security and confirmed the importance of
having sizeable and robust UK domestic energy production.
The rise in international oil and gas prices has also strengthened
investment appetite through enhanced economics. Parkmead
has also seen a positive investment sentiment emanating from
the introduction of the new UK Energy Profits Levy, whereby
the associated investment allowance of up to 91% has created
a powerful incentive for major producers to invest in new UK
North Sea developments.
Onshore Renewables
The acquisition of the Kempstone Hill Wind Farm, completed
31 January 2022, has now been fully integrated into the
Group. The acquisition was immediately revenue and cash
flow enhancing. In the last 12 months the wind farm generated
2,850 MWh with a 99.7% availability, enough to power up
to 1,000 homes. Kempstone Hill benefits from an attractive
inflation-linked, Feed-in Tariff through until 2036. Wholesale
export prices have seen strong gains throughout 2022.
Following Kempstone Hill’s integration into Parkmead, a new
Power Purchase Agreement was negotiated by Parkmead’s
team, commencing 1 August 2022, which we expect to result
in a substantial increase in 2023’s cashflow. Parkmead also has
been assessing a number of opportunities to further enhance
the Kempstone Hill Wind Farm, such as the potential inclusion
of solar power generation, and expanding sales of electricity to
local industrial users.
The major shift in the electricity generation market has changed
the dynamics of renewable projects and Parkmead has
decided to position Pitreadie based on a hybrid of renewable
technologies following the completion of successful feasibility
studies during the year. To that effect, Parkmead is progressing
the work required to allow the Company to consider a combined
wind and solar project, with added potential for a battery
storage unit. This complements our existing onshore projects
throughout the UK and Netherlands as the Group looks to
continue expanding its onshore energy portfolio.
Outlook
Our focus at Parkmead is to continue building a robust and
balanced European energy business, driving forward both
organic and inorganic growth opportunities. We have delivered
significant growth across our portfolio this year, alongside
achieving record gas revenue and profit before tax.
The Directors believe that there are excellent prospects to
increase production from Parkmead’s Netherlands assets and
we will imminently spud a new two-well drilling campaign to
begin accessing these opportunities. The current gas price
environment provides a strong platform to capitalise on the low
cost of production from these concessions.
We maintain a very healthy appetite for transactions which could
provide incremental revenue, cash flow and long-term value for
shareholders. Our proactive approach to investment in cleaner
energies positions Parkmead to continue building a balanced
portfolio of assets across the Group.
Parkmead’s strict financial discipline has allowed us to remain
unhedged for 100% of our gas production, thus gaining
maximum exposure to the higher Dutch gas prices. The
Company has started the 2023 financial year on a sound
footing, with work ongoing across a number of projects which
should pave the way for a successful year ahead.
6 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 7
Acquisition of
Kempstone Hill
Wind Farm in
2022
Provides power
for up to 1,000
homes
2,850 MWh
of electricity
generated
throughout 2022
RENEWABLES
Feeding our first 100% renewable
energy into the National Grid
Acquisition of Kempstone Hill
Wind Energy Limited
Throughout the latter half of 2021, the team worked incredibly
hard to complete the acquisition of Kempstone Hill Wind
Energy Limited and integrate it into the wider business.
This off-market acquisition is Parkmead’s first electricity
generating asset, feeding 100% renewable energy direct into the
grid. The project comprises three V39 Vestas 500kW turbines
providing a combined installed capacity of 1.5MW. The asset
commenced production in 2016 and profits from an inflation
linked Feed-in Tariff (FiT) accreditation through to 2036.
The wind farm also benefits from a full planning consent,
lasting until 2043.
Kempstone Hill was acquired for a total cash consideration
of £3.29m. Since the acquisition, wholesale electricity prices
have increased considerably resulting in an increased Power
Purchase Agreement export price for the coming year, and
therefore higher than expected revenue generation. Availability at
the site remains high averaging 99.7% across the three turbines
in 2022.
Wholesale energy prices are expected to remain high until the
end of 2024. The acquisition has also resulted in further income
stream diversification for the Group, in addition to its onshore
gas portfolio.
The acquisition evidences our commitment to invest in the wider
energy transition. Kempstone Hill complements the Group’s
organic hybrid renewable energy project at Pitreadie, and our
team is continuing to actively review additional acquisitions and
opportunities in this sector.
“ Our team of experts have swiftly
integrated this asset into our Group,
delivering immediate cashflow and
future upside opportunities”
Andrew Smith
Group Asset Manager
UK Electricity Spot Price
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500
400
300
200
100
0
2021
May
Sep
2022
May
Sep
August
2021
October
2021
January
2022
March
2022
July
2022
August
2022
Identification
of market
opportunity
Price, effective
date and exclusivity
position agreed
Acquisition
completes
Full integration
into wider group
New PPA signed
for 2022/2023
Parkmead starts to
received full enhanced
benefit of the new
export pricing
8 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 9
h UK OIL AND GAS
UK OIL & GAS
Increasing our
stake in Skerryvore
“ The acquisition of this natural gas
Tim Coxe
royalty puts Parkmead in a stronger
Managing Director, North Sea
position. It adds substantial core
value and we estimate it will extend
the life of the assets by several
years.”
Guy Stroulger
Director, Business Development & Commercial
Skerryvore
The Skerryvore area (P.2400) is situated in the prolific Central
Graben, and spans Blocks 30/12c, 13c, 17h & 18c.This area
is seeing a particularly high volume of activity at present, with a
Final Investment Decision expected on the adjacent Talbot field,
the redevelopment of the nearby Affleck field, and appraisal
drilling on the Isabella discovery.
In July, Parkmead was delighted to report that following the
completion of a robust technical work programme across
the Skerryvore licence, the joint venture group had taken the
decision to enter the next phase of the licence. This involves
an exploration well on the attractive Skerryvore prospects.
The NSTA has since approved Parkmead as the Exploration
Operator, with the licence formally entering the next phase on
1st October 2022.
The Company’s technical work programme has confirmed the
considerable potential at Skerryvore. Parkmead has therefore
increased its stake in Skerryvore from 30% to 50%. The
planned well will target the main stacked exploration prospects,
at Palaeocene Mey Sandstone and Cretaceous Chalk levels,
which together could contain 157 million barrels of oil equivalent
(“MMBoe”). Additional prospects have also been identified in
the Jurassic and Ekofisk plays. Our joint venture partners in the
licence going forward are Serica Energy (20%) and CalEnergy
Resources (30%).
The project in brief
operated stake in the project
50%
157MMboe
1st
estimated P50 reserves
Parkmead operated well on the UKCS
“ Parkmead’s technical work has
yielded extremely positive results
and we are excited to progress
into the next phase of the licence
which includes an exploration well
on the stacked prospects”
Paul Ramsey
Subsurface Team Lead
10 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 11
Skerryvore
NETHERLANDS GAS
UK OIL & GAS
Accelerating high quality
gas supplies in Europe
EXPLORATION
AND APPRAISAL
The joint venture is driving
forward our E&A activities
which include the LDS
wells, expected to spud
in Q4 2022
PRODUCTION
Currently producing from
4 fields with gross output
of 3,740boepd. Infill well
opportunities are being
explored on Geesbrug
and Brakel
Gas production across Parkmead’s four fields has remained
strong, with average gross production of 21.7MMscfd,
approximately 3,740boepd. These high-quality assets,
combined with efficient operational cost control, underpin a
healthy gross profit margin and allows us to invest in further
opportunities throughout the Netherlands and UK. Parkmead’s
onshore gas production continues to form a key part of the
Group and plays an important role in our transition to a lower-
carbon environment.
On our Drenthe VI licence, the Diever gas field remains in the top
three most prolific producing onshore fields in the Netherlands.
The JV partners are making material progress on the LDS
project, which is targeting multiple gas prospects. These will be
drilled from the same site as the existing Diever field. Further
follow-on prospects have also been identified on this prolific
concession.
The LDS project has continued to progress this year, with the
completion of permitting and associated well planning work
(including the procurement of long lead items). The contracted
land rig has now arrived at location and will target a combined
Pmean GIIP of 37.2 billion cubic feet (“Bcf”). Construction
work to facilitate the potential tie-in of the new wells is largely
complete. In a success case, there will be a short period
required for well clean-up activities and final tie-ins into the same
system as Diever production.
“ Drilling will commence shortly on our
LDS prospects in the Netherlands.
A positive result would add material
gas volumes to Parkmead’s net
production, and build on the JV’s
alignment created across our
concessions as a result of the recent
royalty acquisition”
Henry Steward
Commercial Manager
The Parkmead portfolio includes producing gas fields with a
very low operating cost. This profitable gas production from
the Netherlands provides important cash flow to the Group.
Success at the LDS wells will provide further low cost, fast-
track, additional volumes and material cash flow to Parkmead.
At Parkmead’s producing Geesbrug and Brakel gas fields
the JV has commenced modelling working on low-cost infill
well opportunities which aim to maximise production from
these assets.
DEVELOPMENT
Permitting underway for
Papekop (PMG 15%).
A proven field with
24.2MMBbls of oil-in-
place and 39.4bcf of
gas-in-place
ALTERNATIVE
ENERGY
The JV is actively
assessing hydrogen and
geothermal opportunities
that may be facilitated
through existing or
near-term drilling on
our licences
12 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 13
Natural Gas and Oil Assets
Board of Directors
AT 31 OCTOBER 2022
LICENCE
BLOCK
DESIGNATION
FIELD/
DISCOVERY
PROSPECT/
OPPORTUNITY
OPERATOR
PARKMEAD
EQUITY %
CO-VENTURERS
UK CENTRAL NORTH SEA
15/21e North Area
NE Perth
15/21a South Area
Dolphin
15/21c
14/18b
14/25a
Perth
Athena
Perth
Parkmead
Parkmead
Parkmead
Ithaca
100
100
100
30
Parkmead
100
Ithaca 40%, Jersey 15%, NEO 15%
P218
P588
P1293
P2154
P2516
P2400
14/20g, 15/16g
Fynn Beauly,
Fynn Andrew
Parkmead
30/12c, 13c, 17h
& 18c
Skerryvore
Parkmead
50
50
Orcadian Energy 50%
Serica 30%, CalEnergy 30%
Ryan Stroulger
Finance Director
Thomas Cross
Executive Chairman
Tom is a Chartered Director and petroleum engineer with extensive energy sector experience, spanning projects in more than
20 countries. Tom was the founder and Chief Executive of Dana Petroleum plc through until its sale to the Korea National Oil
Corporation in 2010. Prior to Dana, he held senior positions with Conoco, Thomson North Sea, Louisiana Land and Exploration
and was Director of Engineering at the UK Petroleum Science and Technology Institute. Tom is a former Chairman of BRINDEX,
the Association of British Independent Oil Companies, a former adviser to the BBC on energy affairs and a Fellow of the Institute
of Directors.
LICENCE
FIELD/
DISCOVERY
PROSPECT/
OPPORTUNITY
OPERATOR
PARKMEAD
EQUITY %
CO-VENTURERS
NETHERLANDS ONSHORE
Andel Va
Brakel, Ottoland,
Wijk en Aalburg
Andel Vb
Kerkwijk
Drenthe IV
Grolloo
Drenthe V
Geesbrug
Drenthe VI
Diever
Papekop
Papekop
Andel Va
Brakel, Ottoland
LDS-A-CE
LDS-A-SW
LDS-B
Vermilion
Vermilion
Vermilion
Vermilion
Vermilion
Vermilion
Vermilion
15
7.5
15
15
7.5
15
15
Vermilion 45%, EBN 40%
Vermilion 22.5%, EBN 40%, NAM 30%
Vermilion 45%, EBN 40%
Vermilion 45%, EBN 40%
Vermilion 52.5%, EBN 40%
Vermilion 45%, EBN 40%
Vermilion 45%, EBN 40%
Renewable Energy Assets
LICENCE
LOCATION
OPERATOR
PARKMEAD
EQUITY %
ENERGY TYPE
UK ONSHORE RENEWABLES
Kempstone Hill Wind Farm
Aberdeenshire
Parkmead
Pitreadie Site 1
Pitreadie Site 2
Aberdeenshire
Parkmead
Aberdeenshire
Parkmead
100
100
100
Wind
Wind
Solar PV
Ryan Stroulger has been a key member of The Parkmead Group management team since its foundation as an energy business in
2010. He served as Commercial Director of the Group before becoming Finance Director. Ryan has been responsible for identifying
and driving forward numerous asset and corporate opportunities, such as the acquisitions of DEO Petroleum plc and Lochard Energy
Group PLC. He is also responsible for all aspects of Parkmead’s external financing, from strategic planning through to successful
execution. He is a member of the UK’s Institute of Directors and was awarded the Corporate Finance Qualification by the Institute
of Chartered Accountants in England and Wales (ICAEW). Ryan also holds a Master’s degree in Petroleum Geoscience from the
University of London.
Colin MacLaren
Non-Executive Director
Colin has over 37 years of experience in commercial law. His most recent role was as a Partner at Brodies LLP, a top 50 UK law firm
and one of the largest in Scotland. Colin brings a wealth of experience to the Parkmead Board of Directors. His extensive legal and
commercial knowledge is valuable to Parkmead as we continue to expand our portfolio beyond the oil and gas sector to include
various onshore renewable energy projects. Colin holds a LLB law degree from the University of Aberdeen. Colin is chair of the
Remuneration Committee and member of the Audit Committee.
Robert Finlay
Non-Executive Director
Robert has over 30 years of experience as a corporate adviser to a range of companies quoted on the London Stock Exchange AIM
and Main Market, including a number of energy companies. He is currently a Director in the corporate advisory team at Shore Capital.
His earlier career included roles as Head of Corporate at Stockdale Securities and Head of Corporate Finance at Canaccord Genuity.
Robert is Chair of the Audit Committee and a member of the Remuneration Committee at Parkmead.
14 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 15
Strategic Report
Business review and future activities
The Parkmead Group is a UK and Netherlands focused
independent energy group listed on AIM of the London Stock
Exchange (AIM: PMG). The Group produces from four gas fields
in the Netherlands and holds interests in a total of 21 exploration
and production blocks. Parkmead has significant oil and gas
development and exploration opportunities across the UK and
Netherlands, including the Diever gas field in the Netherlands,
the Greater Perth Area and Skerryvore projects located in the
Central North Sea. The Group also holds interests in a portfolio
of exploration prospects alongside leading international partners.
The Group also benefits from a portfolio of renewable energy
assets including an operational wind farm and a complementary
range of energy opportunities. Parkmead is headquartered in
Aberdeen, Scotland.
The Company is required by the Companies Act 2006 to set out
in this report a review of the business of the Group during the
year ended 30 June 2022, the position of the Group at the end
of the year and any risks facing the Group. The information that
fulfils these requirements, including discussion of the business
and future developments, is set out in the Chairman’s Statement
and the Strategic Report.
Principal risks and mitigation
The Group actively monitors and manages the risks relating to
its operations.
There is no guarantee that the Group’s exploration activities will
be successful and statistically relatively few exploration properties
are ultimately developed into producing hydrocarbon fields.
Accordingly, the Group is seeking to balance this risk by building
a portfolio of prospects that carry a range of differing technical
and commercial risks.
Other uncertainties include variable reservoir performance
and cost overruns on exploration, development and
production projects.
Accordingly, the Group manages its non-operated production
through joint ventures with appropriate planning, budgetary
monitoring and asset management.
The development of the Group’s properties will depend upon
the Group’s ability to obtain financing through the joint venture
of projects, debt financing, farm downs or other means. There is
no assurance that the Group will be successful in obtaining the
required financing or attracting farm-in partners in the medium
term. If the Group is unable to obtain additional financing as
needed or attract suitable farm-in partners, some interests may
be relinquished and/or the scope of the operations reduced.
To mitigate this risk, the Group has established a strong net
asset base and continues discussions with debt providers.
The market price of hydrocarbon products is volatile and if the
price of hydrocarbon products drops significantly, or the fiscal
regime experiences materially adverse changes, the economic
16 I The Parkmead Group plc Annual Report 2022
prospects of the projects in which the Group has an interest
may be significantly reduced or rendered uneconomic.
At all times the Board actively manages its committed
expenditure, including short-term working capital and cash flow
requirements to sustain the Group through periods of reduced
hydrocarbon prices.
