FUELING THE ENERGY TRANSITION Annual Report 2024 Contents Highlights 2 Chairman’s Statement 4 Regulatory Tailwinds for the Renewable Sector from the new government 9 Natural Gas – Fueling the Energy Transition 10 Assets 12 Board of Directors 13 Strategic Report 14 Directors’ Report 17 Corporate Governance 19 Statement of Directors’ Responsibilities 23 Independent Auditor’s Report 24 Financial Statements 31 Notes to the Financial Statements 36 Officers and Professional Advisors 76 The Parkmead Group is a UK and Netherlands focused independent energy group listed on the AIM segment of the London Stock Exchange. The Group produces natural gas from a portfolio of four fields across the Netherlands, and holds significant 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. FUELING THE ENERGY TRANSITION The Parkmead Group plc Annual Report 2024 1 “ Parkmead has delivered a 33% increase in its net assets, and remains well capitalised to continue our established growth trajectory in renewable energies” Tom Cross Executive Chairman Parkmead has delivered a healthy profit in 2024 following another year of strong operational performance from its gas and renewable energy assets Highlights The Parkmead Group plc Annual Report 2024 2 2024 3.3 3.0 2023 Strong operational performance underpins growth and profits 33% increase in net assets Increasing percentage of non-hydrocarbon revenue £4.9m profit for the period Gross Netherlands Production (kboe/d) Kempstone Hill Electricity Generation (MWh) 2023 2,446 2023 2023 2022 £14.7m 3% 6% 12% 2024 2,570 2024 2024 £19.6m +5% +10% 1 2 3 The Parkmead Group plc Annual Report 2024 3 a potential Final Investment Decision being taken by the partnership in 2025. On the Company’s important Papekop development, work is ongoing to secure a suitable export route, with a decision anticipated in the next few months. Once approved this will enable the partnership to progress the project into detailed engineering design during the course of 2025. The Drenthe V partners are continuing to evaluate the potential for further development drilling on the Geesbrug field. This includes two wells, one within the main Geesbrug structure and the second targeting Geesbrug West which is now understood to be disconnected from the rest of the field. Recent technical work by the operator has calculated that significant in-place volumes of 158Bcf remain at Geesbrug and Geesbrug West. During the period, work continued to re-establish production from the Brakel-01 well. There remains potential for gas production to restart at the well through further well intervention or alternatively by side-tracking the existing well. Parkmead is currently exploring both options alongside the operator, Vermillion. At Drenthe IV, the late life Grolloo field continues to produce economically. The field is expected to reach COP during 2025. UK Renewables Kempstone Hill Wind Farm Our operated wind farm at Kempstone Hill has continued to perform strongly during the year, generating 2,570MWh (FY23: 2,446MWh) of electricity and revenue of £0.6m (FY23: £0.7m). Higher average wind speeds during the year resulted in stable electricity production despite a decline in operational uptime which averaged 90% during the year (FY23: 98%) due to the shutdowns associated with upgrades made to Turbine 2 during the second half of FY 24. Post completion of these works the site has performed exceptionally well, with uptime averaging 99% between July and September 2024. Following the year-end, the Group successfully negotiated an updated Purchase Price Agreement covering the site for the twelve month period ending 30 September 2025 at an average export price of 88.50£/MWh, in line with prevailing market rates. Parkmead is pleased to present a strong set of results for the year ended 30 June 2024. Against the challenging backdrop of uncertainty over the future of the UK offshore oil & gas industry, our strategy of diversifying our asset base has proven its worth. Our UK onshore renewables portfolio has provided a platform for the Group to continue to perform in a sustainable manner, despite the political headwinds faced by the offshore industry. Renewable energy has grown to become a more substantial part of our overall revenue, totalling 12% in FY24 compared with 6% in the prior year. It complements our low carbon, natural gas production in the Netherlands. During a turbulent period, the Group has successfully delivered earnings per share of 4.52p and a healthy profit after tax of £4.9m. Our strong financial position and broad asset base positions Parkmead well, relative to some companies who are facing an existential threat in the form of ambiguous energy policy from the UK government. Our assets in the Netherlands provide a hedge against the potential spectre of no significant future exploration or development activity being allowed on the UKCS. Parkmead is well positioned to exploit growth opportunities during the next phase of the Company’s development as we look to realise value from our UK offshore assets and continue to build upon our UK renewable and onshore international E&P portfolios. Netherlands E&P Parkmead’s non-operated portfolio of onshore gas fields in the Netherlands has continued to perform well. Gross production across the portfolio increased 10% year-on- year to 3.3kboepd (thousand of barrels of oil equivalent per day). This increase was primarily due to the success of the LDS-01 discovery on the Group’s Drenthe VI concession which was brought onstream during the period. This prolific gas well outperformed the operator’s post well high case, with the reserves now fully recovered. This allowed the restarting of production from Diever-02 which has performed strongly since being brought back online in February 2024. The outlook for the Drenthe VI concession is particularly exciting, with numerous attractive prospects being progressed through the permitting process. Parkmead recently agreed the unitisation of the VDW-A prospect, which sits partially on its Drenthe VI concession, ahead of Chairman’s Statement The Parkmead Group plc Annual Report 2024 4 “Parkmead’s balanced portfolio and strong financial standing positions us well and provides a solid base to achieve our future growth aspirations” Tom Cross Executive Chairman The Parkmead Group plc Annual Report 2024 5 Pitreadie Wind and Solar Projects As set out at the interim results, Parkmead is in advanced commercial discussions with a major renewable energy developer regarding a potential joint venture whereby Parkmead would participate in a significant wind farm development of potentially up to 100MW. These discussions include cost sharing arrangements for essential pre-planning work streams including ongoing ornithological surveys and wind monitoring using installed LiDAR equipment. Parkmead is looking to finalise the negotiations around a joint venture agreement ahead of the parties approaching local planning authorities to progress this important renewable energy development. The team is also studying the potential for a solar farm to coexist alongside the wind farm project. Brachmont Solar Opportunity Parkmead’s renewable energy team is analysing the potential to develop a solar energy farm in the Brachmont area, where conditions appear favourable. UK Offshore Oil Licences Fynn Beauly Post period end, Parkmead was pleased to accept the award of the major Fynn Beauly discovery as part of the UK’s 33rd offshore licensing round. Licence P2634 is situated in the Outer Moray Firth and comprises blocks 14/15a, 14/20d and 15/11a. Parkmead (50% interest and operator) believes this licence contains one of the UK’s largest undeveloped discoveries. This heavy oil accumulation has been proven by three wells and is estimated to contain oil-in-place of between 740 million and 1.33 billion barrels. A key feature of the Fynn Beauly field is the highly aromatic nature of the crude, which Parkmead has confirmed through review of oil analyses from the historic discovery wells. Aromatic feedstock is essential for oil refineries to produce premium-quality needle coke which can be turned into synthetic graphite, a critical component of lithium-ion battery anodes required in electric vehicles. Skerryvore A significant amount of progress has been made on the planning of the next stage in the development of the Company’s Skerryvore licence. A new well location (30/13c-M) has been agreed by the partners on the licence to optimise penetration of the Mey and Tor reservoir targets whilst avoiding potential shallow gas hazards. The well design has been simplified to a dual-target vertical wellbore to allow for more cost-efficient operations without compromising on the geological requirements. Pore pressure and fracture gradient prediction studies have been completed and the data acquisition plan is now in place. Site survey planning has also commenced as the partners look to enable the drilling of this high-impact exploration well. Gamma East As a result of the negative investment environment created by successive