The Group has exposure to US Dollar to Sterling and Euro to
Sterling exchange risk, due to significant portions of its revenues
being denominated in Euros, which are subject to currency
exchange fluctuations. The Group mitigates this risk by minimising
currency exchange and holding reserves of Dollars and Euros to
use in the Group’s continued investment programme.
The Group also is exposed to various production risks from its
onshore assets throughout the Netherlands. This may generate
revenue loss whilst costs continue to be incurred.
In order to mitigate these production risks and revenue loss,
the Company seeks to diversify its revenue streams through
investment in other near-term production assets as well as
additional forms of energy generation to complement the
Group’s portfolio.
The Group and Company have considered the supply chain and
operational activities in light of the Russian attack on Ukraine
and the Directors do not believe that there will be a material
impact on the business.
Key Performance Indicators
The Group’s key focus is on executing value-adding acquisitions
combined with organic growth to increase the value of the
Group. The Group tracks year-on-year performance measures
and is targeting value-adding growth in production, reserves
and blocks under licence, whilst always maintaining a strong
net asset base. These are deemed to be the most relevant
key performance indicators to report at the year end. Further
discussion of the year-on-year performance measures is set out
in the Chairman’s Statement.
Section 172 Statement
This section of the Strategic Report describes how the directors
have had regard to the matters set out in section 172 (1), and
form the Directors’ statements required under section 414CZA
of the Companies Act 2006.
The Directors have acted in a way they consider to be good
faith, to be most likely to promote the success of the Group and
Company for the benefit of its members as a whole and in doing
so have regarded, amongst other matters, to:
a. the likely consequences of any decision in the
long term;
The Group has a strong Board with significant energy, finance and
commercial expertise. The Board meet regularly to consider and
discuss the long term goals of the Group and the impact decisions
will have on these long term goals and relevant stakeholders.
It also reviews strategy, financial and operational performance
to ensure considered and informed decisions in the best interest
of the Group and its shareholders. Information is provided to the
Board through reports sent in advance of each Board meeting
and through in-person presentations.
During the year, the Group continued to engage with supply
chain and regulators, as operator of key North Sea assets.
The Group and its joint venture partners continue to take a
pragmatic approach to key decisions relating to work scopes
and investment on UKCS projects.
The Group continues to work with its partners in the
Netherlands to ensure we maximise the potential of all our
onshore gas assets. Any expenditure related to these fields
is carefully evaluated. These assets provide the Group with
important cash flow in order to invest in other projects, further
adding value to our well-balanced portfolio.
Long-term objectives involve diversification of the Group’s
energy interests and the continued investment in renewable
energies demonstrates this. The Board continues to evaluate
Parkmead’s portfolio in light of the transitioning energy mix and
UK government’s net zero objectives.
The Group will continue to build and operate a well-balanced
energy portfolio which includes gas, oil, renewable energies and
energy economics benchmarking.
b. the interests of the Company's employees;
The Group is made up of a parent company, The Parkmead
Group plc, and has four subsidiaries; Kempstone Hill Wind
Energy Limited, Aupec Ltd, Parkmead E&P Ltd and Pitreadie
Farm Limited. Senior management of all subsidiaries meet with
The Parkmead Group plc Board of Directors on a regular basis to
ensure targets are met and the Group’s objectives are aligned.
The Group employs 14 members of staff where all senior
management and Board have an ‘open door’ policy to promote
employee engagement and interaction.
Meetings are held with the workforce and senior management
where key business issues are discussed, employees are
updated on the Group’s development. Ad hoc meetings and
discussions are also held for training and other purposes such
as cyber-security awareness.
Parkmead encourages the professional development of all staff
and, in particular, young professionals in the workforce. Staff are
supported should they wish to join industry bodies and societies
which align with the Group’s objectives.
c. the need to foster the Company's business
relationships with suppliers, customers and others;
Members of the senior management team and the Board meet
with key stakeholders to enhance relationships and understand
their views.
Senior management meet with joint venture partners on a
regular basis to ensure projects are kept to budget and are on
target to meet specific work programme deadlines.
d. the impact of the Company's operations on the
community and the environment;
The Parkmead Group plc is committed to care of the community
and environment in which it operates. The Group is aligned
with the UK government’s Net Zero and Energy Transition
goals. Not only is all applicable legislation complied with, the
Group strives beyond this and has transitioned into one of the
first independent, publicly listed E&Ps with operational and
development-stage renewable energy assets.
e. the desirability of the Company maintaining a
reputation for high standards of business conduct;
The Group’s intention is to behave responsibly and ensure
that senior management operate the business in a responsible
manner, operating with high standards of business conduct and
good governance expected.
The UK and Netherlands energy sectors are highly regulated
business environments widely considered to be two of the most
transparent and well regulated E&P industries globally. Within
these highly regulated environments, the Board oversees a
company that is subject to a considerable level of scrutiny and
oversight by its shareholders and other relevant stakeholders.
The Company adopts the Quoted Companies Alliance
Corporate Governance Code 2018 (the ‘QCA Code’) and the
Board recognises the importance of maintaining a good level
of corporate governance, which together with the requirements
to comply with the AIM Rules ensures that the interests of the
Company’s stakeholders are safeguarded.
f. the need to act fairly as between members of the
Company;
The Company openly engages with our stakeholders, as we
recognise the importance of a continuing effective dialogue,
whether it be with institutional or private investors, as well as
employees. It is important to us that shareholders understand
our strategy and objectives, so these must be explained clearly,
with feedback heard and careful consideration of any issues
or questions.
The primary communication tool with shareholders is through
the Regulatory News Service, (“RNS”) on regulatory matters and
matters of material substance. The Company’s website provides
extensive detail of the business, its strategy, Board and Board
Committees, major shareholder information and QCA Code
disclosure updates under AIM Rule 26. Changes are published
in a timely manner on the website to enable the shareholders
to be kept well-informed of Company’s affairs. The Company’s
Annual Report and Notice of Annual General Meeting (AGM) are
also available to all shareholders on the website.
Approved by the Board of Directors and signed on behalf of
the Board
Thomas Cross
Executive Chairman
22 November 2022
The Parkmead Group plc Annual Report 2022 I 17
Directors’ Report
The Directors present their annual report and financial
statements of the Company and of the Group for the year
ended 30 June 2022.
Financial risk management policies
Further details of the Group’s financial risk management policies
are set out in Note 25 to the financial statements.
General information
The Parkmead Group plc is a public limited company
incorporated and domiciled in the UK and is listed on the AIM,
part of the London Stock Exchange (PMG). The Company’s
registered number is 03914068.
Results and dividends
The Group loss for the financial year after taxation amounted
to £0.8 million (2021: £13.8m loss), which included a non-
cash impairment and exploration write-offs of £3.0m. Adjusted
EBITDA was a profit of £9.1m (2021: £1.0m loss). The Directors
do not recommend the payment of a final dividend (2021: £nil).
Future developments
The future developments and events since the end of year are
set out in the Chairman’s Statement and Strategic Report. Post
year end date events can be found in Note 33 to the financial
statements.
Directors and their interests
The Directors of the Company during the period were as follows:
T P Cross
R A Stroulger
C J MacLaren
R J Finlay
Biographical details of all the current Directors, who make up
the “Board” of the Company, as at the date of signing these
financial statements, can be found on page 15. Details of all
Directors’ emoluments can be found in Note 8 to the financial
statements.
Directors’ indemnity
The Company provides, subject to the provisions of UK
legislation, an indemnity for Directors and Officers against all
costs, charges, losses, expenses and liabilities incurred by
them in the execution and discharge of their duties or in relation
thereto including any liability incurred by them in defending any
civil or criminal proceedings, which relate to anything done or
omitted or alleged to have been done or omitted by them as an
Officer or employee of the Company and in which judgment is
given in their favour (or the proceedings otherwise disposed of
without any finding or admission of any material breach of duty
on their part) or in which they are acquitted, or in connection
with any application under any statute for relief from liability in
respect of any such act or omission in which relief is granted to
them by the Court.
Appropriate Directors’ and Officers’ Liability insurance cover is in
place in respect of all the Company’s Directors.
Share capital
At 30 June 2022 the total issued ordinary share capital was
109,266,931 shares of 1.5 pence each.
All of the Company’s ordinary shares are fully paid up and
quoted on AIM. The rights and obligations attaching to the
Company’s ordinary shares as well as the powers of the
Company’s Directors are set out in the Company’s Articles
of Association, copies of which can be obtained from the
Company website (www.parkmeadgroup.com), Companies
House, or by writing to the Company Secretary.
There are no restrictions on the voting rights attaching to or the
transfer of the Company’s issued ordinary shares.
No person holds securities in the Company carrying special
rights with regard to control of the Company. The Company is
not aware of any agreements between holders of securities that
may result in restrictions in the transfer of securities or voting
rights. The Company’s articles of association may be amended
by special resolution of the Company’s shareholders.
Significant shareholdings
The Company has been advised of the following significant
shareholdings as at 30 October 2022:
No. of ordinary
shares held
% of
Ordinary Shares
T P Cross & Affiliates
28,200,929
25.81%
Stonehage Fleming Investment
Management
11,177,652
10.23%
Accountability and audit
The Board believes that the Annual Report and financial
statements play an important part in presenting shareholders
with an assessment of the Group’s position and prospects,
and in particular the Chairman’s Statement, which contains
a detailed consideration of the Group’s financial position
and prospects.
Internal control
The Board has decided that at this stage in the Group’s
development the creation of an internal audit function is not
warranted. In reaching this decision the Board has had regard
to the internal controls that have been implemented across the
Group. These include:
• the establishment of a Board with an appropriate balance of
Executive and Non-Executive Directors, which has overall
responsibility for decision making across the Group
• the preparation and approval of an annual budget in advance
of each financial year and monitoring performance against
this at an appropriate level of detail on a timely basis
Auditors
Jeffreys Henry Audit Limited have indicated their willingness to
continue in office. A resolution concerning their re-appointment
will be proposed at the forthcoming Annual General Meeting.
Annual general meeting
Your attention is drawn to the Notice of the Annual General
Meeting to be held on 21 December 2022. Under ordinary
business shareholders will be asked to consider:
• approving the Annual Report and financial statements for the
year ended 30 June 2022
• to re-appoint Directors who, in accordance with the articles
of association of the Company, have retired by rotation
• approving the re-appointment of Jeffreys Henry Audit Limited
as auditors to the Company
• to grant Directors the authority to make market purchases
and allot shares on a non-pre-emptive basis
Approved by the Board of Directors and signed on behalf of
the Board
Ryan Stroulger
Finance Director
22 November 2022
• establishing clear lines of reporting, responsibility and
delegation throughout the Group and documenting this in a
clearly defined organisational chart
• ensuring that clearly defined control procedures covering
expenditure and authority levels are in place. In particular, the
Group requires that all significant expenditure is authorised
prior to ordering by at least one Executive Director and that
all financial payments are made under dual signature
• undertaking a risk assessment of the Group’s activities and
monitoring the risks identified
There is an ongoing process for identifying, evaluating and
managing risks faced by the Company. These processes were
in place during the year.
Going concern
The Directors, after making appropriate enquiries have a
reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis
in preparing the financial statements.
Disclosure of information to the auditors
In the case of each person who was a Director at the time this
report was approved:
• so far as that Director was aware there was no relevant audit
information of which the Company’s auditors were unaware;
and
• that Director has taken all steps a Director ought to have
taken as a Director to make himself aware of any relevant
audit information and to establish that the Company’s
auditors are aware of that information
This information is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
18 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 19
Corporate Governance
The Company is committed to high standards of corporate
governance and the Board has ensured that the Company has
adopted policies and procedures that the Directors consider
appropriate with regard to the Company’s size.
In order to fulfil the requirements under AIM Rule 26 the
Company has adopted the recommendations of the Quoted
Companies Alliance Corporate Governance Code 2018
(the ‘QCA Code’), to the extent that the Board believes is
proportional to the size, risks, complexity and operations of
the business.
This statement explains the Directors’ approach to addressing
the key principles of the QCA Code during the year ended 30
June 2022.
Establish a strategy and business model which
promotes long-term value for shareholders
The Parkmead Group is a UK and Netherlands focused
independent energy group listed on the AIM Market of the
London Stock Exchange (AIM: PMG). The Group currently
produces gas from a portfolio of four fields across the
Netherlands and holds oil and gas interests spanning a
number of exploration and production blocks. The Group also
benefits from a portfolio of renewable energy assets including
an operational wind farm and various other alternative energy
opportunities.
The Company’s strategy is to build an independent energy group
of considerable scale, with assets in proven and emerging areas,
through innovative commercial transactions in order to maximise
shareholder value. Parkmead has made substantial progress to
date in line with this strategy, completing eleven acquisitions at
both asset and corporate level.
The Group’s risks and risk mitigation strategy are explained in
detail within the Strategic Report section in the Annual Report
each financial year, available on the Parkmead website.
Seek to understand and meet shareholder needs
and expectations
The Company communicates with current and potential
shareholders through the Annual Report and financial
statements, the Interim Statement and any regulatory news
updates. Directors are available at the Annual General Meeting
where shareholders can ask questions or present their views.
Where voting decisions are not in line with the Company’s
expectations the Board will engage with those shareholders to
understand and address any issues. In accordance with the AIM
rules, specifically Rule 26, the Company has disclosed fully all
relevant information so as to ensure that it is fully compliant.
The Company maintains a website (www.parkmeadgroup.com)
where the Annual Report and financial statements can
be accessed. The following information is also located on
the website:
• copies of regulatory announcements
• announcements made to relevant industry media
• Directors’ biographies
•
information relating to the Group’s services
• details of the Group’s investments
• significant shareholders
All queries raised by shareholders are dealt with by an
appropriate senior member of the team, depending on the
nature of the enquiry.
Take into account wider stakeholder and social
responsibilities and their implications for
long-term success
The Company recognises that good relations with a range of
different stakeholder groups is important for long-term success.
These stakeholder groups include internal stakeholders, such
as employees, and external stakeholders, such as government
regulators and shareholders. The Company dedicates time
to understanding and acting on the needs and requirements
of each of these groups via meetings dedicated to obtaining
feedback.
The Company has a formal Health, Safety and Environmental
Policy which requires all operations within the Group to pursue
economic development whilst protecting the environment. The
Directors aim not to damage the environment of the areas in
which the Group operates, to meet all relevant regulatory and
legislative requirements and to apply responsible standards of its
own where relevant laws and regulations do not exist.
It is the policy of the Group to consider the health and welfare
of employees by maintaining a safe place and system of work
as required by legislation in each of the countries where the
Group operates.
Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
The Group’s risks and risk mitigation strategy are explained in
detail within the Strategic Report section in the Annual Report
each financial year, available on the Parkmead website.
The Board considers risks relating to the business at every
Board meeting (at least four meetings a year). The Company
formally reviews and documents the principal risks relating to the
business at least annually.
The Board are responsible for reviewing and evaluating risk and
the Executive Directors meet regularly to review ongoing trading
performance, discuss budgets and forecasts and risks relating to
the business. The Board’s risk management policy and internal
controls are considered appropriate for a Company of its size
and business activities.
Maintain the Board as a well-functioning,
balanced team led by the chair
The Board, which is set up to control the Company and Group,
meets formally at least four times a year and in the year under
review met on eight occasions with all members present.
As at the year end the Board was composed of two Executive
and two Non-Executive Directors. The Board considers its
composition appropriate given the size of the company, its
revenues and profitability. The Non-Executive Directors are
considered by the Board to be independent in character and
judgement, notwithstanding the fact that they may have shares
in the Company, taking into account their detailed experience
and long standing knowledge of the energy sector and personal
contribution through the exercise of their skills and experience.
Each Board member receives the latest financial and
management information, which consists of:
• management accounts setting out actual costs and
revenues against budgeted costs and revenues
• cash collections and forecasts
• a statement of profit or loss compared with budget
• a statement of financial position including net assets
per share
The Board reserves to itself a range of key decisions to ensure
it retains proper direction and control of the Group, whilst
delegating authority to individual Directors who are responsible
for the day-to-day management of the business.
All appointments to the Board are discussed at a full board
meeting and each member is given the opportunity to meet the
individual concerned prior to an appointment being made.
All Directors are subject to re-appointment every three years in
accordance with the Company’s Articles of Association. Any
Director appointed by the Board during the year must stand for
re-appointment at the next Annual General Meeting.
The Board has two committees; the Audit Committee and the
Remuneration Committee. Further details on these committees
are provided in the following principle “Maintain governance
structures and processes that are fit for purpose and support
good decision-making by the Board”.
Ensure that between them the Directors have
the necessary up-to-date experience, skills and
capabilities
Biographical details of all the current Directors can be found
on page 15. These demonstrate a range of experience and
sufficient calibre to bring independent judgement on the issues
of strategy, performance, resources and standards of conduct,
which are vital to the continuing success of the Group.
All Directors have access to the advice and services of the
Company Secretary who is responsible to the Board for ensuring
that Board procedures are followed and that applicable rules
and regulations are complied with. In addition, the Company
Secretary will ensure that the Directors receive appropriate
training as necessary. The appointment and removal of the
Company Secretary is a matter for the Board as a whole.
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
In an effort to strive for continual improvement in the
effectiveness of the Board, its committees, and the individual
Board members, the Company operates an informal evaluation
process throughout the year.
Promote a corporate culture that is based on
ethical values and behaviours
The Board believes that a corporate culture based on sound
values and behaviours is helpful to maximise shareholder value.
The Company maintains and reviews guidance on what is
expected of every employee of the company.
Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the board
The Board currently comprises two Executive and two Non-
Executive Directors. The Board considers its composition
appropriate given the size of the Company, its revenues and
profitability.
The key Board roles are the Executive Chairman and the
Non- Executive Directors.
Executive Chairman
Responsible for the delivery of the business model within the
strategy set by the Board. Works with the other Executive
Directors and two Non-Executive Directors in a transparent way.
Keeps the Board up-to-date with operational performance, risks
and other issues to ensure that the Company remains aligned
with the Group’s strategy.
Non-Executive Directors
The primary responsibility of the Non-Executive Directors is to
ensure that the strategies proposed by the Executive Directors
are fully considered. The Non-Executive Directors are also
responsible for making sure that the board agenda concentrates
on the key issues, both operational and financial, with regular
reviews of the company’s strategy and its overall implementation.
The Board has two committees; the Audit Committee and the
Remuneration Committee.
20 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 21
Corporate Governance
Statement of Directors’ Responsibilities
(CONTINUED)
Audit Committee
The Audit Committee meets at least twice a year and consists of
R J D Finlay, the Committee Chairman, C J MacLaren and T P
Cross. R A Stroulger attends by invitation. In the year ended 30
June 2022 the Audit Committee met on two occasions, with all
members present.
During the year the Audit Committee completed their duties
set out below including planning of the audit, reviewing the
draft financial statements, reviewing results of the audit,
independence of auditors and changes in accounting standards
in the year.
The duties of the Audit Committee include:
• review of the scope and the results of the audit
• assessment of the cost effectiveness of the audit
• monitoring the independence and objectivity of the Auditors
The Remuneration Committee is responsible for reviewing the
level and make-up of the remuneration of Executive Directors. In
doing so the Committee’s aims are:
• to ensure that remuneration packages are sufficient to attract
and retain Executive Directors of the requisite calibre
• to ensure that the targets of the Group and its Executive
Directors are aligned
• to ensure that the remuneration policies adopted by the
Group give consideration to the guidance of the QCA
• to consider, and if thought fit, grant options to Executive
Directors and staff under the Group’s Option Schemes
• where applicable, to assess targets that should be used in
the fixing of performance related pay for Executive Directors.
Such bonuses are paid at the discretion of the Remuneration
Committee
• review and assessment of current updates of changes in
accounting standards and their likely impact on the Group’s
financial statements
The remuneration of the Non-Executive Directors is determined
by the Board within the limits set out in the Articles of
Association.
Communicate how the Company is governed
and is performing by maintaining dialogue with
shareholders and other relevant stakeholders
The Company communicates with current and potential
shareholders through the Annual Report and financial
statements, the Interim Statement as well as any regulatory
news and trading updates. Directors are available at the Annual
General Meeting where shareholders can ask questions and
present their views. The outcome of resolutions put to the
Annual General Meeting are published and available on the
Company’s website.
Ryan Stroulger
Company Secretary
22 November 2022
• review and assessment of the internal controls of the
Company
• assessment of the competencies of the financial human
resources available to the Company
The Chairman of the Audit Committee has recent and relevant
financial experience. The Audit Committee advises the Board
on the appointment, re-appointment or removal of the external
Auditors and on their remuneration. The Audit Committee
discusses the nature and scope of the audit with the external
Auditors and provides a forum for reporting by the Group’s
external Auditors on any matters it considers appropriate. The
Audit Committee consider the Auditors independent.
It is the task of the Audit Committee to ensure that auditor
objectivity and independence is safeguarded when non-audit
services are provided by the Auditors. To ensure auditor
objectivity and independence there is a process in place to
approve any non-audit work at each Audit Committee meeting.
Remuneration Committee
The Remuneration Committee meets at least once a year and
consists of C J MacLaren, the Committee Chairman, R J D
Finlay and T P Cross. In the year ended 30 June 2022 the
Remuneration Committee met once, with all members present.
During the year the Remuneration Committee completed their
review of pay and rewards for the Executive Directors including
making recommendations in respect of awards of option under
the Unapproved Employee Share Option Scheme.
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group and Parent company
financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) UK-adopted,
as regards the Parent Company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently
• make judgements and accounting estimates that are
reasonable and prudent
• state whether applicable IFRSs have been followed, subject
to any material departures disclosed and explained in the
financial statements
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and
enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for ensuring that they meet
their responsibilities under the AIM Rules. The Directors are
responsible for the maintenance and integrity of the corporate
and financial information included on the Company’s website.
Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
22 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 23
Independent Auditor’s Report
TO THE MEMBERS OF THE PARKMEAD GROUP PLC
Opinion
We have audited the financial statements of The Parkmead
Group Plc (the ‘parent company’) and its subsidiaries (the
‘Group’) for the year ended 30 June 2022 which comprise
the Group statement of profit or loss, Group and company
statement of profit or loss and other comprehensive income,
Group and company statement of financial position, Group
statement of changes in equity, company statement of changes
in equity, Group and company statement of cashflows and
the notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs)
as adopted by the United Kingdom. The financial reporting
framework that has been applied in the preparation of the parent
company financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the United
Kingdom, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state
of the Group’s and of the parent company’s affairs as at 30
June 2022 and of the Group’s and parent company’s loss for
the year then ended;
• the Group’s financial statements have been properly prepared
in accordance with IFRSs as adopted by the United Kingdom;
• the parent company’s financial statements have been
properly prepared in accordance with IFRSs as adopted by
the United Kingdom;
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs UK) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the director’s use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the entity’s ability
to continue to adopt the going concern basis of accounting
included:
• a review of management’s budgets and cashflow forecasts
for the 12 months from proposed sign off date;
• a review of the inputs and assumptions utilised in the budgets
and cashflow forecasts taking into account our knowledge of
the Group and its levels of operating cashflows;
• stress testing of the forecasted cashflows;
• a review of the cash balances held by the Group at year end
date and at sign-off date.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. This is
not a complete list of all risks identified by our audit.
• Carrying values of exploration and evaluation (E&E assets).
• Carrying values of development and production assets
(D&P assets).
• Carrying values of decommissioning provisions.
• Carrying value of goodwill.
• Carrying values of investments in subsidiaries and
intercompany receivables (company only risk).
These are explained in more detail below.
Key audit matter
How our audit addressed the key audit matter
Carrying values of exploration and evaluation
(“E&E assets”)
• The Group held a significant balance of E&E assets as
at the year end, with a total carrying value of £33,346k
(2021: £29,497k).
Our audit procedures:
• We discussed with management and undertook a full review
of the underlying assets to establish if there was any indication
of impairment in accordance with IFRS 6 and the Group’s
accounting policy.
• Included within E&E assets were additions relating to
• We reviewed management’s impairment workings such as
capitalised exploration and appraisal costs, capitalised
technical and administrative costs as well as write-offs of
E&E assets that were no longer considered technically
feasible for the Group’s purposes.
• The Group undertakes impairment assessments annually
for all E&E assets based on a number of assumptions and
forecasts. These require significant judgement and so are
considered a key audit matter.
forecasts which included their approach and methodology as
well as inputs and significant assumptions, namely:
– Future revenue, operating costs and capital
expenditure cashflows;
– Future commodity prices;
– Discount rates;
– Estimated reserves.
• We considered whether management had exercised any bias
in assumptions used or the outputs produced in the forecasts
prepared.
• We reviewed the exploration licences to third party regulators
and joint operating agreements where applicable.
• We considered the appropriateness of the Group’s disclosures
in relation to E&E assets in the financial statements.
Carrying values of development and production assets
(“D&P assets”)
• The Group held a significant balance of D&P assets as
at the year end, with a total carrying value of £15,843k
(2021: £14,646k).
Our audit procedures:
• We discussed with management and undertook a full review
of the underlying assets to establish if there was any indication
of impairment in accordance with IAS 36 and the Group’s
accounting policy.
• Included within D&P assets were additions relating to
• We reviewed management’s impairment workings such as
capitalised development costs, capitalised costs relating
to the change in estimate of decommissioning provision
abandonment expenditure, and depreciation charges based
on the unit-of-production method.
• The Group undertakes impairment assessments annually
for all D&P assets and where indicators of impairment are
identified, an impairment review is performed based on
a number of assumptions and forecasts. These require
significant judgement and so are considered a key
audit matter.
forecasts which included their approach and methodology as
well as inputs and significant assumptions, namely:
– Future revenue, operating costs and capital
expenditure cashflows;
– Future commodity prices;
– Discount rates;
– Production volumes.
• We considered whether management had exercised any bias
in assumptions used or the outputs produced in the forecasts
prepared.
• We considered the appropriateness of the Group’s disclosures
in relation to D&P assets in the financial statements.
24 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 25
Independent Auditor’s Report
(CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Carrying value of decommissioning provisions
Our audit procedures:
• The Group held a significant provision for decommissioning
costs as at the year-end of £20,294k (2021: £14,754k).
• Included within the decommissioning provision are increases
relating to changes in abandonment expenditure estimates,
unwinding of the discount relating to the present value of the
provision and utilisation of the provision for costs incurred
during the period.
• The calculation of the provisions is based on significant
estimates and assumptions utilised by management in
determining the potential future expenditure to be incurred.
• We undertook a review of the decommissioning provision
calculations performed by management and reviewed these
for mathematical accuracy.
• We considered whether management had exercised any
bias in assumptions used or the outputs produced in the
forecasts prepared.
• We reviewed the estimated costs against external third-party
evidence for reasonability and to ensure that no management
bias was included in the estimates made.
• We considered the appropriateness of the Group’s
disclosures in relation to the decommissioning provisions in
the financial statements.
Carrying value of goodwill
Our audit procedures:
• The Group had a balance of goodwill at the year-end of
£1,084k (2021: £2,174k).
• The prior year goodwill is historic and arose on the
acquisition of Aupec Limited. In accordance with IAS 36
the Group is required to assess the goodwill balance for
impairment annually regardless of whether any indicators
of impairment exist. Full impairment of £2,174k recognised
during the period.
• The remaining goodwill arose on the acquisition of
Kempstone Hill Wind Energy Limited during the year.
• We undertook a review of the impairment model prepared
by management, considering the mathematical accuracy
along with the inputs and assumptions utilised for the
forecast figures.
• We vouched the net assets at acquisition and consideration
of Kempstone Hill Wind Energy Limited to supporting
documentation.
• We reviewed the IFRS adjustments made from the initial
FRS102 Kemsptone Hill Wind Energy Ltd accounts and
ensured these were being prepared correctly in line with
IFRS standards.
• We considered whether management had exercised any bias
in the inputs and assumptions used in the forecast figures.
Carrying value of investments in subsidiaries and
intercompany receivables (parent company only risk)
Our audit procedures:
• We considered the value of the investments and
• The parent company had a carrying value of investments in
subsidiaries at the year-end of £30,730k (2021: £27,443k),
as well as an intercompany receivable of £56,011k
(2021: £55,937k).
recoverability of the intercompany receivable with reference
to the underlying assets held by the subsidiaries, along
with the revenue forecasted to be generated in the
subsidiary entities.
• We reviewed the impairment models provided by
management and assessed these for mathematical
accuracy, as well as to confirm whether the inputs and
assumptions utilised were reasonable and supportable.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£863,000 (2021: £784,700)
£788,000 (2021: £706,200)
How we determined it
1% of gross assets (2021: 1% of
gross assets)
1% of gross assets, limited to a
percentage of Group materiality
(2021: 1% of gross assets)
Rationale for benchmark applied
We believe that the gross assets
are the primary measure used by
the shareholders in assessing the
performance of the Group and is a
generally accepted auditing benchmark.
We believe that the gross assets
are the primary measure used by
the shareholders in assessing the
performance of the Company and is a
generally accepted auditing benchmark.
For each component in the scope of our Group audit, we
allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components
was between £292,000 and £681,000.
We agreed with the Audit Committee that we would report to
them misstatements identified during our audit above £43,775
as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors
made subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in
all of our audits we also addressed the risk of management
override of internal controls, including evaluating whether there
was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of
the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The Group financial statements are a consolidation of four
reporting entities. We have audited all components within the
Group, and no unaudited components remain.
It is our responsibility for the direction, supervision and
performance of the Group audit and we remain solely
responsible for the audit opinion.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
26 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 27
Independent Auditor’s Report
(CONTINUED)
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the Group
and parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 23, the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and parent company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate
the Group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered
capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, was as follows:
• the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and
skills to identify or recognise non-compliance with applicable
laws and regulations.
• we identified the laws and regulations applicable to the Group
through discussions with directors and other management.
• we focused on specific laws and regulations which we
considered may have a direct material effect on the financial
statements or the operations of the company, including
taxation legislation, data protection, anti-bribery, employment,
environmental, health and safety legislation and anti-money
laundering regulations.
• we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of
management and inspecting legal correspondence.
• identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances
of non-compliance throughout the audit; and
• we assessed the susceptibility of the Group’s financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
– making enquiries of management as to where they
considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud;
– considering the internal controls in place to mitigate risks
of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and
override of controls, we:
• performed analytical procedures to identify any unusual or
unexpected relationships;
• tested journal entries to identify unusual transactions;
• assessed whether judgements and assumptions made in
determining the accounting estimates set out in note 2 of the
Group financial statements were indicative of potential bias;
• investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance with
laws and regulations, we designed procedures which included,
but were not limited to:
• agreeing financial statement disclosures to underlying
supporting documentation;
• reading the minutes of meetings of those charged with
governance;
• enquiring of management as to actual and potential litigation
and claims;
• reviewing correspondence with HMRC and the Group’s
legal advisors.
There are inherent limitations in our audit procedures described
above. The more removed those laws and regulations are from
financial transactions, the less likely it is that we would become
aware of noncompliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management
and the inspection of regulatory and legal correspondence,
if any.