UK governments through ambiguous energy policy and a series of changes to the fiscal regime, Parkmead has elected not to progress the Gamma East prospect further. The Group has notified the NSTA of its intention to relinquish licence P218, in which Gamma East is located, and this is being progressed. P1293 Abex During the year, the final subsea removals were successfully carried out on P1293. The required work scopes were completed safely and on budget. Following this the joint venture proactively carried out a post decommissioning seabed survey, after which it is the view of the operator that all commitments have now been fulfilled on the licence. Once confirmed by the regulator, Parkmead will have no further exposure to UK offshore abandonment costs. UK Oil & Gas Parkmead believes that it holds quality assets in its UK offshore licences. It is however cognisant of the current headwinds facing the UK North Sea E&P sector and also the increasing capital required to fully develop such licences into production. Furthermore, Parkmead recognises that it has a valuable asset in its UK Ring Fence tax loss pool that could be used against future UK production. Parkmead is therefore in discussions regarding a potential sale of its UK offshore position, as it looks to deliver shareholder value from these assets. These discussions are ongoing. Financial performance Parkmead has delivered a healthy profit after tax of £4.9m (FY23: loss of £42.3m) as a result of strong operating performance, and a tax credit to the income statement following a reduction in previous estimates of Netherlands tax liabilities, including the Netherlands windfall tax. This is equivalent to a basic earnings per share of 4.52p (FY:23 loss per share of 38.74p). Group turnover for the year was £5.7m (FY23: £14.8m). The year-on-year decrease was due to a fall in gas prices from the historic highs which arose as a result of the war in Ukraine. The average realised gas price in the period was €34.23/MWh (FY23: €105.73/MWh). Operating costs have remained stable compared with the prior year at £2.3m (FY23: £2.2m) leading to a gross profit for the period of £3.4m (FY23: £12.5m). Administrative expenses have remained closely controlled at £1.8m (FY23: £1.8m). Exploration expenses for the period totalled £0.3m and related primarily to costs on licence P218 (FY23: £33.0m). The Parkmead Group plc Annual Report 2024 6 Parkmead continues to maintain a strong balance with sheet with gross assets of £27.3m (FY23: £28.6m). Cash and cash equivalents decreased in the year to £9.5m (FY23: £11.6m) primarily due to decommissioning expenditure of c£2.8m in the period on Athena. This was mainly incurred in the first half of the year. Our modest financial debt has continued to reduce with £0.8m outstanding at 30th June 2024 (FY23: £0.9m). This small debt was inherited as a result of the acquisition of Kempstone Hill Wind Energy Limited. Outlook Parkmead remains in a position of relative financial strength due to our Netherlands gas and UK renewable income streams, healthy cash balances and carefully controlled costs. In addition, the Group has no further exposure to UK offshore abandonment liabilities. As set out above, we believe that there is an opportunity to deliver shareholder value from the work we have done to date in accumulating and progressing our UK offshore licences. Furthermore, Parkmead continues to progress its attractive hopper of organic growth initiatives, such as the Pitreadie wind development opportunity, whilst expanding our broad portfolio of natural gas targets in the Netherlands. We are also focused on complementing our organic growth by exploring opportunities to expand the Group’s asset base through selective acquisitions. We firmly believe that oil & gas will continue to play an important role in the global energy mix. Therefore, we are continuing to assess international E&P investment opportunities, as well as targeting the acquisition of further cashflow generating renewable energy assets onshore UK to deliver value for our shareholders. Thomas Cross Executive Chairman 25 November 2024 £4.9m profit for the year The Parkmead Group plc Annual Report 2024 7 “Parkmead is well positioned to take advantage of the supportive stance of Government policy to drive forward with its expansion in onshore renewable energy” Andrew Smith Executive Director - Business Development The Parkmead Group plc Annual Report 2024 8 The United Kingdom’s renewable energy sector has seen significant growth over the past decade, with a strong focus on offshore wind, solar, and bioenergy. However, onshore wind power has faced barriers, especially due to restrictive planning laws introduced in 2015, which have been criticized for stifling further development. A major turning point for the sector arrived on 8th July 2024, when the new Labour government made a landmark announcement aimed at revitalizing the country’s onshore wind capacity, as part of its broader commitment to clean energy. In the statement, the government committed to doubling the UK’s onshore wind capacity by 2030, marking a decisive shift in the nation’s energy strategy. A key aspect of this announcement was the removal of the de facto ban on onshore wind development in England, which had been in place since 2015. This policy, which made planning permission for onshore wind farms almost impossible to obtain, had limited the expansion of what is considered one of the most cost-effective renewable energy sources. By revising the National Planning Policy Framework (NPPF) to place onshore wind on equal footing with other energy developments, the government is streamlining the approval process, making it easier for new wind projects to be developed. The benefits of this policy shift are multi-faceted. It is expected to boost Britain’s energy independence, reducing reliance on imported fossil fuels and enhancing the country’s ability to generate clean, homegrown electricity. This aligns with broader efforts to secure the UK’s energy future in an increasingly uncertain global energy landscape. Additionally, expanding onshore wind may lead to lower energy bills for consumers, as renewable energy sources, including wind, can be cheaper to produce than fossil fuels. This will be particularly significant in the face of rising global energy prices and volatile oil and gas markets. The Labour government’s clean power mission will create high-skilled jobs in the renewable energy sector, driving economic growth in regions where onshore wind farms are developed. This initiative plays a crucial role in the UK’s strategy to tackle the climate crisis. By expanding renewable energy sources, the UK can reduce its carbon emissions and progress toward its net-zero goal by 2050. Regulatory Tailwinds for the Renewable Sector from the new government The Parkmead Group plc Annual Report 2024 9 Natural gas is often considered the transition fuel for the European Union (EU) as it plays a critical role in bridging the gap between traditional fossil fuels and renewable energy sources. The EU is striving to reduce its carbon emissions and meet its climate goals, such as the European Green Deal’s objective of becoming climate-neutral by 2050. While the long-term vision is to phase out all fossil fuels, natural gas serves as a practical intermediate step due to its lower carbon footprint compared to coal and oil, as well as its flexibility and the existence of transportation and storage infrastructure. The primary reason that natural gas is seen as a transition fuel is its relatively cleaner combustion process. When burned, natural gas emits about 50% less carbon dioxide (CO2) than coal and around 30% less than oil. This reduction in greenhouse gas emissions is vital for the EU’s short to mid-term climate goals, as the region works to expand its renewable energy capacity. As grid scale battery storage technology continues to develop, wind, solar, and other renewable sources still face challenges related to intermittency, which makes them unreliable as sole energy providers in the near term. Natural gas can provide a stable and flexible backup, ensuring energy security while renewable technologies mature. Additionally, the EU already has a vast network of natural gas infrastructure, including pipelines and storage facilities. Leveraging this existing system makes natural gas a more cost-effective and immediate solution compared to other alternatives like hydrogen, which would require new and extensive infrastructure. Europe’s dependence on gas, particularly from external suppliers such as the US, also highlights the geopolitical dimension of the fuel, driving the EU to seek a balanced approach that diversifies its supply sources while gradually reducing overall fossil fuel dependence. Natural Gas – Fueling the Energy Transition “The group continues to benefit from an exciting hopper of opportunities across its Netherlands assets, with a number of highly attractive prospects being progressed” Tom Cross Executive Chairman The Parkmead Group plc