Material misstatements that arise due to fraud can be harder
to detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of this report
This report is made solely to the Company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters that we
are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, or the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Sanjay Parmar
SENIOR STATUTORY AUDITOR
For and on behalf of Jeffreys Henry Audit Limited,
statutory auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
United Kingdom
22 November 2022
28 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 29
Group statement of profit or loss
FOR THE YEAR ENDED 30 JUNE 2022
Group and company statement of profit or loss
and other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2022
Continuing operations
Revenue
Cost of sales
Gross profit
Exploration and evaluation expenses
Impairment of goodwill
Loss on sale of assets
Administrative expenses
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Loss for the period attributable to the equity holders of the Parent
Loss per share (pence)
Basic
Diluted
Notes
2022
£’000
3
12,129
(1,370)
10,759
2021
£’000
3,608
(1,835)
1,773
4
14
4
9
10
11
12
(1,116)
(11,116)
(2,174)
(31)
–
(388)
(2,231)
(3,040)
5,207
(12,771)
73
(1,317)
148
(819)
3,963
(13,442)
(4,777)
(364)
(814)
(13,806)
(0.75)
(0.75)
(12.64)
(12.64)
(Loss)/profit for the year
Other comprehensive income
Income tax relating to components of other comprehensive
income
Other comprehensive income for the year, net of tax
Notes
Group
Company
2022
£’000
(814)
–
–
2021
£’000
2022
£’000
2021
£’000
(13,806)
(3,141)
(1,152)
–
–
–
–
–
–
Total comprehensive (loss)/income for the year attributable to
the equity holders of the Parent
(814)
(13,806)
(3,141)
(1,152)
30 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 31
Group and company statement of financial position
Group statement of changes in equity
AS AT 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
Share
capital
£’000
19,678
–
–
10
–
Share
premium
£’000
87,805
–
–
212
–
Merger
reserve
£’000
3,376
–
–
–
–
Retained
deficit
£’000
Total
£’000
(39,513)
71,346
(13,806)
(13,806)
(13,806)
(13,806)
–
(41)
222
(41)
19,688
88,017
3,376
(53,360)
57,721
–
–
–
–
–
–
–
–
–
–
–
–
(814)
(814)
–
87
(814)
(814)
–
87
19,688
88,017
3,376
(54,087)
56,994
Notes
Group
Company
Non-current assets
Property, plant and equipment: development & production
Property, plant and equipment: other
Goodwill
Exploration and evaluation assets
Investment in subsidiaries and joint ventures
Interest bearing loans
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Inventory
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Decommissioning provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Loans
Deferred tax liabilities
Decommissioning provisions
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders
Called up share capital
Share premium
Merger reserve
Retained deficit
Total Equity
13
13
14
14
15
18
11
19
20
21
21
21
21
22
11
23
26
2022
£’000
15,843
6,636
1,084
34,346
–
2,900
187
60,996
2,018
42
23,263
25,323
86,319
(3,545)
(19,228)
(1,432)
(24,205)
(1,181)
(948)
(1,925)
(1,066)
(5,120)
(29,325)
56,994
19,688
88,017
3,376
(54,087)
56,994
2021
£’000
14,646
4,654
2,174
29,497
–
2,900
–
2022
£’000
–
27
–
–
29,379
2,900
–
2021
£’000
–
235
–
–
27,443
2,900
–
At 30 June 2020
Loss for the year
Total comprehensive loss for the year
Share capital issued
Share-based payments
At 30 June 2021
Loss for the year
53,871
32,306
30,578
Total comprehensive loss for the year
Share capital issued
Share-based payments
At 30 June 2022
1,352
66
23,378
24,796
78,667
(3,101)
(389)
(241)
(3,731)
(1,011)
(500)
(1,339)
(14,365)
(17,215)
(20,946)
57,721
19,688
88,017
3,376
(53,360)
57,721
56,160
56,062
–
330
56,490
88,796
–
4,656
60,718
91,296
(3,136)
(2,567)
–
–
–
–
(3,136)
(2,567)
–
–
–
–
–
(3,136)
85,660
19,688
88,017
3,376
(25,421)
85,660
(15)
–
–
–
(15)
(2,582)
88,714
19,688
88,017
3,376
(22,367)
88,714
The loss after tax of the Parent Company for the year was £3,141,000 (2021: £1,152,000).
The financial statements on pages 30 to 74 were approved by the Board of Directors on 22 November 2022 and signed on its behalf by:
Thomas Cross
Ryan Stroulger
Director
Director
32 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 33
Company statement of changes in equity
Group and company statement of cashflows
FOR THE YEAR ENDED 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
At 30 June 2020
Loss for the year
Total comprehensive income for the year
Share capital issued
Share-based payments
At 30 June 2021
Loss for the year
Total comprehensive income for the year
Share capital issued
Share-based payments
At 30 June 2022
Share
capital
£’000
Share
premium
£’000
Revaluation
reserve
£’000
Retained
deficit
£’000
Total
£’000
19,678
87,805
3,376
(21,174)
89,685
-
-
10
-
-
-
212
-
-
-
-
-
(1,152)
(1,152)
-
(41)
(1,152)
(1,152)
222
(41)
19,688
88,017
3,376
(22,367)
88,714
-
-
-
-
-
-
-
-
-
-
-
-
(3,141)
(3,141)
-
87
(3,141)
(3,141)
-
87
19,688
88,017
3,376
(25,421)
85,660
Notes
Group
Company
Cashflows from operating activities
Continuing activities
Taxation paid
Net cash generated by/(used in) operating activities
28
Cash flow from investing activities
Investment in subsidiaries
Interest received
Acquisition of exploration and evaluation assets
Disposal of property, plant and equipment
Acquisition of property, plant and equipment: development and
production
Acquisition of property, plant and equipment: other
Decommissioning expenditure
Net cash on acquisition of Kempstone Hill
2022
£’000
2021
£’000
8,038
(3,508)
4,530
–
73
(548)
874
(123)
(3,114)
(1,667)
360
(1,191)
(124)
(1,315)
–
148
(369)
4,000
(165)
(114)
(31)
–
2022
£’000
(930)
–
(930)
(3,288)
73
–
–
–
(11)
–
–
Net cash (used in)/generated by investing activities
(4,145)
3,469
(3,226)
Cash flow from financing activities
Interest paid
Lease payments
Repayment from loans and borrowings
Net cash (used in)/generated by financing activities
(45)
(375)
(542)
(962)
(110)
(421)
(3,100)
(3,631)
(8)
(174)
–
(182)
2021
£’000
(2,117)
–
(2,117)
–
73
–
–
–
(48)
–
–
25
(21)
(192)
–
(213)
Net (decrease)/increase in cash and cash equivalents
(577)
(1,477)
(4,338)
(2,305)
Cash and cash equivalents at beginning of year
23,378
25,708
4,656
6,963
Effect of foreign exchange rate differences
462
(853)
Cash and cash equivalents at end of year
20
23,263
23,378
12
330
(2)
4,656
34 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 35
Notes to the financial statements
1. Corporate information
The consolidated financial statements of The Parkmead Group PLC (“Company”) and its subsidiaries (together the “Group”) for the
year ended 30 June 2022 were authorised for issue by the Board of Directors on 22 November 2022 and the Statement of Financial
Position was signed on the Board’s behalf by T P Cross and R A Stroulger. The Company is a public limited company incorporated in
England & Wales. The Company’s shares are publicly traded on AIM of the London Stock Exchange. The registered office is located at
20 Farringdon Street, 8th Floor, London, England, EC4A 4AB.
2. Accounting policies
Basis of preparation of the financial statements
The consolidated and Company financial information presented in these financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the UK, IFRS Interpretations Committee (IFRIC) interpretations and
the parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The Company has taken advantage of the exemption permitted under Section 408 of the Companies Act 2006 and does not present
its own statement of profit or loss. The consolidated and Company financial statements have been prepared on a going concern
basis, under the historical cost convention, except for certain fair value adjustments required by those accounting policies.
Going concern
The Directors have made an assessment of the Group and Company ability to continue as a going concern. As at 30 June 2022 the
Group had £57.0 million of net assets of which £23.3 million is held in cash, of which £5.9 million is held as restricted cash. As at 30
June 2022 the Company had £85.7 million of net assets of which £0.3 million is held in cash.
The Group’s production in the Netherlands has been uninterrupted by COVID–19 and the Group and Company employees have
utilised technology to work utilising hybrid working arrangements. The Group has prepared a cash flow model to 31 December 2023
and is forecast to have sufficient cash balances at that date, therefore prepared the accounts on a going concern basis.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2022.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to
be consolidated until the date when such control ceases. All intra–group balances, transactions, unrealised gains and losses resulting
from intra–group transactions and dividends are eliminated in full.
Subsidiaries
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, measured at acquisition date fair value and the amount of any non–controlling interest in the
acquiree. For each business combination, the acquirer measures the non–controlling interest in the acquiree either at fair value
or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in
administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for
non–controlling interest over the net identifiable assets acquired and liabilities assumed. If consideration is less than the fair value of the
net assets of the subsidiary acquired, the difference is recognised as a gain on a bargain purchase directly in the statement of profit
or loss.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Separately recognised goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Consideration, including deferred consideration, is measured at fair value on the date of acquisition or disposal. Deferred consideration
is re–measured, where appropriate, at each year end date to reflect the anticipated amount due.
2. Accounting policies (continued)
Joint arrangements
Under IFRS 11, joint arrangements are those that convey joint control which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control. Investments in joint arrangements are classified as either joint operations
or joint ventures depending on the contractual rights and obligations of each investor.
The Group’s interest in joint operations (e.g. exploration and production arrangements) are accounted for by recognising its assets
(including its share of assets held jointly), its liabilities (including its share of liabilities incurred jointly), its share of revenue from the sale
of output by the joint operation and its expenses (including its share of any expenses incurred jointly).
A complete list of the Group’s Joint Arrangements accounted for as joint operations is provided in Note 32.
Revenue recognition
The Group’s principal activity is the production of oil and gas and the provision of services to the oil and gas production and
processing industry. Revenue from contracts with customers is recognised when contract performance obligations are met.
Oil and Gas exploration and production
The Group recognise revenue arising from the sale of oil, natural gas, natural gas liquids, liquefied natural gas, petroleum and
chemicals products at a point in time when title has passed to the buyer. Revenue from contracts with customers is recognised when
control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects
to be entitled to in exchange for those goods or services. Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, customs duties
and sales taxes.
Generally, revenues from the production of oil and natural gas properties in which the Group has an interest with joint venture partners
are recognised on the basis of the Group’s working interest in those properties.
Energy Economics
The Group and the Company recognise revenue as services are provided over time and when the amount of revenue can be reliably
measured and it is probable that future economic benefits will flow to the entity. Revenue is recognised over time as there is no
alternative use and the Group and Company have the right to payment.
Revenues from long–term fixed–price contracts are recognised under the “percentage–of–completion” method, an input method of
recognition. The stage of completion of a contract is determined by reference to the proportion that contract costs incurred for work
performed to date bear to the estimated total costs of the contract. Revenue recognised in excess of invoices raised is included within
contract asset. Where amounts have been invoiced in excess of revenue recognised, the excess is included within contract liability.
Oil and gas expenditure – exploration and evaluation assets
Capitalisation
Pre–acquisition costs on oil and gas assets are recognised in the statement of profit or loss when incurred. Costs incurred after rights
to explore have been obtained, such as geological and geophysical surveys, drilling and commercial appraisal costs and other directly
attributable costs of exploration and appraisal including technical and administrative costs are capitalised as intangible exploration and
evaluation (“E&E”) assets. The assessment of what constitutes an individual E&E asset is based on technical criteria but essentially
either a single licence area or contiguous licence areas with consistent geological features are designated as individual E&E assets.
E&E costs are not amortised prior to the conclusion of appraisal activities. Once active exploration is completed the asset is assessed
for impairment. If commercial reserves are discovered then the carrying value of the E&E asset is reclassified as a development and
production (“D&P”) asset, following development sanction, but only after the carrying value is assessed for impairment and where
appropriate its carrying value adjusted. If commercial reserves are not discovered or it is not possible to determine technical feasibility
or if the legal right to explore expires or if the Company decides not to continue exploration and evaluation activity, then the E&E asset
is written off to the statement of profit or loss.
36 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 37
Notes to the financial statements
(CONTINUED)
2. Accounting policies (continued)
Impairment
The Group’s oil and gas assets are analysed into cash generating units (“CGU”) for impairment review purposes, with E&E asset
impairment testing being performed at a CGU level. The current CGU consists of E&E assets within a broadly similar geographical
location. E&E assets are reviewed for impairment in accordance with IFRS 6, “Exploration for and Evaluation of Mineral Resources”,
and when circumstances arise which indicate that the carrying value of an E&E asset exceeds the recoverable amount. When
reviewing E&E assets for impairment, the combined carrying value of the grouped CGU is compared with the grouped CGU’s
recoverable amount. The recoverable amount of a grouped CGU is determined as the higher of its fair value less costs to sell and
value in use. Impairment losses resulting from an impairment review are written off to the statement of profit or loss.
Oil and gas expenditure – development and production assets
Capitalisation
Costs of bringing a field into production, including the cost of facilities, wells and sub–sea equipment together with E&E assets
reclassified in accordance with the above policy, are capitalised as a D&P asset. Normally each individual field development will form
an individual D&P asset but there may be cases, such as phased developments, or multiple fields around a single production facility
when fields are grouped together to form a single D&P asset.
Depreciation
All costs relating to a development asset are accumulated and not depreciated until the commencement of production. Depreciation
is calculated on a unit of production basis based on the proven and probable reserves of the asset. Any re–assessment of reserves
affects the depreciation rate prospectively. Significant items of plant and equipment will normally be fully depreciated over the life of the
field. However these items are assessed to consider if their useful lives differ from the expected life of the D&P asset and should this
occur a different depreciation rate would be charged.
The key areas of estimation regarding depreciation and the associated unit of production calculation for oil and gas assets are:
• recoverable reserves; and
• future capital expenditure
Impairment
A review is carried out for any indication that the carrying value of the Group’s D&P assets may be impaired. The impairment review of
D&P assets is carried out at a Group level on an asset by asset basis, irrespective of any split in the legal ownership of assets between
subsidiaries, and involves comparing the carrying value with the recoverable value of an asset. The recoverable amount of an asset is
determined as the higher of its fair value less costs to sell and value in use. The value in use is determined from estimated future net
cash flows. Any additional depreciation resulting from the impairment testing is charged to the statement of profit or loss.
The future cash flows are adjusted for risks specific to the cash–generating unit and are discounted using a post–tax discount rate.
The discount rate is derived from the Group’s post–tax weighted average cost of capital and is adjusted where applicable to take
into account any specific risks relating to the country where the cash–generating unit is located, although other rates may be used if
appropriate to the specific circumstances. In 2022 the rate used was 8% (2021: 8%). The discount rates applied in assessments of
impairment are reassessed each year.
See Note 13 for the carrying value of development and production assets.
2. Accounting policies (continued)
Key assumptions used in the value–in–use calculations
The calculation of value–in–use for oil and gas exploration and evaluation assets, assets under development or in production is most
sensitive to the following assumptions:
• Production volumes;
• Commodity prices;
• Variable operating costs;
• Capital expenditure; and
• Discount rates.
Production volumes/recoverable reserves
Annual estimates of oil and gas reserves are generated internally by the Group’s geoscience team. The self–certified estimated future
production profiles are used in the life of the fields which in turn are used as a basis in the value–in–use calculation.
Commodity prices
The long term assumption for Brent oil and natural gas is based on management estimates having considered published external
data, future prices are inflated in accordance with the Company’s corporate assumptions. Field specific discounts and prices are used
where applicable.
Fixed and variable operating costs
Typical examples of variable operating costs are pipeline tariffs, treatment charges and freight costs. Commercial agreements are
in place for most of these costs and the assumptions used in the value–in–use calculation are sourced from these where available.
Examples of fixed operating costs are platform costs and operator overheads. Fixed operating costs are based on operator budgets.
Capital expenditure
Field development is capital intensive and future capital expenditure has a significant bearing on the value of an oil and gas
development asset. In addition, capital expenditure may be required for producing fields to increase production and/or extend the life
of the field. Cost assumptions are based on operator budgets or specific contracts where available.
Discount rates
Discount rates reflect the current market assessment of the risks specific to the oil and gas sector and are based on the weighted
average cost of capital for the Group. Where appropriate, the rates are adjusted to reflect the market assessment of any risk specific
to the field for which future estimated cash flows have not been adjusted. The Group has applied a post–tax discount rate of 8% for
the current year (2021: 8%).
Sensitivity to changes in assumptions
For certain fields, a reasonably possible change in any of the above assumptions would cause the estimated recoverable value to be
lower than the carrying value, resulting in a further impairment loss. The assumptions which would have the greatest impact on the
recoverable amounts of the fields are production volumes and commodity prices.
The following down side sensitivities have been prepared on the value in use calculations with the following changes to the base
assumptions:
• 1% increase in the discount rate
• 5% reduction in production volumes
• 5% reduction in commodity prices
38 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 39
Notes to the financial statements
(CONTINUED)
2. Accounting policies (continued)
Individually applied no impairment would be charged against Developed and Production asset or Exploration and Evaluations assets.
The value in use calculations would have a reduction in headroom available. If all three sensitivities were applied to the value in use
calculations, an impairment of Exploration and Evaluation assets would be require of £nil as at 30 June 2022.
The Board recognise the market price of hydrocarbon products is volatile and a significant reduction in global oil prices can have a
consequential adverse impact on the revenue and cash flow of the Group. At all times the Board actively manages its committed
expenditure, including short–term working capital and cash flow requirements to sustain the Group through periods of reduced
hydrocarbon prices.
Oil & gas expenditure – acquisitions and disposals
Commercial transactions involving the acquisition of a D&P asset in exchange for an E&E or D&P asset are accounted for at fair
value with the difference between the fair value and cost being recognised in the statement of profit or loss as a gain or loss. When
a commercial transaction involves a D&P asset and takes the form of a farm–in or farm–out agreement, the premium expected to be
paid/received is treated as part of the consideration.
Fair value calculations are not carried out for commercial transactions involving the exchange of E&E assets. The capitalised costs of
the disposed asset are transferred to the acquired asset. Farm–in and farm–out transactions of E&E assets are accounted for at cost.
Costs are capitalised according to the Group’s cost interest (net of premium received or paid) as costs are incurred.
Proceeds from the disposal of an E&E asset, or part of an E&E asset, are deducted from the capitalised costs and the difference
recognised in the statement of profit or loss as a gain or loss. Proceeds from the disposal of a D&P asset, or part of a D&P asset, are
recognised in the statement of profit or loss, after deducting the related net book value of the asset.
Decommissioning
The Group recognises the discounted cost of decommissioning when the obligation to rectify environmental damage arises. The
amount recognised is the present value of the estimated future expenditure determined by local conditions and requirements. A
corresponding asset of an amount equal to the provision is created unless the associated activity resulted in a profit or loss write–off.
This asset is subsequently depreciated as part of the capital cost on a unit of production basis. Any change to the present value of the
estimated decommissioning cost is reflected as an adjustment to the asset. The unwinding of the discount on the decommissioning
provision is included as an interest expense. Where the Group has an asset with nil carrying value, and subsequently on the basis of
new information makes an increase to the discounted cost of decommissioning, then such increase is taken to the statement of profit
or loss.
The key areas of estimation regarding decommissioning are:
• expected economic life of field, determined by factors such as
– field reserves and future production profiles
– commodity prices
• inflation rate 2%;
• discount rate 8%; and
• decommissioning cost estimates (and the basis for these estimates)
See Note 23 in respect of decommissioning obligations.
2. Accounting policies (continued)
Interest income
For all financial instruments measured at amortised cost and interest bearing financial assets at fair value through other comprehensive
income, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the
estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate,
to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of profit
or loss.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision–maker
as required by IFRS 8 “Operating Segments”. The chief operating decision–maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors.
Segment reporting
The accounting policies of the reportable segments are consistent with the accounting policies of the Group as a whole. Segment
profit represents the profit earned before tax by each segment. This is the measure of profit that is reported to the Board of Directors
for the purpose of resource allocation and the assessment of segment performance.
When assessing segment performance and considering the allocation of resources, the Board of Directors review information about
segment assets and liabilities. For this purpose, all assets and liabilities are allocated to reportable segments with the exception of
cash and cash equivalents, financial assets at fair value through other comprehensive income and current and deferred tax assets and
liabilities. Disclosures of segment reporting have been disclosed in Note 6.
Foreign currency
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in pounds
sterling, which are the Company’s functional and presentation currency and the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing in the month of the
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year–end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss.
Where consideration is received in advance of revenue being recognised the date of the transaction reflects the date the consideration
is received.
Changes in the fair value of monetary securities denominated in foreign currency classified as financial assets at fair value through
other comprehensive income are analysed between translation differences resulting from changes in the fair value of the security, and
other changes in the carrying amount of the security. Translation differences related to changes in fair value are recognised in profit or
loss and other changes in carrying amount are recognised in equity.
Translation differences on non–monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation
differences on non–monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in
profit or loss as part of the fair value gain or loss. Translation differences on non–monetary financial assets such as equities classified
as financial assets at fair value through other comprehensive income are included in the revaluation reserve in equity.
40 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 41
Notes to the financial statements
(CONTINUED)
2. Accounting policies (continued)
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
The tax currently payable is based on the taxable profit or loss for the year. Taxable profit or loss differs from net profit or loss as
reported in the statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the year end date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the year end date and are expected to apply when the related deferred tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the
foreseeable future.
Pensions
The Company offers to contribute 10% of employees’ gross salary into personal pension plans. The cost of providing pension
contributions for employees is charged to the statement of profit or loss as accrued.
Share based payments
The Group issues both equity–settled and cash–settled share based payments as an incentive to certain key management and staff.
Equity–settled transactions
The cost of share–based employee compensation arrangements, whereby employees receive remuneration in the form of shares or
share options, is recognised as an employee benefit expense in the statement of profit or loss.
Incentives are provided to employees under an unapproved share option scheme and through other discretionary share based awards.
The Group measures the fair value of any share based awards issued by the Group to employees at the date of grant. The fair value at
the date of grant is expensed over the vesting period, except where market based conditions make it more appropriate to recognise
the costs over the expected life of the options. All share based awards are settled in equity and accordingly the share based payment
is credited directly to equity.
Where the share based payment has taken the form of a loan from the Employee Benefit Trust, a charge based on the fair value of the
anticipated benefit is determined on a consistent basis with the other share based awards. The charge is recognised in the statement
of profit or loss.
The fair value of the share options granted has been calculated using the Black–Scholes–Merton model. The key inputs into the model
include share volatility, expected dividend yield, and risk free rate Note 27.
Cash–settled transactions
The cost of cash–settled transactions is measured at the current fair value determined at each reporting date. This fair value is
expensed over the period until the vesting date with recognition of a corresponding liability. The corresponding liability is remeasured
to fair value at each reporting date up to and including the settlement date, with changes in fair value recognised as an employee
benefit expense in the statement of profit or loss.
2. Accounting policies (continued)
Property, plant and equipment (excluding development and production assets)
Property, plant and equipment are stated at historic purchase cost less depreciation and any provision for impairment.
Cost includes the original purchase price of the asset and the costs attributable to bringing the asset into its working condition.
Depreciation is provided on all tangible fixed assets on a straight line basis to write each asset down to its estimated residual value
over its expected useful life, as follows:
Short leasehold improvements
Shorter of the remaining lease term or 5 years
Fixtures, fittings and computer equipment
3 – 5 years
Land
Right of Use assets
Wind turbines
No depreciation is charged
Shorter of the lease term or life of asset
Life of asset
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each year end date.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
Transaction costs relating to acquisition of a subsidiary are recognised directly in the statement of profit or loss.
Impairment of investments in subsidiaries and receivables due from group companies
The Company assesses its investments in subsidiaries for indicators of impairment at each reporting date. Similarly, receivables
due from group companies, which are interest free, are assessed under the expected credit losses model. In each case, the
most appropriate assessment is for the Company to consider the output from the impairment tests and value–in–use calculations
carried out in respect of the Group’s E&E assets and D&P assets. The key assumptions used in these value–in–use calculations are
production volumes, commodity prices, operating costs, capital expenditure and discount rates. The derived values at the reporting
date are considered to be an indicator of the underlying value of the relevant company. These values are compared to the carrying
values of the investments in subsidiaries and receivables due from group companies at the reporting date and consideration is given to
whether any provision for impairment is required.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset acquired in a
business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure is reflected in the statement of profit or loss in the year in which the
expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life. Development costs and contract and customer relations
are amortised over the period of expected future sales from the related projects and contracts on a straight line basis.
Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial
year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense
category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash
generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be
supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
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The Parkmead Group plc Annual Report 2022 I 43
Notes to the financial statements
(CONTINUED)
2. Accounting policies (continued)
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset
when the Group can demonstrate:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale
• Its intention to complete and its ability to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at
cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost
of sales. During the period of development, the asset is tested for impairment annually.
Impairment of non–financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash–generating units (CGU) fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the estimated future cashflows are discounted to their present value
using a pre–tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
Impairment losses of continuing operations are recognised in the statement of profit or loss in those expense categories
consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to other
comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any
previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s
or cash–generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a
revaluation increase.
The following criteria are also applied in assessing impairment of specific assets:
Goodwill
Goodwill is tested for impairment annually (as at 30 June) and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each cash–generating unit (or group of cash–
generating units) to which the goodwill relates. Where the recoverable amount of the cash–generating unit is less than their carrying
amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
2. Accounting policies (continued)
Financial assets
The Parkmead Group Plc applies IFRS 9 Financial Instruments to the recognition, classification and measurement, and derecognition
of financial assets and financial liabilities and the impairment of financial assets.
Measurement of financial assets
Recognition
Financial assets and liabilities are recognised when The Parkmead Group Plc becomes a party to the terms of the contract.
Classification and measurement
The financial assets are classified on the basis of two criteria:
i) The business model within financial assets are managed, and
ii) Their contractual cash flow characteristics (whether cash flows represent ‘solely payments of principal and interest’ (SPPI).
Financial assets will be measured at amortised cost if they are held within a business model whose objective is to hold financial assets
in order to collect contractual cash flows, and their contractual cash flows represent SPPI.
Financial assets at amortised cost
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short–term highly liquid investments with
original maturities of three months or less. Any cash balance held where the use is restricted for a specific purpose or future event will
be separately noted as “restricted cash” and details provided to explain the restriction.
Trade receivables
Trade receivables are initially stated at transaction price determined in accordance with IFRS 15 and subsequently adjusted for any
provisions for impairment. Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9
using lifetime expected credit losses. During this process the probability of the non–payment of the trade receivables is assessed. This
probability is then multiplied by the amount of expected loss to occur from default to determine the lifetime expected credit losses.
Movements in the provision for expected trade losses are recorded in the statement of profit or loss in administrative expenses.
Inventory
Inventory is held at the lower of cost and net realizable value. Movements in inventory are charged directly to costs of sales in the profit
and loss account.
Contract liabilities
A contract liability is the obligation to complete a performance obligation for a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group
completes a performance obligation to the customer, a contract liability is recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as revenue when the Group completes a performance obligation under
the contract.
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Notes to the financial statements
(CONTINUED)
2. Accounting policies (continued)
Trade payables
Trade payables are initially recognised at fair value and subsequently at amortised cost.
Leases
IFRS 16 Leases set out the principles for the recognition, measurement, presentation and disclosure of leases for both lessors and
lessees.
A lessee recognises a right–of–use asset, representing its right to use the underlying asset, and a lease liability, representing its
obligation to make lease payments. Lessees recognise separately the interest expense on the lease liability and the depreciation
expense on the right–of–use asset. There were recognition exemptions for short–term leases and leases of low–value items.
As a lessee, the Group and Company recognises a right–of–use asset and a lease liability at the lease commencement date. The lease
liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by
using the rate implicit in the lease, or, if that rate cannot be readily determined, the Company uses its incremental borrowing rate which
is between 6–8%.
The lease liability is subsequently recorded at amortised cost, using the effective interest rate method. The liability is remeasured when
there is a change in future lease payments arising from a change in an index or rate or if the Company changes its assessment of
whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right–of–use asset or is recorded in profit or loss if the carrying amount of the
rightof–use asset has been reduced to zero.
The right–of–use asset is measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right–
of–use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. The Company does not
currently act as a lessor.
Finance costs and debt
Interest–bearing loans and borrowings
Interest bearing bank loans, overdrafts and other loans are initially recorded at fair value, which is ordinarily equal to the proceeds
received net of direct issue costs. These liabilities are subsequently measured at amortised cost, using the effective interest
rate method.
Finance costs of debt are allocated to periods over the term of the related debt at a constant rate on the carrying amount.
Arrangement fees and issue costs are deducted from the debt proceeds on initial recognition of the liability and are amortised and
charged to the statement of profit or loss as finance costs over the term of the debt.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
2. Accounting policies (continued)
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that a transfer of
economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the year end date.
Employer’s national insurance in the UK is payable on the exercise of certain share options or when benefits in kind are provided to
employees. For share options, provision of national insurance is calculated on the expected gain on the share options at the year end
date. For other benefits in kind, provision is made when it is probable that a liability will arise.
Significant accounting judgments, estimates and assumptions
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and
assumptions. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies.
The resulting accounting estimates may not equate with the actual results which will only be known in time. Significant accounting
judgments and accounting estimates used by the Group are discussed in more detail in the following accounting policies:
Accounting estimates
• Oil and Gas: Intangible Exploration Assets – Impairment (Note 14)
• Oil and Gas: Development and Production Assets – Depreciation and Impairment (Note 13)
• Oil and Gas: Decommissioning Provisions (Note 23)
• Employee Benefits: Share Based Payments (Note 27)
•
Investment in subsidiaries: Company’s investments in subsidiaries and receivables due from group companies – Impairment (Note 15)
Accounting judgements
• Oil and Gas expenditure – capitalisation (Note 14)
New IFRS accounting standards and interpretations adopted in the year
The following standards, amendments and interpretations are new and effective for the year ended 30 June 2022 and have been
adopted. None of the pronouncements had a material impact on the Group’s consolidated results, assets or liabilities.
• Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
New IFRS accounting standards and interpretations not yet effective
The IASB and IFRIC have issued the following standards and amendments which are effective for reporting periods beginning after the
date of these financial statements.
• IFRS 17 insurance contracts
All amendments as noted above are not believed to have a material impact on the financial statements of the Group.
46 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 47
Notes to the financial statements
(CONTINUED)
3. Revenue
An analysis of the Group’s revenue is as follows:
Revenue recognised at a point in time
Gas sales
Condensate sales
Renewables
Pitreadie
Revenue recognised over time
Rendering of energy economics services
Total revenue
4. Operating (loss)/profit
The operating (Loss)/profit is stated after charging/(crediting):
Pre–award exploration expenditure
Exploration expenditure written off
Depreciation of property, plant and equipment
Share based payment charge/(credit) (Note 27)
Cost of inventory recognised as an expense
Foreign exchange loss/(gain)
2022
£’000
2021
£’000
11,701
2,994
46
191
191
43
–
326
12,129
3,363
–
–
245
245
12,129
3,608
2022
£’000
256
860
513
87
24
(462)
2021
£’000
261
10,855
402
56
64
853
5. Auditor’s remuneration
The Group paid the following amounts to its auditors in respect of the audit of the financial statements and for other services provided
to the Group:
Audit fees payable to the auditor for the audit of the Company’s annual financial statements
Audit of the Company’s subsidiaries
Total audit fees
Audit related services
Total non–audit fees
Total audit and non–audit fees
Audit related services comprise of the review of interim results and were paid to Jeffreys Henry Audit Limited.
2022
£’000
2021
£’000
31
43
74
4
4
78
25
35
60
5
5
65
6. Operating segment information
For management purposes, the Group is organised into business units based on their services and has three reportable operating
segments as follows:
• The oil and gas exploration and production segment invests in oil and gas exploration and production assets.
• The energy economics segment provides energy sector economics, valuation and benchmarking, advising on energy policies and
fiscal matters, undertaking economic evaluations, supply benchmarking services and training.
• The Renewables segment involves mixed farming activities as well as renewable energy production and opportunities.
UK and Netherlands oil and gas is reviewed by the board as one segment but additional information is provided in the strategic report
and Chairman’s statement.
No operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured
consistently with operating profit or loss in the consolidated financial statements. However, income taxes are managed on a Group
basis and are not allocated to operating segments.
Year ended 30 June 2022
Revenue
External customer
Total revenue
Results
Operating (Loss)/profit
Finance income
Finance costs
Segment profit
Operating assets
Operating liabilities
Other disclosures
Capital expenditure
Depreciation, amortisation and impairments
Oil and Gas
Exploration and
Production
£’000
Energy
Economics
£’000
Renewables
£’000
Consolidated
£’000
11,747
11,747
7,313
73
(1,215)
6,171
74,342
(26,900)
671
1,018
–
–
382
382
12,129
12,129
(1,998)
–
(25)
(2,023)
3,410
(164)
–
117
(108)
–
(77)
(185)
8,567
5,207
73
(1,317)
3,963
86,319
(2,414)
(29,478)
4,565
451
5,236
1,586
48 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 49
Notes to the financial statements
(CONTINUED)
6. Operating segment information (continued)
1) Inter–segment balances are eliminated on consolidation and reflected in the adjustments and eliminations column.