Annual Report 2024 10 The Parkmead Group plc Annual Report 2024 11 The Parkmead Group plc Annual Report 2024 12 Renewable Energy Assets Natural Gas and Oil Assets LICENCE LOCATION OPERATOR PARKMEAD EQUITY % ENERGY TYPE UK ONSHORE RENEWABLES Kempstone Hill Wind Farm Aberdeenshire Parkmead 100 Wind Pitreadie Site 1 Aberdeenshire Parkmead 100 Wind Pitreadie Site 2 Aberdeenshire Parkmead 100 Solar PV AT 31 OCTOBER 2024 LICENCE BLOCK DESIGNATION FIELD/ DISCOVERY PROSPECT/ OPPORTUNITY OPERATOR PARKMEAD EQUITY % CO-VENTURERS UK CENTRAL NORTH SEA P218 15/21e NE Perth Parkmead 100 15/21a Residual Dolphin Gamma East Sigma Scott Parkmead 100 15/21a Gamma Spaniards Parkmead 100 P2634 14/15a, 14/20d & 15/11a Fynn Beauly, Fynn T82 Lowlander Parkmead 50 Orcadian Energy 50% P2400 30/12c, 13c, 17h & 18c Skerryvore Mey Skerryvore Tor Parkmead 50 Serica 20%, CalEnergy 30% LICENCE FIELD/ DISCOVERY PROSPECT/ OPPORTUNITY OPERATOR PARKMEAD EQUITY % CO-VENTURERS NETHERLANDS ONSHORE Andel Va Brakel, Ottoland, Wijk en Aalburg Vermilion 15 Vermilion 45%, EBN 40% Andel Vb Kerkwijk, Molenaarsgraaf Vermilion 7.5 Vermilion 22.5%, EBN 40%, NAM 30% Drenthe IV Grolloo Vermilion 15 Vermilion 45%, EBN 40% Drenthe V Geesbrug Vermilion 15 Vermilion 45%, EBN 40% Drenthe VI Diever, LDS-01 Vermilion 7.5 Vermilion 52.5%, EBN 40% Papekop Papekop Vermilion 15 Vermilion 45%, EBN 40% The Parkmead Group plc Annual Report 2024 13 Board of Directors Thomas Cross Executive Chairman Tom is a Chartered Director, professional engineer and economist 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 KNOC 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. 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. 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. Andrew Smith Executive Director - Business Development Following a fifteen-year career in private practice, Andrew joined the Parkmead Group in January 2019. He is Managing Director of the Renewable Energies Division. In 2023 he was appointed to the Board of Directors overseeing all Business Development activity. Andrew has advised many investors, authorities, government agencies and blue-chip institutions on all aspects of commercial real estate and land. His expertise in both asset and corporate transactions is beneficial to the continued expansion of Parkmead’s onshore renewable energy projects. Andrew holds a Bachelor of Land Economics (BLE) degree and is also a Member of the Royal Institution of Chartered Surveyors (MRICS). 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 complementary to Parkmead’s executive team 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. The Parkmead Group plc Annual Report 2024 14 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). At 30 June 2024, The Group produces from three gas fields in the Netherlands and holds interests in a total of 16 exploration and production blocks. Parkmead has significant oil and gas development and appraisal opportunities across the UK and Netherlands. The Group also holds interests in a portfolio of exploration prospects alongside leading international partners. The Group benefits from a broad portfolio of renewable energy assets including an operational wind farm and various other alternative 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 2024, 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 projects will depend upon the Group’s ability to obtain financing through the joint venture of projects, debt and equity 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. 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 asset base and continues discussions with a range of finance 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 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 is also exposed to various production risks from its onshore assets throughout the Netherlands. This may result in reduced revenue whilst costs continue to be incurred. In order to mitigate these production risks and revenue loss, the company continuously seeks to diversify its revenue streams through investment in other near-term production assets as well as additional forms of energy generation to compliment the Group’s portfolio The Parkmead Group plc Annual Report 2024 15 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 the supply chain and regulators, as operator of several North Sea licences. 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 subsidiaries as described in Note 15. 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. At 30 June 2024 the Group employed 10 members of staff. This included the 4 Board members and 3 senior management team members. Biographies of all senior management team and Board members can be found at www.parkmeadgroup.com. 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. The Parkmead Group plc Annual Report 2024 16 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 at least a bi-annual basis to ensure projects are kept to budget and are on target to meet specific work program 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 the 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 Board 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 Meetings (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 Director 25 November 2024 Strategic Report (continued) The Parkmead Group plc Annual Report 2024 17 The Directors present their annual report and financial statements of the Company and of the Group for the year ended 30 June 2024. 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 profit for the financial year after taxation amounted to £4.9 million (2023: £42.3m loss). The Directors do not recommend the payment of a final dividend (2023: £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 31 to the financial statements. Directors and their interests The Directors of the Company during the period were as follows: Thomas Cross Andrew Smith Colin MacLaren Robert 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 13. 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. Financial risk management policies Further details of the Group’s financial risk management policies are set out in Note 23 to the financial statements. Share capital At 30 June 2024 the total issued ordinary share capital was 109,266,931 shares at 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 2024: No. of ordinary shares held % of Ordinary Shares T P Cross & Affiliates 28,106,257 25.72% Stonehage Fleming Investment Management Limited 12,778,652 11.69% 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. Directors’ Report The Parkmead Group plc Annual Report 2024 18 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. Auditors Gravita 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 23 December 2024. Under ordinary business shareholders will be asked to consider: • approving the Annual Report and financial statements for the year ended 30 June 2024 • to re-appoint Directors who, in accordance with the articles of association of the Company, have retired by rotation • approving the re-appointment of Gravita 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 Approved by the Board of Directors and signed on behalf of the Board Andrew Smith Director 25 November 2024 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 • 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. Directors’ Report (continued) The Parkmead Group plc Annual Report 2024 19 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. 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 2024. 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 produces gas from a portfolio of fields across the Netherlands and holds UK oil and gas interests spanning a number of exploration and production blocks. The Group also benefits from a broad 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 frontier 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. Corporate Governance The Parkmead Group plc Annual Report 2024 20 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 six 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 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”. 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. Corporate Governance (continued) The Parkmead Group plc Annual Report 2024 21 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 13. 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 Director 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. Audit Committee The Audit Committee met once during the year and consists of R J D Finlay, the Committee Chairman, C J MacLaren and T P Cross. All members were in attendance. 