2) Capital expenditure consists of additions of property, plant and equipment and intangible assets including assets from the
acquisition of subsidiaries.
Year ended 30 June 2021
Revenue
External customer
Total revenue
Results
Operating (Loss)/profit
Finance income
Finance costs
Segment profit
Operating assets
Operating liabilities
* Previously Pitreadie
Other disclosures
Capital expenditure
Oil and Gas
Exploration and
Production
£’000
Energy
Economics
£’000
Renewables*
£’000
Consolidated
£’000
3,037
3,037
245
245
326
326
3,608
3,608
(11,565)
(552)
147
(695)
1
(47)
(12,113)
(598)
70,974
3,354
(19,401)
(255)
(654)
––
(77)
(731)
4,399
(1,290)
534
–
114
(12,771)
148
(819)
(13,442)
78,667
(20,946)
648
11,466
Depreciation, amortisation and impairments
120
1) Inter–segment balances are eliminated on consolidation and reflected in the adjustments and eliminations column.
2) Capital expenditure consists of additions of property, plant and equipment and intangible assets including assets from the
11,233
113
acquisition of subsidiaries.
Geographic information
Revenues from external customers
Europe
North America
Rest of the World
2022
£’000
12,129
–
–
2021
£’000
3,474
91
43
Total revenue per Group statement of profit or loss
12,129
3,608
The revenue information is based on the location of the customer. Included in revenues from Europe were sales in the Netherlands of
£11,747,000 (2021: £3,037,000) and sales in the United Kingdom of £382,000 (2021: £437,000).
Non–current assets
Europe
North America
Rest of the World
Total
2022
£’000
60,996
–
–
2021
£’000
53,871
–
–
60,996
53,871
Non–current assets for this purpose consist of oil and gas properties, property, plant and equipment, exploration and evaluation
assets, goodwill and other intangible assets. Included in non–current assets from Europe were assets held in the Netherlands of
£4,961,000 (2021: £5,009,000) and assets held in the United Kingdom of £56,035,000 (2021: £48,862,000).
7. Staff costs
Employee benefits expense:
Group
Wages and salaries
Social security costs
Other pension costs
Staff costs (before share based payments)
(Credit)/charge for share based payments (Note 27)
Total staff costs
The average monthly number of employees (including executive directors) during the year was as follows:
Management and consultants
Technical
Admin, Project & IT support
8. Directors’ emoluments
Directors remuneration in aggregate comprised:
Aggregate emoluments
Company pension contributions to money purchase schemes
2022
£’000
1,351
178
127
1,656
562
2,218
2022
No.
8
2
4
14
2022
£’000
651
10
661
2021
£’000
1,621
224
142
1,987
56
2,043
2021
No.
10
3
5
18
2021
£’000
744
10
754
During the year one (2021: one) Director accrued benefits under a money purchase pension scheme. The Company contributions paid
to the scheme were £10,000 (2021: £10,000). No director exercised share appreciation rights in the period (2021: £nil). No director
exercised share options in the period (2021: nil).
The remuneration package for each of the individual Directors was comprised as follows:
T P Cross
R A Stroulger
P J Dayer
C MacLaren
R Findlay
Total
Salaries
and Fees
£’000
Benefits
in Kind
£’000
Pension
£’000
506
100
–
20
20
646
4
1
–
–
–
5
–
10
–
–
–
10
Total
2022
£’000
510
111
–
20
20
661
Total
2021
£’000
510
111
110
20
3
754
50 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 51
Notes to the financial statements
(CONTINUED)
8. Directors’ emoluments (continued)
T P Cross and R Stroulger participated in the share appreciation rights (SARs) arrangements for senior management, details of which
are provided in Note 27.
Details of outstanding SARs held by each director as at 30 June 2022 and 30 June 2021:
11. Taxation
a) Income tax
The major components of income tax expense for the years ended 30 June 2022 and 2021 are:
T P Cross
T P Cross
T P Cross
T P Cross
T P Cross
T P Cross
T P Cross
R Stroulger
R Stroulger
Number of
SARs outstanding
Exercise
price
Date from
which exercisable
Expiry
date
901,534
1,065,800
1,245,000
1,444,700
1,444,700
1,988,210
1,988,210
350,000
350,000
£0.41
£0.41
£0.41
£0.35
£0.35
£0.27
£0.27
£0.27
£0.27
21 December 2016
21 December 2025
21 December 2016
21 December 2025
21 December 2016
21 December 2025
7 December 2018
7 December 2027
7 December 2019
7 December 2027
21 December 2023
21 December 2030
21 December 2023
21 December 2030
21 December 2023
21 December 2030
21 December 2023
21 December 2030
No outstanding share options held by directors as at 30 June 2022.
R Findlay and C MacLaren participated in deferred share payments (DSPs) arrangements for Non Executive Directors, details of which
are provided in Note 27. The Company reserves the right, at its sole discretion to settle the payment in cash and the DSPs have been
accounted for as cash–settled transactions.
9. Finance income
Bank interest receivable
Loan interest received
10. Finance costs
Unwinding of discount on decommissioning provision
Interest on late paid tax
Interest on currency
Other finance charges
Interest paid on leases
Interest payable on loans and borrowings
2022
£’000
–
73
73
2022
£’000
1,135
–
66
–
51
65
2021
£’000
75
73
148
2021
£’000
611
5
39
37
76
51
1,317
819
Current tax:
Corporation tax
Adjustments in respect of current income tax of previous periods
Overseas current taxation
Total current income tax
Deferred tax:
Origination and reversal of timing differences
Total deferred income tax charge
Income tax (credit)/expense reported in the statement of profit or loss
2022
£’000
–
(150)
4,933
4,783
(6)
(6)
4,777
2021
£’000
–
(300)
726
426
(62)
(62)
364
Tax has been calculated using an estimated annual effective rate of 40% (2021: 40%) on profit before tax.
The difference between the total tax expense shown above and the amount calculated by applying the Group’s applicable rate of UK
corporation tax to the profit before tax is as follows:
b) Reconciliation of total income tax charge
Profit/(loss)on ordinary activities before tax
2022
£’000
3,963
2021
£’000
(13,442)
Profit/(loss) on ordinary activities multiplied by the Group’s applicable rate of corporation tax in the UK of 40%
(2021: 40%)
1,585
(5,377)
Effects of:
Expenses not deductible for tax purposes
Profits taxed outside ring–fence
Deferred tax not recognised
Prior year adjustment
Overseas tax suffered
Total tax expense/(credit) for the year
368
839
(2,798)
(150)
4,933
4,777
881
139
4,296
(301)
726
364
52 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 53
Notes to the financial statements
(CONTINUED)
11. Taxation (continued)
c) Deferred income taxation
The movement in the deferred tax balances as shown in the Statement of Financial Position is as follows:
Deferred tax asset
At 1 July
Acquisition
Income statement credit/(charge)
At 30 June
Deferred tax liability
At 1 July
Acquisition
Tax income recognised in the statement of profit or loss
At 30 June
Deferred tax included in the Statement of Financial Position is as follows:
Deferred tax asset
Accelerated capital allowances
Deferred tax liability
Accelerated capital allowances
Fair value gains
Deferred tax liability, net
d) Tax losses
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
187
–
187
3
(3)
–
1,339
1,404
586
–
–
(65)
1,925
1,339
–
–
–
–
–
–
–
–
–
–
–
–
Group
Company
2021
£’000
2022
£’000
2021
£’000
–
–
–
(1,339)
(1,339)
(1,339)
–
–
–
–
–
–
–
–
–
–
–
–
2022
£’000
187
187
–
(1,925)
(1,925)
(1,738)
Deferred income tax assets are recognised for the carry–forward of unused tax losses to the extent that it is probable that taxable
profits will be available against which the unused tax losses can be utilised.
A deferred tax asset has not been recognised in respect of timing differences relating to excess management expenses, unclaimed
capital allowances, capital losses and unrealised capital losses where there is insufficient evidence that the asset will be recovered.
The amount of ring fenced trading losses available are £162.1 million (2021: £147 million), non–ring fenced trading losses available
are £0.9 million (2021: £1.6 million), excess management expenses available are £26.4 Million (2021: £26.4 million), capital
losses available are £71.4 million (2021: £71.4 million) and unrealised capital losses on financial assets at fair value through other
comprehensive income of £3 million (2021: £3 million).
12. (Loss)/profit per share
(Loss)/profit per share attributable to equity holders of the Company arise from continuing and discontinued operations as follows:
(Loss)/profit per 1.5p ordinary share from continuing operations (pence)
Basic
Diluted
The calculations were based on the following information:
Loss attributable to ordinary shareholders
Continuing operations
Total
Weighted average number of shares in issue
Basic weighted average number of shares
Dilutive potential ordinary shares
Share options
2022
2021
(0.75)p
(0.75)p
(12.64)p
(12.64)p
2022
£’000
(814)
(814)
2021
£’000
(13,806)
(13,806)
109,266,931
109,188,561
–
–
(Loss)/profit per share is calculated by dividing the (Loss)/profit for the year by the weighted average number of ordinary shares
outstanding during the year.
Diluted (loss)/profit per share
(Loss)/profit per share requires presentation of diluted (Loss)/profit per share when a company could be called upon to issue shares
that would decrease net profit or increase net loss per share. When the group makes a loss the outstanding share options are
therefore anti–dilutive and so are not included in dilutive potential ordinary shares.
54 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 55
Notes to the financial statements
(CONTINUED)
13. Property, plant and equipment
Group
Cost
At 1 July 2021
Additions
Transfers
Disposals
Change in estimate of abandonment asset
At 30 June 2022
Depreciation
At 1 July 2021
Disposals
Depreciation charged in the year
At 30 June 2022
Net book amount
At 30 June 2022
At 30 June 2021
Development
and production
£’000
Property, plant
and equipment:
other
£’000
Fixtures, fittings
and computer
equipment
£’000
Total
£’000
47,269
5,498
768
53,535
123
109
–
1,125
48,626
3,476
–
(1,080)
–
7,894
5
–
–
–
3,604
109
(1,080)
1,125
773
57,293
32,623
901
711
34,235
–
160
(147)
513
32,783
1,287
15,843
14,646
6,627
4,597
–
53
764
9
57
(147)
726
34,814
22,479
19,300
Property, plant and equipment: other
Property, plant and equipment other include Land and Buildings of £2,394,000 (2021: £3,710,000).
Right of Use Asset
Group Property, plant and equipment other are right of use assets with a cost of £1,826,000 (2021: £1,458,000) with accumulated
depreciation of £1,108,000 (2021: £759,000) with a net book value of £718,000 (2021: £699,000). The incremental borrowing rate
applied to the leases ranges between 6–8%.
Abandonment Asset
The abandonment asset adjustment above reflects the increase in cost estimate in the Athena field.
Asset Impairment – Athena
Where an indicator for impairment has arisen the valuation of the asset is assessed based on the fair value less costs of disposal
determined by discounting the post–tax cash flows expected to be generated from oil and gas production net of selling costs taking
into account assumptions that market participants would typically use in estimating fair values.
Production at the Athena field was shut–in in January 2016. The Group has assumed a redevelopment of the remaining reserves in
the field over a longer term period in order to achieve the existing carrying value of £11,929,000 (2021: £10,804,000) in respect of
the Athena asset. Such redevelopment would require a recovery in oil price and the procurement of significant further financing. The
following key assumptions were applied over the expected remaining life of the field:
Athena
56 I The Parkmead Group plc Annual Report 2022
Discount
Rate
Short term price
assumption (Oil)
(3 Years)
Long–term price
assumption (Oil)
8%
$88–76/bbl
$75/bbl
13. Property, plant and equipment (continued)
Based on these assumptions the current recoverable amount exceeds the existing carrying value and no impairment is required. The
key sensitivities in assessing the recoverable amount are the long–term oil price and the relationship with future production assumed.
If these assumptions are not met there would be a further impairment of the asset required. A reduction of 20% in long–term oil price
would not result in impairment of the asset.
Company
Cost
At 1 July 2021
Additions
Disposals
At 30 June 2022
Depreciation
At 1 July 2021
Disposals
Depreciation charged in the year
At 30 June 2022
Net book amount
At 30 June 2022
At 30 June 2021
Property, plant and
equipment: other
£’000
Fixtures, fittings
and computer
equipment
£’000
Total
£’000
569
701
1,270
15
–
584
12
(147)
566
27
(147)
1,150
351
685
1,035
–
206
557
27
218
(147)
28
566
–
17
(147)
234
1,122
27
235
Right of Use Asset
Company Property, plant and equipment other are right of use assets with a cost of £539,000 (2021: £524,000) with accumulated
depreciation of £524,000 (2021: £349,000) with a net book value of £15,000 (2021: £175,000). The incremental borrowing rate
applied to the leases is 6%.
The comparable table for 2021 is detailed below:
Group
Cost
At 1 July 2020
Additions
Disposals
Change in estimate of abandonment asset
At 30 June 2021
Depreciation
At 1 July 2020
Disposals
Depreciation charged in the year
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
Development
and production
£’000
Property, plant
and equipment:
other
£’000
Fixtures, fittings
and computer
equipment
£’000
44,473
9,829
722
166
–
2,630
47,269
67
(4,398)
–
5,498
47
(1)
–
768
Total
£’000
55,024
280
(4,399)
2,630
53,535
32,494
509
631
33,634
–
129
32,623
(10)
402
901
14,646
11,979
4,597
9,320
–
80
711
57
91
(10)
611
34,235
19,300
21,390
The Parkmead Group plc Annual Report 2022 I 57
Notes to the financial statements
(CONTINUED)
13. Property, plant and equipment (continued)
Abandonment Asset
The abandonment asset adjustment above reflects the decrease in cost estimate for the Athena field.
Production at the Athena field was shut-in in January 2016. The Group has assumed a redevelopment of the remaining reserves in
the field over a longer term period. Such redevelopment would require a recovery in oil price and the procurement of significant further
financing. The following key assumptions were applied over the expected remaining life of the field for the year ended 30 June 2021:
Athena
Short term
price assumption
(Oil)
(3 Years)
Long term
price assumption
(Oil)
Discount
Rate
8%
$72–$61/bbl
$68/bbl
Based on these assumptions the current recoverable amount exceeds the existing carrying value and no impairment is required. The
key sensitivities in assessing the recoverable amount are the long-term oil price and the relationship with future production assumed. If
these assumptions are not met there would be a further impairment of the asset required. A reduction of 20% in long-term price would
not result in impairment of the asset.
Company
Cost
At 1 July 2020
Additions
At 30 June 2021
Depreciation
At 1 July 2020
Depreciation charged in the year
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
Short leasehold
property
£’000
Fixtures, fittings
and computer
equipment
£’000
528
41
569
694
7
701
Total
£’000
1,222
48
1,270
176
174
610
75
786
249
350
685
1,035
218
352
17
84
235
436
14. Intangible assets
Group
Cost
At 1 July 2021
Additions
Transfers
Change in estimate of abandonment asset
Exploration write-off
At 30 June 2022
Amortisation and impairment
At 1 July 2021
Impairment
At 30 June 2022
Net book amount
At 30 June 2022
At 30 June 2021
The comparable table for 2021 is detailed below:
Group
Cost
At 1 July 2020
Additions
Change in estimate of abandonment asset
Exploration write–off
At 30 June 2021
Amortisation and impairment
At 1 July 2020
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
Exploration and
Evaluation assets
£’000
Goodwill
£’000
Total
£’000
29,497
548
(109)
5,270
(860)
2,174
1,084
–
–
–
31,671
1,632
(109)
5,270
(860)
34,346
3,258
37,604
–
–
–
34,346
29,497
–
(2,174)
(2,174)
1,084
2,174
–
(2,174)
(2,174)
35,430
31,671
Exploration and
Evaluation assets
£’000
Goodwill
£’000
Total
£’000
36,089
2,174
38,263
369
3,894
(10,855)
–
–
–
369
3,894
(10,855)
29,497
2,174
31,671
–
–
–
–
–
–
29,497
36,089
2,174
2,174
31,671
38,263
58 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 59
Other intangibles include development costs and contract and customer relationships.