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 • review and assessment of current updates of changes in accounting standards and their likely impact on the Group’s financial statements • 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 considers the Auditors independent. Corporate Governance (continued) The Parkmead Group plc Annual Report 2024 22 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 2024 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 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 The remuneration of the Non-Executive Directors is determined by the Board within the limits set out in the Articles of Association. Corporate Governance (continued) 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. Andrew Smith Company Secretary 25 November 2024 The Parkmead Group plc Annual Report 2024 23 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 UK-adopted International Accounting Standards (“IFRSs”) and, 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 as adopted by the United Kingdom 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. Statement of Directors’ Responsibilities The Parkmead Group plc Annual Report 2024 24 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 2024 which comprise the Group 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 parent company financial statements is applicable law and UK-adopted International Accounting Standards. 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 2024 and of the group’s profit for the year then ended; • the group’s financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards; • the parent company’s financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards, as applied in accordance with the provisions of the Companies Act 2006; • 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 the year end date and at the sign off date; • consideration of any loans repaid or due to be repaid post year end for the 12 months following the proposed sign off of these financial statements; • consideration of receipt of loan receivables due post year end; • reviewed potential costs associated with licenses in the next 12 months from proposed sign off date; • assessment of the reliability of forecasts to date by agreeing historical actuals to budgets, and challenging the current forecasts; • we reviewed the latest management accounts to gauge the financial position; and • considered the appropriateness of the Company’s disclosures in relation to going concern in the financial statements 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. The Parkmead Group plc Annual Report 2024 25 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). • Loan receivable from a related party. 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 £2,481k (2023: £1,966k). • Included within E&E assets were additions relating to 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. 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. • We reviewed management’s impairment assessments including 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. The Parkmead Group plc Annual Report 2024 26 Independent Auditor’s Report (continued) KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER 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 £4,049k (2023: £4,503k). • Included within D&P assets were additions relating to 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. 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. • We reviewed management’s impairment assessments including 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. Carrying values of decommissioning provisions • The group held a significant provision for decommissioning costs as at the year-end of £1,269k (2023: £4,302k). • 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. Our audit procedures: • 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 • The group had a balance of goodwill at the year-end of £1,084k (2023: £1,084k). • Goodwill is historic and arose on the acquisition of Kempstone Hill Wind Energy Limited during the prior year. Our audit procedures: • We obtained evidence of ownership of the investment held. • 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 assessed the discounted cash flows per the impairment model and challenged management on assumptions. • We considered whether management had exercised any bias in the inputs and assumptions used in the forecast figures. The Parkmead Group plc Annual Report 2024 27 KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER Carrying values of investments in subsidiaries and intercompany receivables (parent company only risk) • The parent company had a carrying value of investments in subsidiaries at the year-end of £29,413k (2023: £29,167k), as well as an intercompany receivable of £2,541k (2023: £nil). Our audit procedures: • We considered the value of the investments and reviewed the basis of impairment 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. Loan receivable a related party • In 2017, The Parkmead Group Plc provided a loan facility of £2.9m to a related party. As of 30 June 2024, this loan is not yet repaid and has been extended post year end by 12 months and is now repayable July 2025. • The directors have considered the loan in accordance with IFRS 9 to ensure the loan amount is recoverable and also whether the loan is appropriately accounted for. Our audit procedures: • We obtained the signed loan agreement and loan schedule. • We obtained confirmation from the borrower for the loan amount as at 30 June 2024. • We recalculated the interest receivable on the loan and agreed the amounts recorded in the accounts. • We have reviewed management’s assumptions and estimates around the fair value of the loan and appropriate market rates of interest considered in calculations. • For 2024, we believe that the loan should be assessed for modification at the date of the most recent extension prior to the year end, based on discounting the new cash flows at a market rate. We challenged management on their assessment of the interest rate charged on the loan and their assertion that this represented a market rate of interest and performed stress test analysis to confirm no material adjustment might be necessary. • We have reviewed management’s assessment of the Expected Credit Loss, the key factors in the determination of credit risk and potential impact of extending the loans on the assessment. Ensured this is in accordance with IFRS 9. • We have reviewed management’s assessment of the recoverability of the asset. This included a review of the recent management accounts of the borrower as well as its valuation of the properties it holds. • We considered the appropriateness of the Group’s disclosures in relation to the loan in the financial statements. The Parkmead Group plc Annual Report 2024 28 Independent Auditor’s Report (continued) 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 £79,000 and £243,000. We set performance materiality at an amount less than materiality for the financial statements as a whole to reduce to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality was set at 70% of the overall materiality. This ranges across components between £55,300 and £170,100. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £13,635 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 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 £272,700 (2023: £289,300) £243,000 (2023: £260,000) How we determined it 1% of gross assets (2023: 1% of gross assets) 1% of gross assets, limited to a percentage of Group materiality (2023: 1% of gross assets, limited to a percentage of Group materiality) 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. The Parkmead Group plc Annual Report 2024 29 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. 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. 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. 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. 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. The Parkmead Group plc Annual Report 2024 30 Independent Auditor’s Report (continued) • 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; • enquiring for any 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. Jan Charlesworth SENIOR STATUTORY AUDITOR For and on behalf of Gravita Audit Limited, statutory auditor Aldgate Tower 2 Leman Street London E1 8FA United Kingdom 25 November 2024 The Parkmead Group plc Annual Report 2024 31 Group statement of profit or loss and other comprehensive income for the year ended 30 June 2024 Notes 2024 £’000 2023 £’000 Continuous operations Revenue 3 5,720 14,769 Cost of sales (2,302) (2,237) Gross profit 3,418 12,532 Exploration and evaluation expenses 4 (300) (33,009) Impairment of property, plant and equipment 13 – (13,030) Gain/(loss) on sale of assets (2) 36 Administrative (expenses)/credit 4 (1,780) (1,753) Operating profit/(loss) 1,336 (35,224) Finance income 9 148 192 Finance costs 10 (412) (267) Profit/(loss) before taxation 1,072 (35,299) Taxation 11 2,357 (4,661) Windfall taxation 11 1,513 (2,374) Profit/(loss) for the period attributable to the equity holders of the Parent 4,942 (42,334) Earnings/(loss) per share (pence) Basic 12 4.52 (38.74) Diluted 12 4.07 (38.74) The Parkmead Group plc Annual Report 2024 32 Group and company statement of financial position as at 30 June 2024 Notes Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Non-current assets Property, plant and equipment: development & production 13 4,049 4,503 – – Property, plant and equipment: other 13 5,603 5,600 24 27 Goodwill 14 1,084 1,084 – – Exploration and evaluation assets 14 2,481 1,966 – – Investment in subsidiaries 15 – – 29,413 29,167 Total non-current assets 13,217 13,153 29,437 29,194 Current assets Trade and other receivables 17 1,632 941 2,720 108 Interest bearing loans 16 2,936 2,936 2,936 2,936 Inventory – 16 – – Cash and cash equivalents 18 9,486 11,576 1,597 2,691 Total current assets 14,054 15,469 7,253 5,735 Total assets 27,271 28,622 36,690 34,929 Current liabilities Trade and other payables 19 (1,877) (2,673) (5,037) (4,756) Decommissioning provisions 21 – (2,773) – – Current tax liabilities 11 (3,053) (2,263) – – Total current liabilities (4,930) (7,709) (5,037) (4,756) Non-current liabilities Trade and other payables 19 (760) (942) – – Loans 20 (668) (767) – – Windfall taxation 11 – (2,374) – – Deferred tax liabilities 11 – (641) – – Decommissioning provisions 21 (1,269) (1,529) – – Total non-current liabilities (2,697) (6,253) – – Total liabilities (7,627) (13,962) (5,037) (4,756) Net assets 19,644 14,660 31,653 30,173 Equity attributable to equity holders Called up share capital 24 19,688 19,688 19,688 19,688 Share premium 83,625 83,625 83,625 83,625 Merger reserve 24 3,376 3,376 3,376 3,376 Retained deficit (87,045) (92,029) (75,036) (76,516) Total Equity 19,644 14,660 31,653 30,173 The profit after tax of the Parent Company for the year was £1,438,000 (2023: loss £55,487,000). The financial statements on pages 31 to 75 were approved by the Board of Directors on 25 November 2024 and signed on its behalf by: Thomas Cross Andrew Smith Director Director The Parkmead Group plc Annual Report 2024 33 Group statement of changes in equity for the year ended 30 June 2024 Note Share capital £’000 Share premium £’000 Merger reserve £’000 Retained deficit £’000 Total £’000 At 30 June 2022 19,688 83,625 3,376 (49,695) 56,994 Loss for the year – – – (42,334) (42,334) Total comprehensive loss for the year – – – (42,334) (42,334) At 30 June 2023 19,688 83,625 3,376 (92,029) 14,660 Profit for the year – – – 4,942 4,942 Total comprehensive income for the year – – – 4,942 4,942 Share-based payments – – – 42 42 At 30 June 2024 19,688 83,625 3,376 (87,045) 19,644 The Parkmead Group plc Annual Report 2024 34 Company statement of changes in equity for the year ended 30 June 2024 Note Share capital £’000 Share premium £’000 Revaluation reserve £’000 Retained deficit £'000 Total £’000 At 30 June 2022 19,688 83,625 3,376 (21,029) 85,660 Loss for the year – – – (55,487) (55,487) Total comprehensive loss for the year – – – (55,487) (55,487) At 30 June 2023 19,688 83,625 3,376 (76,516) 30,173 Profit for the year – – – 1,438 1,438 Total comprehensive income for the year – – – 1,438 1,438 Share-based payments – – – 42 42 At 30 June 2024 19,688 83,625 3,376 (75,036) 31,653 The Parkmead Group plc Annual Report 2024 35 Group and company statement of cashflows for the year ended 30 June 2024 Notes Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Cashflows from operating activities Continuing activities 26 1,516 11,414 (1,111) 2,361 Taxation paid 753 (4,881) – – Net cash generated by/(used in) operating activities 2,269 6,533 (1,111) 2,361 Cash flow from investing activities Interest received 109 192 68 73 Acquisition of exploration and evaluation assets (414) (519) – – Disposal of property, plant and equipment – 654 – – Acquisition of property, plant and equipment: development and production (187) (950) – – Acquisition of property, plant and equipment: other (549) (87) (16) (60) Decommissioning expenditure (2,809) (16,983) – – Net cash (used in)/generated by investing activities (3,850) (17,693) 52 13 Cash flow from financing activities Interest paid (180) (136) (35) (2) Lease payments (239) (229) – – Repayment from loans and borrowings (99) (88) – – Net cash (used in)/generated by financing activities (518) (453) (35) (2) Net (decrease)/increase in cash and cash equivalents (2,099) (11,613) (1,094) 2,364 Cash and cash equivalents at beginning of year 11,576 23,263 2,691 330 Effect of foreign exchange rate differences 9 (74) – (3) Cash and cash equivalents at end of year 9,486 11,576 1,597 2,691 The Parkmead Group plc Annual Report 2024 36 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 2024 were authorised for issue by the Board of Directors on 25 November 2024 and the Statement of Financial Position was signed on the Board’s behalf by T P Cross and A J Smith. 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 One Angel Court, 13th Floor, London, England, EC2R 7HJ. 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 UK-adopted International Accounting Standards (“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’s ability to continue as a going concern. As at 30 June 2024 the Group had £19.6 million of net assets of which £9.5 million is held in cash, of which £0.05 million is held as restricted cash. As at 30 June 2024 the Company had £31.7 million of net assets of which £1.6 million is held in cash. The Group is dependent on its existing cash resources and its ability to raise additional funding in order to develop its assets. Based on the cash balance at year end and the Company’s commitments, the Directors are of the opinion that the Company has sufficient funds to cover its budgeted operational obligations as they fall due. Basis of consolidation The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2024. 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. The Parkmead Group plc Annual Report 2024 37 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 30. 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. Renewables The Group recognise revenue arising from the sale of renewable energy (wind power) at a point in time when title has passed to the buyer. 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. Deferred revenue The Group recognise revenue arising from Government Grants over the course of the Grant, once all unfulfilled commitments are met. Pitreadie deferred income relates to maintaining the woodland located on the Pitreadie site. Revenue is recognised for the period of time the woodland has been maintained as per the Government Grant. 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. The Parkmead Group plc Annual Report 2024 38 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 a cash generating unit basis. The recoverable amount of the cash generating unit 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 2024 the rate used was 10% (2023: 10%). The discount rates applied in assessments of impairment are reassessed each year. See Note 13 for the carrying value of development and production assets. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 39 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 10% for the current year (2023: 10%). 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 The Parkmead Group plc Annual Report 2024 40 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 required of £nil as at 30 June 2024. 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 21 in respect of decommissioning obligations. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 41 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. The Parkmead Group plc Annual Report 2024 42 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. Market based conditions are not used to assess the vesting period but are included as part of the FV measurement. 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 25). 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. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 43 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 No depreciation is charged Right of Use assets Shorter of the lease term or 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. The Parkmead Group plc Annual Report 2024 44 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. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 45 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. Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. IFRS 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) • financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’) • ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date 12-month expected credit losses’ are recognised for the first category (ie Stage 1) while ‘lifetime expected credit losses’ are recognised for the second category (ie Stage 2). Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. 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 realisable 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. The Parkmead Group plc Annual Report 2024 46 2. Accounting policies (continued) Trade payables Trade payables are initially recognised at fair value and subsequently at amortised cost. Leases Under IFRS 16, 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. Lessor accounting remains similar to the previous accounting under IAS 17 i.e. lessors continue to classify leases as finance or operating leases. 