Notes to the financial statements
(CONTINUED)
14. Intangible assets (continued)
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected
to benefit from that business combination identified according to operating segments. The carrying amount of goodwill has been
allocated as follows:
15. Investment in subsidiaries and joint ventures (continued)
The comparable table for 2021 is detailed below:
Energy Economics
Kempstone Hill
2022
£’000
–
1,084
1,084
2021
£’000
2,174
–
2,174
On 3 November 2009, the Group acquired 100% of the issued share capital of Aupec Limited (“Aupec”), an unlisted company based
in Scotland. Aupec is a respected global authority in energy sector economics, valuation and benchmarking and has been providing
economic consultancy services to the oil and gas sector for over 30 years. Goodwill on the purchase of Aupec Limited is attributable
to the value of the assembled professional team in place acquired with this business as well as the Company’s relationships with a
number of blue-chip energy companies. The Group tests goodwill annually for impairment or more frequently if there are indications
that goodwill might be impaired. There are no intangible assets with indefinite lives in either CGU.
Aupec is undergoing a growth strategy change that will focus the company’s offering to a more interactive, cloud-based system for
clients. This will also allow Aupec to offer a benchmarking analytics service to clients outside of the energy sector, as such the historic
goodwill has been fully impaired.
On 31 January 2022, the Group acquired 100% of the issued share capital of Kempstone Hill Wind Energy Limited (“Kempstone”), an
unlisted company based in Scotland. The acquisition was immediately revenue and cash flow enhancing. In the last 12 months the
wind farm generated 2,850 MWh with a 99.7% availability, enough to power up to 1,000 homes. Kempstone Hill benefits from an
attractive inflation-linked, Feed-in Tariff through until 2036. The goodwill associated with Kempstone has been tested with discounted
cash flows for the company and no impairment is required.
15. Investment in subsidiaries and joint ventures
Company
Cost or valuation
At 1 July 2021
Additions
At 30 June 2022
Amortisation and impairment
At 1 July 2021
Impairment
At 30 June 2022
Net book amount
At 30 June 2022
At 30 June 2021
Subsidiary and
joint venture
undertakings
£’000
£’000
27,443
3,288
30,731
–
(1,352)
(1,352)
29,379
27,443
Company
Cost or valuation
At 1 July 2020
At 30 June 2021
Amortisation and impairment
At 1 July 2020
At 30 June 2021
Net book amount
At 30 June 2021
At 30 June 2020
Subsidiary and
joint venture
undertakings
£’000
27,443
27,443
–
–
27,443
27,443
The interests in Group undertakings of the Company, which are directly held, are listed below:
Name of Undertaking
Class of Holding
Interest in subsidiary/ joint venture
Nature of Business
Registered in Scotland:
Aupec Limited
Parkmead (E&P) Limited
Pitreadie Farm Limited*
Ordinary
Ordinary
Ordinary
Kempstone Hill Wind Energy Limited*
Ordinary
* From 31 January 2022.
100%
100%
100%
100%
Energy advisory and consulting services
Oil & Gas Exploration and Production
Mixed farming
Production of renewable energy
The registered office of Kempstone Hill Wind Energy Limited, Aupec Limited, Parkmead (E&P) Limited and Pitreadie Farm Limited is
located at 4 Queen’s Terrace, Aberdeen, AB10 1XL.
The Directors believe that the carrying values of the investments are supported by the subsidiaries underlying value in use.
60 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 61
Notes to the financial statements
(CONTINUED)
16. Business combinations
Acquisition of Kempstone Hill Wind Energy Limited
On 31 January 2022, the Group completed the acquisition of 100% of the share capital of Kempstone Hill Wind Energy Limited
(“Kempstone Hill”) to purchase a company with owning a 1.5MW onshore wind farm in Scotland. The fair values of the identifiable assets
and liabilities of Kempstone Hill at the acquisition date are shown below:
18. Interest bearing loans
Non-current assets
Loans issued
Non current assets
Property, plant and equipment: other
Lease assets
Deferred tax asset
Current assets
Debtors
Prepayments and accrued income
Cash
Current creditors
Trade creditors
Non current liabilities
Bank loan
Lease liabilities
Deferred tax liability
Net assets
Cash consideration
Goodwill on acquisition
£ 000
3,083
368
187
85
73
360
(8)
(990)
(368)
(586)
2,204
(3,288)
1,084
The property, plant and equipment, being acquired, were valued at £3,083,000 based on discounted cash flows produced by
management. The primary objective of the transaction was to acquire producing turbines. From the date of acquisition to the 30th of
June 2022, Kempstone Hill had revenue of £191,000 and made a profit of £19,000. If the acquisition had taken place on 1 July 2021
the Group would have to record revenue of £419,000 and a profit of £46,000 for the year.
17. Financial assets at fair value through other comprehensive income
The Group and Company no longer hold financial assets at fair value through other comprehensive income.
Group
Company
2022
£’000
2,900
2,900
2021
£’000
2,900
2,900
2022
£’000
2,900
2,900
2021
£’000
2,900
2,900
Loans issued
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 £2,900,000 to Energy Management Associates Limited. The Loan had an initial period of two years,
with a fixed interest rate of 2.5 per cent. On 26 July 2021, The Parkmead Group plc entered into a 24-month extension of the
interest-bearing loan to Energy Management Associates Limited of £2,900,000. The Loan will continue to bear a fixed interest rate of
2.5 per cent per annum. The Loan has not been discounted on materiality grounds.
Interest charged during the period amounted to £73,000 (2021: £73,000).
Loans and advances at amortised cost
The fair value of loans and advances is derived from discounting expected cash flows in a way that reflects the current market price for
lending to issuers of similar credit quality.
19. Trade and other receivables
Current assets
Trade receivables
Less: loss allowance
Trade receivables - net
Receivables due from group companies
Other receivables
Prepayments
Current assets
Trade receivables
Group
Company
2021
£’000
2022
£’000
2021
£’000
342
–
342
–
–
–
–
–
–
–
56,011
55,937
831
179
1,352
36
113
56,160
36
89
56,062
2022
£’000
242
–
242
–
1,573
203
2,018
In accordance with IFRS 9, trade and other receivables are recognised and carried at their anticipated realisable value, which implies
that a provision for a loss allowance on lifetime expected credit losses of the receivables is recognised. A provision for loss allowance
for expected credit losses is performed at each reporting date and is based on a multifactor and holistic analysis depending on several
assumptions taken. The Group considers reasonable and supportable information that is available without undue cost or effort and
that is relevant for the assessment of credit risk with regard to customer. The Group’s trade and other receivables are all current and
not overdue.
Of the trade receivables balance at the end of the year £242,000 (2021: £342,000) was due from the Group’s largest customer.
There is one (2021: one) other customer who represents more than 5% of the total balance of trade receivables.
62 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 63
Notes to the financial statements
(CONTINUED)
19. Trade and other receivables (continued)
Payment terms apply to amounts owed by the customers for oil and gas sales, typically this is within 30 days. Historically, invoices are
normally paid on or around the due date and this is the established operating cycle under IFRS 9, as a result the loss given default is
deemed to be a negligible timing difference. The Group has had no historical losses on trade and other receivables during this period.
As long as the customer continues to settle invoices on a monthly basis in line with what has been established practice, there are no
indications of significant increase in credit risk, and therefore deem there to be an insignificant probability of default. Therefore, it is not
considered necessary to provide for any loss allowance on credit losses.
The carrying amounts of the Group’s trade and other receivables (current and non-current) are denominated in the following currencies:
21. Trade and other payables (continued)
Non-current liabilities
Accruals and deferred income
Leases
Group
Company
2022
£’000
543
639
2021
£’000
597
414
1,181
1,011
2022
£’000
2021
£’000
–
–
–
15
–
15
Pound Sterling
Other currencies
Group
Company
2022
£’000
722
1,296
2,018
2021
£’000
1,010
342
1,352
2022
£’000
56,160
–
2021
£’000
56,062
–
56,160
56,062
The short term decommissioning provision includes Perth, Athena and Platypus (2021: Perth).
Trade payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade
purchases is 31 days (2021: 31 days). No interest is charged on the outstanding balance. The Directors consider that the carrying
amount of trade and other payables approximates to their fair value.
Receivables due from group companies
The Company considers that the amounts included in receivables due from group companies will prove recoverable. However,
the timing of and the ultimate repayment of these amounts will depend primarily on the growth of revenues for the relevant group
companies. Currently, the Company expects the amounts to be repaid over a number of years.
20. Cash and cash equivalents
Unrestricted cash in bank accounts
Restricted cash
Group
Company
2022
£’000
17,351
5,912
23,263
2021
£’000
16,857
6,521
23,378
2022
£’000
330
–
330
2021
£’000
4,656
–
4,656
The restricted cash primarily relates to amounts held in trust as security for future decommissioning liabilities under a standard
Decommissioning Security Agreement (DSA) covering the Athena asset being £5,912,000 (2021: £6,471,000).
The Directors consider that the carrying amount of these assets approximates to their fair value. The credit risk on liquid funds is
limited because the counter-party is a bank with a high credit rating.
21. Trade and other payables
Current liabilities
Trade payables
Amounts owed to group companies
Other taxes and social security costs
Accruals
Leases
Current tax
Short term decommissioning provision
Group
Company
2022
£’000
2021
£’000
400
418
–
–
2022
£’000
28
531
12
2021
£’000
182
242
5
2,348
2,565
1,964
335
241
389
–
–
–
174
–
–
3,731
3,316
2,567
–
–
3,004
141
1,432
19,228
24,205
22. Loans
Non-current liabilities
Loans
Group
Company
2022
£’000
948
948
2021
£’000
500
500
2022
£’000
2021
£’000
–
–
–
–
The 2022 loans carry an interest rate of 6.25%. Close Brothers hold fixed and floating charges over Kempstone Hill Wind Energy
Limited. The loan are repayable in full in the second half of 2025. The 2021 loans carry an interest rate of 2.5% with Bank of Scotland
holding a floating charge over the loan of Pitreadie Farm Limited, the loan was repaid in March 2022.
23. Decommissioning provisions
As at 1 July 2021
Changes in estimates
Change in estimates directly to cost of sales
Utilisation
Short term (Note 21)
Unwinding of discount
As at 30 June 2022
Group
£’000
14,754
6,395
(323)
(1,667)
(19,228)
1,135
1,066
The decommissioning provision is recorded at the Group’s share of the decommissioning cost expected to be incurred and is
based on engineering estimates and reports. Changes in estimates have arisen as a result of an increase in estimated costs of
engineering works.
The short term decommissioning provision includes P.218, P.1293 and P.1242 (2021: P.218). The long term costs are expected
to be incurred at various intervals over the next 11 years. The provision has been estimated using existing technology at current
prices, escalated at 2% and discounted at 8%. The economic life and the timing of the decommissioning liabilities are dependent on
Government legislation, commodity prices and the future production profiles of the production and development facilities. In addition,
the costs of decommissioning are subject to inflationary charges in the service costs of third parties.
64 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 65
Notes to the financial statements
(CONTINUED)
23. Decommissioning provisions (continued)
The comparable table for 2021 is detailed below:
As at 1 July 2020
Changes in estimates
Unwinding of discount
Utilisation of provision
Short term provision
As at 30 June 2021
Development and
production costs
£’000
7,650
6,524
611
(31)
(389)
Total
£’000
7,650
6,524
611
(31)
(389)
14,365
14,365
24. Contingent deferred consideration
Under the terms of a sale and purchase agreement between Parkmead (E&P) Limited and Dyas Holdings B.V., Parkmead (E&P)
Limited are liable to pay a deferred consideration of €3,000,000 on the first commercial sale of oil from the Papekop field development.
As the decision to develop this field is yet to be taken by the joint venture partners, it is uncertain whether the deferred consideration
will be paid. The fair value, as a result, is deemed to be £nil.
25. Financial instruments and financial risk factors
Financial risk management
The Group actively monitors and manages the financial risks relating to its operations on a continuous basis. The Group and
Company’s operations expose it to a variety of financial risks that include market price risk, interest rate risk, credit risk, liquidity
risk, capital risk and currency risk. The Group and Company’s financial instruments comprise equity investments financial assets at
fair value through other comprehensive income, cash and cash equivalents, interest bearing loans and various items such as trade
receivables and trade payables that arise directly from its operations.
The Group has not entered into any derivative or other hedging instrument.
Cash and treasury credit risks are mitigated through the exclusive use of institutions that carry published “A-1” (Standard & Poor’s) or
better credit ratings in order to minimise counterparty risk.
Interest rate risk
The Group and Company are exposed to interest rate risk as a result of positive cash balances.
Cash and cash equivalents (which are presented as a single class of asset on the statement of financial position) comprise cash at
bank and other short-term deposits and liquid investments that are readily convertible to a known amount of cash and which are
subject to an insignificant risk of change in value. As detailed in Note 20 some of the cash balance is restricted.
Floating rate financial assets < 1 year
Total
2022
£’000
23,263
25,263
2021
£’000
23,378
23,378
At 30 June 2022, short-term deposits were earning interest at a weighted average fixed deposit rate of 0.0% (2021: 0.32%). Cash at
bank earns interest at floating rates based on the GBP Base Rate. Interest earned at floating rates represents an insignificant risk of
change in rates.
At 30 June 2022, interest bearing loans were earning interest at a fixed interest rate of 2.50% (2021: 2.50%).
25. Financial instruments and financial risk factors (continued)
Credit risk
The Group’s credit risk is primarily attributable to its trade receivables and interest bearing loans.
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control. Outstanding
customer receivables are regularly monitored. Historically, invoices are normally paid on or around the due date. The Group has
had no historical losses on trade and other receivables during this period. As long as the customer continues to settle invoices on a
monthly basis in line with what has been established practice, there are no indications of significant increase in credit risk.
At 30 June 2022, the Group had one customer that owed the Group more than £50,000. The requirement for impairment is analysed
in respect of trade receivables at each reporting date on an individual basis for each client. The maximum exposure to credit risk at
the reporting date amounted to £242,000 (2021: £342,000). The Group evaluates the concentration of risk with respect to trade
receivables and contract assets as low, as its customers are located in several jurisdictions. The Group does not hold collateral
as security.
Interest bearing loans credit risk is managed by regularly monitoring the underlying asset value coverage of the loanee. The
requirement for impairment is analysed in respect of interest bearing loans at each reporting date. The maximum exposure to credit
risk at the reporting date amounted to £2,936,000 (2021: £2,936,000). The Group does not hold collateral as security.
Liquidity risk
The Group and Company actively review their requirements for long-term and short-term debt finance to ensure it has sufficient
available funds for operations and planned expansions. The Group and Company monitor their levels of working capital to ensure that
they can meet debt repayments as they fall due.
The following table shows the contractual maturities of the financial liabilities, all of which are measured at amortised cost:
Trade payables and other liabilities
6 months or less
6-12 months
More than 1 year
Group
Company
2022
£’000
19,073
5,132
1,181
25,386
2021
£’000
3,731
–
1,011
2022
£’000
2021
£’000
3,136
2,567
–
–
–
15
4,742
3,136
2,582
Capital risk
The Group and Company considers its capital under management to be its free cash and cash equivalents and its interest bearing
loans. The Group and Company’s overall objective from its investing and trading activities is to increase its net assets per share.
In assessing opportunities to invest in the energy sector the Group and Company undertakes financial modelling and technical
assessments on proposed investments.
The Group and Company’s capital management objectives have not changed in the period under review. The Group’s net asset per
share was 52 pence in 2022 (2021: 53 pence).
Currency risk
The Group and Company are exposed to foreign currency risk on trade receivables and cash balances. The currencies giving rise to
the risk are United States Dollars and Euros. There are no currency hedging arrangements in place. The value of the Group’s financial
assets denominated in foreign currencies at 30 June 2022 was £15,670,000 (2021: £11,445,000); Company £135,000 (2021:
£226,000). A 10% change in Sterling exchange rate will result in a profit or loss pre-tax recognised in the statement of profit or loss of
£1,567,000 (2021: £1,145,000) in the Group; Company £14,000 (2021: £23,000).
The Group is exposed to foreign currency risk on its financial liabilities. The currencies giving rise to the risk are United States Dollars.
The value of the Group’s financial liabilities denominated in foreign currencies at 30 June 2022 was £nil (2021: £nil). A 10% change in
Sterling exchange rate will result in an increase or decrease of £nil (2021: £nil) in the Group.
66 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 67
Notes to the financial statements
(CONTINUED)
25. Financial instruments and financial risk factors (continued)
Fair values of financial assets and liabilities
The following is a comparison by category of the carrying amounts and fair values of the Group’s financial assets and liabilities at
30 June 2022. Set out below the table is a summary of the methods and assumptions used for each category of instrument.
Financial assets at amortised cost
Financial liabilities at amortised cost
Financial assets at amortised cost
2022
2021
Carrying amount
£’000
Fair value
£’000
Carrying amount
£’000
Fair value
£’000
4,715
(26,334)
(21,619)
4,715
(26,334)
(21,619)
4,073
(5,242)
(1,169)
4,073
(5,242)
(1,169)
The fair value of trade receivables approximates to the carrying amount because of the short maturity of these instruments. The fair
value of interest bearing loans reasonably approximates to the carrying amount at the reporting date.
Financial liabilities at amortised cost
The fair value approximates to the carrying amount because the majority are associated with variable rate interest payments that are
re-aligned to market rates at intervals of less than one year.
Financial assets at fair value through other comprehensive income
The balances are recorded at fair value and are determined by using published price quotations in an active market or using a
valuation technique based on the price of recent investment methodology.
26. Share capital and reserves
Ordinary shares of £0.015 each
Deferred shares of £0.049 each
Ordinary shares of £0.015 each
Deferred shares of £0.049 each
Ordinary shares of £0.015 each
Deferred shares of £0.049 each
Ordinary shares of £0.015 each
Deferred shares of £0.049 each
Authorised
2022
No.
2021
No.
296,750,185
296,750,185
368,341,780
368,341,780
665,091,965
665,091,965
£’000
4,451
18,049
22,500
£’000
4,451
18,049
22,500
Allotted, Called Up and Paid Up
2022
No.
2021
No.
109,266,931
109,266,931
368,341,780
368,341,780
477,608,711
477,608,711
£’000
1,639
18,049
19,688
£’000
1,639
18,049
19,688
26. Share capital and reserves (continued)
Deferred shares have no voting rights and no rights to distributions and therefore have been excluded from the calculations of
Earnings per Share.
Other reserves as previously stated in the Group statement of changes in equity
In September 2019 9,645,669 ordinary shares were issued on the acquisition of Pitreadie Farm Limited. The non cash consideration
included £145,000 recorded against share capital, and £3,376,000 against a merger reserve. The merger reserve represents the
premium on the issue of the consideration shares and is non distributable. Recorded in line with Section 612 of the Companies
Act 2006.
27. Share based payments
Share options – equity settled
Share options are granted from time to time at the discretion of the remuneration committee. All employees are eligible to receive
share options. At 30 June 2022, 7 employees (2021: 8) held share options.
Share options have been awarded under two different schemes:
• Unapproved options
• Unapproved options with vesting conditions
Share appreciation rights – cash settled
Certain key management and staff are awarded share appreciation rights (SARs), to be settled in cash. The fair value of the SARs is
measured at each reporting date using the Black-Scholes-Merton model. The carrying amount of the liability relating to the SARs at
30 June 2022 is £1,918,000 (2021: £1,500,000).
Deferred share payments – cash settled
R Findlay and C MacLAren participated in deferred share payments (DSPs) arrangements for Non-Executive Directors. R Findaly will
receive 166,666 shares subject to them fulfilling a three year service commitment. C MacLaren will receive 235,756 shares subject
to them fulfilling a three year service commitment. The Company reserves the right, at its sole discretion to settle the payment in cash
and the DSPs have been accounted for as cash-settled transactions. The fair value of the DSPs is measured at each reporting date
using the closing share price of The Parkmead Group plc.
The carrying amount of the liability relating to the DSPs at 30 June 2022 is £104,000 (2021: £45,000).
(Credit)/expense arising from share based payments
The (credit)/expense recognised for employee services received during the year is shown as follows:
Equity-settled share based payments
Cash-settled share based payments
The SARs are settled by cash and are therefore revalued with the movement in share price.
2022
£’000
87
477
562
2021
£’000
(41)
97
56
68 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 69
Notes to the financial statements
(CONTINUED)
27. Share based payments (continued)
Movements in the year
The movement in share option awards during the year ended 30 June 2022 is as follows:
27. Share based payments (continued)
The movement in SARs during the year ended 30 June 2022 is as follows:
2022
2021
Number
Weighted
average
exercise price
Number
Weighted
average
exercise price
Outstanding at 1 July
1,598,300
£0.31
2,148,895
Granted
Lapsed
Forfeited
Outstanding at 30 June
Exercisable at 30 June
–
–
780,000
(302,533)
£0.37
(66,667)
–
–
(1,263,928)
1,295,767
215,767
£0.31
£0.37
1,598,300
358,300
£0.36
£0.27
£0.23
£0.39
£0.31
£0.37
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Expiry date
21 December 2025
7 December 2027
1 January 2029
1 December 2029
1 January 2030
21 December 2030
Exercise price
2022
2021
£0.41
£0.35
£0.35
£0.35
£0.35
£0.27
65,267
149,000
90,500
209,300
60,000
60,000
300,000
300,000
100,000
100,000
680,000
780,000
1,295,767
1,598,300
The options outstanding at 30 June 2022 had a weighted average remaining contractual life of 7.6 years (2021: 8.3 years).
The fair value of the share options granted has been calculated using the Black-Scholes-Merton model. The inputs into the model and
resulting fair values were as follows:
December 2015
December 2017
November 2019
January 2020
December 2019
January 2020
December 2020
Share price
Exercise
price
Volatility
Vesting
period
Expected
life
Expected
dividend yield
Risk free
rate
Fair value
£0.41
£0.35
£0.63
£0.50
£0.50
£0.47
£0.37
£0.41
£0.35
£0.35
£0.35
£0.35
£0.35
£0.27
42%
48%
54%
45%
46%
51%
3 years
10 years
3 years
10 years
3 years
10 years
3 years
10 years
3 years
10 years
3 years
10 years
55.9%
3 years
10 years
0%
0%
0%
0%
0%
0%
0%
1.94%
1.28%
1.56%
1.27%
0.84%
0.82%
0.2%
£0.19
£0.18
£0.41
£0.28
£0.28
£0.27
£0.23
Volatility was calculated from an average of the Group’s shares monthly volatility from March 2011.
2022
2021
Number
Weighted average
exercise price
Number
Weighted average
exercise price
Outstanding at 1 July
10,778,154
£0.33
9,314,068
Granted
Lapsed
Forfeited
Outstanding at 30 June
Exercisable at 30 June
–
–
–
–
–
–
4,676,420
–
(3,212,334)
10,778,154
£0.33
10,778,154
6,101,734
£0.38
6,101,734
£0.39
£0.27
–
£0.41
£0.33
£0.38
The fair value of the SARs granted at 30 June 2022 has been calculated using the Black-Scholes-Merton model. The inputs into the
model and resulting fair values were as follows:
Number of
SARs outstanding
Share price at
30 June 2022
Exercise price
Volatility
Vesting Period
Expected life
Expected
dividend yield
Risk free rate
December 2015
December 2017
December 2017
December 2020
6,424,668
1,444,700
1,444,700
4,676,420
£0.45
£0.45
£0.45
£0.45
£0.41
£0.35
£0.35
£0.27
56.6%
56.6%
56.6%
56.6%
1 year
10 years
1 year
10 years
2 years
10 years
3 years
10 years
0%
0%
0%
0%
2.00%
2.00%
2.00%
2.00%
The fair value of the SARs granted at 30 June 2021 has been calculated using the Black–Scholes–Merton model. The inputs into the
model and resulting fair values were as follows:
Number of
SARs outstanding
Share price at
30 June 2021
Exercise price
Volatility
Vesting Period
Expected life
Expected
dividend yield
Risk free rate
December 2015
December 2017
December 2017
December 2020
3,212,334
1,444,700
1,444,700
4,676,420
£0.45
£0.45
£0.45
£0.45
£0.41
£0.35
£0.35
£0.27
49%
49%
49%
49%
1 year
10 years
1 year
10 years
2 years
10 years
3 years
10 years
0%
0%
0%
0%
0.72%
0.72%
0.72%
0.72%
70 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 71
Notes to the financial statements
(CONTINUED)
28. Reconciliation of operating (loss)/profit to net cash flow from continuing operations
Group
Company
2021
£’000
2022
£’000
(12,771)
(3,141)
Operating profit/(loss)
Depreciation
Amortisation and exploration write-off
Loss on sale of property, plant and equipment
Provision for share based payments
Currency translation adjustments
Impairment of Goodwill
Impairment of investments
Decreases/(increase) in receivables
Decrease in stock
Increase/(decrease) in payables
2022
£’000
5,207
726
860
31
87
(462)
2,174
–
(667)
24
58
611
10,855
388
(41)
853
–
–
62
65
(1,213)
234
–
–
87
(12)
–
1,352
98
–
452
(930)
8,038
(1,191)
2021
£’000
(1,186)
249
–
–
(41)
2
–
–
(1,423)
–
283
(2,117)
29. Reconciliation of liabilities arising from financing activities
The Group have a loan from financing activities which can be seen in Note 22. The Company have no liabilities from financing
activities.
30. Leases
The Group and Company has entered into commercial leases. These non-cancellable leases have remaining terms of between one
and five years. All leases include a clause to enable upward revision of lease charges according to prevailing market conditions.
Discounted maturity analysis of IFRS 16 Leases:
Within one year
Within two to five years
More than five years
Group
Company
2022
£’000
141
364
275
780
2021
£’000
335
414
–
749
2022
£’000
–
–
–
–
2021
£’000
174
–
–
174
31. Ultimate controlling party and related party transactions
In the opinion of the Directors there is no ultimate controlling party. All other transactions and balances with related parties, which are
presented for the Group and the Company, are detailed below.
Transactions with subsidiaries
Transactions with subsidiaries mainly comprise sale and purchase of services in the ordinary course of business at normal commercial
terms and in total amounted to £1,255,000 (2021: £2,112,000). The Parkmead Group plc received dividends from subsidiaries of £nil
(2021: £nil).
Any balances outstanding at 30 June 2022 and 2021 in respect of the above transactions are shown in Note 19 and Note 21.
Transactions with Directors
In August 2012, the Company entered into a 10 year lease with Tilestamp Limited, a company where T P Cross is a director and a
shareholder. In November 2015, the Company entered into an additional 10 year lease with Tilestamp Limited. Invoices paid during the
period amounted to £406,000 (2021: £316,000). As at 30 June 2022 a right of use asset for leased buildings was held on the balance
sheet of £337,000 (2021: £604,000). As at 30 June 2022 a lease liability for buildings was held on the balance sheet of £364,000
(2021: £641,000).
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 £2,900,000 to Energy Management Associates Limited. The Loan was extended on 26 July 2021
for an additional two years, with a fixed interest rate of 2.5 per cent. Energy Management Associates Limited is a company where T P
Cross is a director and a shareholder. Further details of the Loan are provided in Note 18.
Key management
Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the
Group. In the opinion of the Board, the Group’s key management are the directors of The Parkmead Group plc. Information regarding
their compensation is given below in aggregate for each category specified in IAS 24 Related Party Disclosures:
Short-term employee benefits
Post-employment pension benefits
Share-based payment transactions
2022
£’000
651
10
477
1,138
2021
£’000
744
10
97
851
72 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 73
Notes to the financial statements
(CONTINUED)
Officers and professional advisors
Nominated Adviser & Broker
finnCap
1 Bartholomew Close
London
EC1A 7BL
Secretary and Registered office
R A Stroulger
20 Farringdon Street, 8th Floor
London, England, EC4A 4AB
Registered number
03914068
32. Jointly Controlled Assets
Fields in production or under development as at 30 June 2022:
Country
Licence
Block Destination
Field Name
Field Operator
Net unit Interest (%)
Netherlands
Andel Va
Netherlands
Andel Va
Andel Va
Andel Va
Brakel
Vermilion Energy Netherlands BV
Wijk en Aalburg
Vermilion Energy Netherlands BV
Netherlands
Drenthe IV
Drenthe IV
Grolloo
Vermilion Energy Netherlands BV
Netherlands
Drenthe V
Drenthe V
Geesbrug
Vermilion Energy Netherlands BV
Netherlands
Drenthe VI
Drenthe VI
Diever West
Vermilion Energy Netherlands BV
UK
P.1293
14/18b
Athena
Ithaca Energy (UK) Limited
15
15
15
15
7.5
30
Exploration acreage and discoveries as at 30 June 2022:
Country
Licence
Block Destination
Field Name
Field Operator
Net unit Interest (%)
Netherlands
Andel Va
Netherlands
Andel Vb
Netherlands
Papekop
Andel Va
Andel Vb
Papekop
Ottoland
Kerkwijk
Papekop
Vermilion Energy Netherlands BV
Vermilion Energy Netherlands BV
Vermilion Energy Netherlands BV
UK
UK
UK
UK
UK
UK
UK
UK
UK
P.2516
P.218
P.218
P.588
P.2154
P.2400
P.2402
P.2435
P.2406
14/20g, 15/16g
Fynn
Parkmead (E&P) Limited
15/21e
15/21a
Perth
Dolphin
Parkmead (E&P) Limited
Parkmead (E&P) Limited
15/21b, 21c
Perth
Parkmead (E&P) Limited
14/25a
30/12c, 30/13c,
30/17h, 30/18c
Perth West
Skerryvore
Parkmead (E&P) Limited
Parkmead (E&P) Limited
30/19c
Ruvaal*
Parkmead (E&P) Limited
47/10d, 48/6c
Blackadder/Teviot*
Parkmead (E&P) Limited
205/12
Davaar*
Parkmead (E&P) Limited
15
7.5
15
50
100
100
100
100
30
30
75
100
* Licence expired 30 September 2022.
33. Post balance sheet events
On the 1 October 2022, Parkmead E&P Limited increased its equity position on Skerryvore P.2400 to 50% from 30% and moved into
phase C which requires the Company to drill and an exploration well.
On 26 July 2022, Parkmead E&P Limited successfully permanently plugged and abandoned the single well located on P218 15/21a.
On 27 October, Parkmead E&P Limited received confirmation from the North Sea Transition Authority no further actions are required.
On 14 November 2022, Parkmead E&P Limited received notification the drilling rig is on site for the ‘LDS’ two-well campaign in
the Netherlands. The LDS wells will be drilled from the existing Diever well site and will target a combined mid-case gas-in-place of
37.2 billion cubic feet (“Bcf”) in the prolific Rotliegendes reservoirs within this licence.
The Group and Company has considered the supply chain and operational activities in light of the Russian attack on Ukraine and the
Directors do not believe that there will be a material impact on the business.
Directors
T P Cross
R A Stroulger
C J MacLaren
R Findlay
Group Head Office
4 Queen’s Terrace
Aberdeen
AB10 1XL
Auditors
Jeffreys Henry Audit Limited
Finsgate 5-7 Cranwood Street
London
EC1V 9EE
Bankers
Bank of Scotland
39 Albyn Place
Aberdeen
AB10 1YN
Solicitors
Burness Paull LLP
Union Plaza
1 Union Wynd
Aberdeen
AB10 1DQ
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
74 I The Parkmead Group plc Annual Report 2022
The Parkmead Group plc Annual Report 2022 I 75
76 I The Parkmead Group plc Annual Report 2022
In keeping with Parkmead’s ESG vision and commitment to minimise the environmental impact of our activities this year’s Annual Report mailing was packaged using fully recyclable materials.Communiqué Associates Limited, Edinburgh am@communique-associates.co.uk T
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The Parkmead Group plc
4 Queen’s Terrace
Aberdeen
AB10 1XL
United Kingdom
www.parkmeadgroup.com
ENERGY
REFOCUSED
Annual Report 2022