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 right of-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. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 47 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 21) • Employee Benefits: Share Based Payments (Note 25) • Investment in subsidiaries: Company’s investments in subsidiaries and receivables due from group companies – Impairment (Note 15) • Receivables from related parties (Note 16) 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 2024 and have been adopted. None of the pronouncements had a material impact on the Group’s consolidated results, assets or liabilities. • Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) • Definition of Accounting Estimates (Amendments to IAS 8) 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. • IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Noncurrent) • IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants) All amendments as noted above are not believed to have a material impact on the financial statements of the Group. The Parkmead Group plc Annual Report 2024 48 3. Revenue 2024 £’000 2023 £’000 An analysis of the Group’s revenue is as follows: Gas sales 4,901 13,863 Condensate sales 141 78 Renewables 611 664 Pitreadie 67 164 Total revenue 5,720 14,769 4. Operating profit/(loss) 2024 £’000 2023 £’000 The operating profit/loss is stated after charging/(crediting): Pre-award exploration expenditure 300 175 Exploration expenditure written off (Note 14) – 32,834 Impairment of development and production: developed and production – 13,030 Depreciation of property, plant and equipment: other 546 437 Depreciation of property, plant and equipment: developed and production 481 285 (Credit)/expense arising from share based payments (Note 25) (619) 1,218 Cost of inventory recognised as an expense 16 26 Foreign exchange (gain)/loss (9) 74 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: 2024 £’000 2023 £’000 Audit fees payable to the auditor for the audit of the Company’s annual financial statements 45 36 Audit of the Company’s subsidiaries 52 54 Total audit fees 97 90 Audit related services 3 3 Total non-audit fees 3 3 Total audit and non-audit fees 100 93 Audit related services comprise of the review of interim results and were paid to Gravita Audit Limited. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 49 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 2024 Oil and Gas Exploration and Production £’000 Energy Economics £’000 Renewables £’000 Consolidated £’000 Revenue External customer 5,042 – 678 5,720 Total revenue 5,042 – 678 5,720 Results Operating (loss)/profit 1,399 (260) 197 1,336 Finance income 134 14 – 148 Finance costs (319) (13) (80) (412) Segment profit/(loss) 1,214 (259) 117 1,072 Operating assets 20,910 856 5,505 27,271 Operating liabilities (6,097) (191) (1,339) (7,627) Other disclosures Capital expenditure 643 472 36 1,151 Depreciation, amortisation and impairments 552 221 254 1,027 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 The Parkmead Group plc Annual Report 2024 50 6. Operating segment information (continued) Year ended 30 June 2023 Oil and Gas Exploration and Production £’000 Energy Economics £’000 Renewables £’000 Consolidated £’000 Revenue External customer 13,941 – 828 14,769 Total revenue 13,941 – 828 14,769 Results Operating (loss)/profit (35,421) (183) 380 (35,224) Finance income 174 18 – 192 Finance costs (151) (19) (97) (267) Segment profit (35,398) (184) 283 (35,299) Operating assets 23,070 680 4,872 28,622 Operating liabilities (11,882) (278) (1,802) (13,962) Other disclosures Capital expenditure 1,551 5 – 1,556 Depreciation, amortisation and impairments 46,149 107 330 46,586 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. Geographic information Revenues from external customers 2024 £’000 2023 £’000 Europe 5,720 14,769 Total revenue per Group statement of profit or loss 5,720 14,769 The revenue information is based on the location of the customer. Included in revenues from Europe were sales in the Netherlands of £5,042,000 (2023: £13,940,000) and sales in the United Kingdom of £678,000 (2023: £829,000). Non–current assets 2024 £’000 2023 £’000 Europe 13,217 13,153 Total 13,217 13,153 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 £5,451,000 (2023: £5,762,000) and assets held in the United Kingdom of £7,766,000 (2023: £7,391,000). Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 51 7. Staff costs Employee benefits expense: Group 2024 £’000 2023 £’000 Wages and salaries 1,132 1,370 Social security costs 139 173 Other pension costs 97 150 Staff costs (before share based payments) 1,368 1,693 (Credit)/charge for share based payments (Note 25) (619) (1,218) Total staff costs 749 475 The average monthly number of employees (including executive directors) during the year was as follows: 2024 No. 2023 No. Management and consultants 7 8 Technical 1 2 Admin, Project & IT support 2 2 10 12 8. Directors’ emoluments Directors remuneration in aggregate comprised: 2024 £’000 2023 £’000 Aggregate emoluments 648 705 Company pension contributions to money purchase schemes 10 9 658 714 During the year one (2023: two) Director accrued benefits under a money purchase pension scheme. The Company contributions paid to the scheme were £10,000 (2023: £9,000). No director exercised share appreciation rights in the period (2023: £nil). No director exercised share options in the period (2023: nil). The remuneration package for each of the individual Directors was comprised as follows: Salaries and Fees £’000 Benefits in Kind £’000 Pension £’000 Total 2024 £’000 Total 2023 £’000 T P Cross 506 3 – 509 508 A J Smith 97 2 10 109 3 C J MacLaren 20 – – 20 20 R J D Finlay 20 – – 20 20 R A Stroulger – – – – 163 Total 643 5 10 658 714 The Parkmead Group plc Annual Report 2024 52 8. Directors’ emoluments (continued) T P Cross participated in the share appreciation rights (SARs) arrangements for senior management, details of which are provided in Note 25. Details of outstanding SARs held by each director as at 30 June 2024: Number of SARs outstanding Exercise price Date from which exercisable Expiry date T P Cross 901,534 £0.41 21 December 2016 21 December 2025 T P Cross 1,065,800 £0.41 21 December 2016 21 December 2025 T P Cross 1,245,000 £0.41 21 December 2016 21 December 2025 T P Cross 1,444,700 £0.35 7 December 2018 7 December 2027 T P Cross 1,444,700 £0.35 7 December 2019 7 December 2027 T P Cross 1,988,210 £0.27 21 December 2023 21 December 2030 T P Cross 1,988,210 £0.27 21 December 2023 21 December 2030 Details of outstanding SARs held by each director as at 30 June 2023: Number of SARs outstanding Exercise price Date from which exercisable Expiry date T P Cross 901,534 £0.41 21 December 2016 21 December 2025 T P Cross 1,065,800 £0.41 21 December 2016 21 December 2025 T P Cross 1,245,000 £0.41 21 December 2016 21 December 2025 T P Cross 1,444,700 £0.35 7 December 2018 7 December 2027 T P Cross 1,444,700 £0.35 7 December 2019 7 December 2027 T P Cross 1,988,210 £0.27 21 December 2023 21 December 2030 T P Cross 1,988,210 £0.27 21 December 2023 21 December 2030 R J D Finlay and C J MacLaren participated in deferred share payments (DSPs) arrangements for Non Executive Directors, details of which are provided in Note 25. 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. A J Smith participated in Share Options arrangements, details of which are provided in Note 25. 9. Finance income 2024 £’000 2023 £’000 Bank interest receivable 75 119 Loan interest receivable 73 73 148 192 10. Finance costs 2024 £’000 2023 £’000 Unwinding of discount on decommissioning provision 100 85 Other finance charges 219 75 Interest payable on leases 39 47 Interest payable on loans and borrowings 54 60 412 267 Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 53 11. Taxation a) Income tax The major components of income tax expense for the years ended 30 June 2024 and 2023 are: 2024 £’000 2023 £’000 Current tax: Corporation tax – – Adjustments in respect of current income tax of previous periods 34 – Overseas windfall tax (1,513) 2,374 Overseas current taxation (1,750) 5,758 Total current income tax (3,229) 8,132 Deferred tax: Origination and reversal of timing differences (641) (1,097) Total deferred income tax charge (641) (1,097) Income tax (credit)/expense reported in the statement of profit or loss (3,870) 7,035 Tax has been calculated using an estimated annual effective rate of 40% (2023: 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 2024 £’000 2023 £’000 Profit/(loss) on ordinary activities before tax 1,072 (35,299) Profit/(loss) on ordinary activities multiplied by the Group’s applicable rate of corporation tax in the UK of 40% (2023: 40%) 429 (14,120) Effects of: Expenses not deductible for tax purposes 54 (12) Profits taxed outside ring-fence (172) 185 Deferred tax not recognised (947) 12,837 Income not taxable 1 13 Overseas tax suffered (3,235) 8,132 Total tax (credit)/expense for the year (3,870) 7,035 The Parkmead Group plc Annual Report 2024 54 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: Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Deferred tax asset At 1 July – 187 – – Income statement credit/(charge) – (187) – – At 30 June – – – – Deferred tax liability At 1 July 641 1,925 – – Tax income recognised in the statement of profit or loss (641) (1,284) – – At 30 June – 641 – – Deferred tax included in the Statement of Financial Position is as follows: Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Deferred tax asset Accelerated capital allowances – – – – – – – – Deferred tax liability Fair value gains – (641) – – – (641) – – Deferred tax liability, net – (641) – – d) Tax losses 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 £196.9 million (2023: £188.8 million), non-ring fenced trading losses available are £2.5 million (2023: £2.4 million), excess management expenses available are £34.5 million (2023: £36.3 million), capital losses available are £71.4 million (2023: £71.4 million) and unrealised capital losses on financial assets at fair value through other comprehensive income of £3 million (2023: £3 million). Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 55 12. Profit/(loss) per share Profit/(loss) per share attributable to equity holders of the Company arise from continuing and discontinued operations as follows: 2024 2023 Profit/(loss) per 1.5p ordinary share from continuing operations (pence) Basic 4.52p (38.74)p Diluted 4.07p (38.74)p The calculations were based on the following information: 2024 £’000 2023 £’000 Profit/(loss) attributable to ordinary shareholders Continuing operations 4,942 (42,334) Total 4,942 (42,334) Weighted average number of shares in issue Basic weighted average number of shares 109,266,931 109,266,931 Dilutive potential ordinary shares Share options 12,072,297 – Profit/(loss) per share is calculated by dividing the profit/(loss) for the year by the weighted average number of ordinary shares outstanding during the year. Diluted profit/(loss) per share Profit/(loss) per share requires presentation of diluted profit/(loss) 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. The Parkmead Group plc Annual Report 2024 56 13. Property, plant and equipment Group Development and production £’000 Property, plant and equipment: other £’000 Total £’000 Cost At 1 July 2023 50,601 8,068 58,669 Additions 188 549 737 Change in estimate of abandonment asset (161) – (161) At 30 June 2024 50,628 8,617 59,245 Depreciation At 1 July 2023 46,098 2,468 48,566 Depreciation charged in the year 481 546 1,027 At 30 June 2024 46,579 3,014 49,593 Net book amount At 30 June 2024 4,049 5,603 9,652 At 30 June 2023 4,503 5,600 10,103 Property, plant and equipment: other Property, plant and equipment other include Land and Buildings of £2,205,000 (2023: £2,189,000). Right of Use Asset Group Property, plant and equipment other are right of use assets with a cost of £1,858,000 (2023: £1,826,000) with accumulated depreciation of £1,412,000 (2023: £1,280,000) with a net book value of £446,000 (2023: £546,000). The incremental borrowing rate applied to the leases ranges between 6-8%. Abandonment Asset The abandonment asset adjustment above reflects the increase in time before the Dutch fields are decommissioned. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 57 13. Property, plant and equipment (continued) Company Property, plant and equipment: other £’000 Total £’000 Cost At 1 July 2023 1,218 1,218 Additions 16 16 At 30 June 2024 1,234 1,234 Depreciation At 1 July 2023 1,191 1,191 Depreciation charged in the year 19 19 At 30 June 2024 1,210 1,210 Net book amount At 30 June 2024 24 24 At 30 June 2023 27 27 Right of Use Asset Company Property, plant and equipment other are right of use assets with a cost of £539,000 (2023: £539,000) with accumulated depreciation of £539,000 (2023: £539,000) with a net book value of £nil (2023: £nil). The incremental borrowing rate applied to the leases is 6%. The Parkmead Group plc Annual Report 2024 58 13. Property, plant and equipment (continued) The comparable table for 2023 is detailed below: Group Development and production £’000 Property, plant and equipment: other £’000 Total £’000 Cost At 1 July 2022 48,626 8,667 57,293 Additions 950 88 1,038 Disposals – (687) (687) Change in estimate of abandonment asset 1,025 – 1,025 At 30 June 2023 50,601 7,269 58,669 Depreciation At 1 July 2022 32,783 2,031 34,814 Impairment 13,030 – 13,030 Depreciation charged in the year 285 437 722 At 30 June 2023 46,098 2,408 48,566 Net book amount At 30 June 2023 4,503 5,600 10,103 At 30 June 2022 15,843 6,636 22,479 Abandonment Asset The abandonment asset adjustment above reflects the increase in cost estimate for the Athena field. Asset Impairment – Athena Production at the Athena field was shut-in in January 2016. The Group has assumed a redevelopment will not take place and the asset has been fully impaired. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 59 13. Property, plant and equipment (continued) Company Property, plant and equipment: other £’000 Total £’000 Cost At 1 July 2022 1,150 1,150 Additions 68 68 At 30 June 2023 1,218 1,218 Depreciation At 1 July 2022 1,123 1,123 Depreciation charged in the year 68 68 At 30 June 2023 1,191 1,191 Net book amount At 30 June 2023 27 27 At 30 June 2022 27 27 14. Intangible assets Group Exploration and Evaluation assets £’000 Goodwill £’000 Total £’000 Cost At 1 July 2023 1,966 3,258 5,224 Additions 414 – 414 Change in estimate of abandonment asset 101 – 101 At 30 June 2024 2,481 3,258 5,739 Amortisation and impairment At 1 July 2023 – (2,174) (2,174) At 30 June 2024 – (2,174) (2,174) Net book amount At 30 June 2024 2,481 1,084 3,565 At 30 June 2023 1,966 1,084 3,050 The Parkmead Group plc Annual Report 2024 60 14. Intangible assets (continued) The comparable table for 2023 is detailed below: Group Exploration and Evaluation assets £’000 Goodwill £’000 Total £’000 Cost At 1 July 2022 34,346 3,258 37,604 Additions 519 – 519 Change in estimate of abandonment asset (65) – (65) Exploration write-off* (32,834) – (32,834) At 30 June 2023 1,966 3,258 5,224 * This is due to the relinquishment of the Perth licences P588 and P2154 Amortisation and impairment At 1 July 2022 – 2,174 2,174 At 30 June 2023 – 2,174 2,174 Net book amount At 30 June 2023 1,966 1,084 3,050 At 30 June 2022 34,346 1,084 35,430 Other intangibles include development costs and contract and customer relationships. 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: 2024 £’000 2023 £’000 Goodwill 1,084 1,084 1,084 1,084 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. Kempstone Hill benefits from an attractive inflation-linked, Feed-in Tariff through until 2036 and lease running until 2043. The Goodwill from the Kempstone acquisition is a strategic enabler for the Renewable segment, with the knowledge base of operating a wind farm and also the planning documentation required to advance projects. The goodwill has been reclassified as general and compared to the Renewable segments discounted cashflows. The goodwill associated with Kempstone acquisition has been tested with discounted cash flows for the Renewable segment which includes Kempstone Hill Wind Energy Limited and Pitreadie Farm Limited and no impairment is required. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 61 15. Investment in subsidiaries Company Subsidiaries £’000 Cost or valuation At 1 July 2023 30,731 At 30 June 2024 30,731 Amortisation and impairment At 1 July 2023 1,564 Reversal of impairment (703) Impairment 457 At 30 June 2024 1,318 Net book amount At 30 June 2024 29,413 At 30 June 2023 29,167 The Company has reviewed the carrying value of the Pitreadie investment and reversed historic impairments of £703,000 (2023: £nil). The comparable table for 2023 is detailed below: Company Subsidiary £’000 Cost or valuation At 1 July 2022 30,731 At 30 June 2023 30,731 Amortisation and impairment At 1 July 2022 1,352 Impairment 212 At 30 June 2023 1,564 Net book amount At 30 June 2023 29,167 At 30 June 2022 29,379 The Parkmead Group plc Annual Report 2024 62 15. Investment in subsidiaries (continued) 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 Aupec Limited Ordinary 100% Energy advisory and consulting services Deo Petroleum Limited Ordinary 100% Oil & Gas Exploration and Production Deo Petroleum UK Limited Ordinary 100% Oil & Gas Exploration and Production High Blackwood Wind Energy Limited* Ordinary 100% Production of renewable energy Parkmead (E&P) Limited Ordinary 100% Oil & Gas Exploration and Production Pitreadie Farm Limited Ordinary 100% Mixed farming Kempstone Hill Wind Energy Limited Ordinary 100% Production of renewable energy Parkmead Renewable Energy Limited** Ordinary 100% Production of renewable energy PMG Renewable Energy Limited*** Ordinary 100% Production of renewable energy * Dissolved 26 September 2023 ** Incorporated on 21 March 2024 *** Incorporated on 9 April 2024 The registered office of Kempstone Hill Wind Energy Limited, Aupec Limited, Parkmead (E&P) Limited, Parkmead Renewable Energy Limited and Pitreadie Farm Limited is located at 4 Queen’s Terrace, Aberdeen, AB10 1XL. The registered office of Deo Petroleum Limited and PMG Renewable Energy Limited is One Angel Court, 13th Floor, London, England, EX2R 7HJ. The Directors believe that the carrying values of the investments are supported by the subsidiaries underlying recoverable amount. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 63 16. Interest bearing loans Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Current assets Loans issued 2,936 2,936 2,936 2,936 2,936 2,936 2,936 2,936 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 2023, The Parkmead Group plc entered into a 12-month extension of the interest-bearing loan to Energy Management Associates Limited of £2,900,000. On 22 July 2024, The Parkmead Group plc entered into a 12-month extension of the interest-bearing loan to Energy Management Associates Limited of £2,670,000 after receiving £230,000 on the 19 July 2024. The Loan will continue to bear a fixed interest rate of 2.5 per cent per annum. Interest charged during the period amounted to £73,000 (2023: £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. The Directors have stress tested the current rate of 2.5 percent with an additional 3 percent and an immaterial difference was noted to the current carrying value. The entry by the Company into the Loan extension with Energy Management Associates Limited, in which Thomas Cross is a director and shareholder, is a related party transaction for the purposes of Rule 13 of the AIM Rules. The independent Directors (being those other than Thomas Cross), having consulted with Cavendish Capital Markets Limited, consider that such arrangements with EMAL are fair and reasonable insofar as the Company’s shareholders are concerned. The Directors do not deem the extension to be an indicator of significant increase in credit risk, but a strategic decision to provide a diversification for the interest income separate from our current bankers. The loan has not deteriorated significantly in credit quality since initial recognition and the Directors have assessed the credit risk as low, therefore recognised as Stage 1. The Directors have frequent finance updates from Energy Management Associates and all finance requests made by the Company have been provided to the date of the statement of financial position and post balance sheet. Additionally, Energy Management Associates Limited has provided a list of assets available for sale which provide which provide over 1.75 times the value of the unsecured loan. The loan is expected to be fully recovered within a 12 month period. The expected credit loss for the loan issued is £nil (2023: £nil). 17. Trade and other receivables Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Current assets Trade receivables 122 134 – – Receivables due from group companies – – 2,541 – Other receivables 408 697 – – Prepaid Tax 933 – 58 – Prepayments 169 110 121 108 1,632 941 2,720 108 The Parkmead Group plc Annual Report 2024 64 17. Trade and other receivables (continued) Current assets Trade receivables 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 £122,000 (2023: £134,000) was due from the Group’s largest customer. There is one (2023: one) other customer who represents more than 5% of the total balance of trade receivables. 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: Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Pound Sterling 577 807 2,720 108 Other currencies 1,055 134 – – 1,632 941 2,720 108 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. Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 65 18. Cash and cash equivalents Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Unrestricted cash in bank accounts 9,441 10,415 1,597 2,691 Restricted cash 45 1,161 – – 9,486 11,576 1,597 2,691 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 £45,000 (2023: £1,161,000). 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. 19. Trade and other payables Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Current liabilities Trade payables 530 222 257 31 Amounts owed to group companies – – 4,036 3,310 Other taxes and social security costs – – – 41 Accruals 1,102 2,242 744 1,374 Leases 146 116 – – Loan 99 93 – – Current tax 3,053 2,263 – – Short term decommissioning provision – 2,773 – – 4,930 7,709 5,037 4,756 Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Non-current liabilities Accruals and deferred income 418 461 – – Leases 342 481 – – 760 942 – – No short term decommissioning provision is required (2023: provision for Athena). Trade payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 74 days (2023: 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. The Parkmead Group plc Annual Report 2024 66 20. Loans Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Non-current liabilities Loans 668 767 – – 668 767 – – The loans carry an interest rate of 6.25%. Close Brothers hold fixed and floating charges over Kempstone Hill Wind Energy Limited. The loan is repayable in full in the second half of 2025. 21. Decommissioning provisions Total £’000 As at 1 July 2023 4,302 Changes in estimates (60) Change in estimates directly to cost of sales (264) Utilisation (2,809) Unwinding of discount 100 As at 30 June 2024 1,269 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 no short term decommissioning provision (2023: Athena). The long term costs are expected to be incurred at various intervals over the next 13 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. The comparable table for 2023 is detailed below: Total £’000 As at 1 July 2022 20,294 Changes in estimates 960 Change in estimates directly to cost of sales (54) Utilisation (16,983) Short term (Note 19) (2,773) Unwinding of discount 85 As at 30 June 2023 1,529 Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 67 22. 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. 23. 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 18 some of the cash balance is restricted. 2024 £’000 2023 £’000 Floating rate financial assets < 1 year 9,486 11,576 Total 9,486 11,576 At 30 June 2024, short-term deposits were earning interest at a weighted average fixed deposit rate of 0.52% (2023: 0.15%). Interest earned at floating rates represents an insignificant risk of change in rates. At 30 June 2024, interest bearing loans were earning interest at a fixed interest rate of 2.50% (2023: 2.50%). 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 2024, 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 £122,000 (2023: £134,000). 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 (2023: £2,936,000). The Group does not hold collateral as security. The Parkmead Group plc Annual Report 2024 68 23. Financial instruments and financial risk factors (continued) 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: Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Trade payables and other liabilities 6 months or less 4,930 7,709 5,037 4,756 6-12 months – – – – More than 1 year 760 942 – – 5,690 8,651 5,037 4,756 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 18 pence in 2024 (2023: 13 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 2024 was £7,283,000 (2023: £5,999,000); Company £79,000 (2023: £108,000). 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 £728,000 (2023: £599,000) in the Group; Company £8,000 (2023: £11,000). 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 2024 was £nil (2023: £nil). A 10% change in Sterling exchange rate will result in an increase or decrease of £nil (2023: £nil) in the Group. 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 2024. Set out below the table is a summary of the methods and assumptions used for each category of instrument. 2024 2023 Carrying amount £’000 Fair value £’000 Carrying amount £’000 Fair value £’000 Financial assets at amortised cost 4,399 4,399 3,767 3,767 Financial liabilities at amortised cost (5,497) (5,497) (6,645) (6,645) (1,098) (1,098) (2,878) (2,878) Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 69 23. Financial instruments and financial risk factors (continued) Financial assets at amortised cost 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. 24. Share capital and reserves Authorised 2024 No. 2023 No. Ordinary shares of £0.015 each 296,750,185 296,750,185 Deferred shares of £0.049 each 368,341,780 368,341,780 665,091,965 665,091,965 £’000 £’000 Ordinary shares of £0.015 each 4,451 4,451 Deferred shares of £0.049 each 18,049 18,049 22,500 22,500 Allotted, Called Up and Paid Up 2024 No. 2023 No. Ordinary shares of £0.015 each 109,266,931 109,266,931 Deferred shares of £0.049 each 368,341,780 368,341,780 477,608,711 477,608,711 £’000 £’000 Ordinary shares of £0.015 each 1,639 1,639 Deferred shares of £0.049 each 18,049 18,049 19,688 19,688 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. The Parkmead Group plc Annual Report 2024 70 25. 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 2024, 5 employees (2023: 4) 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 2024 is £364,000 (2023: £957,000). Deferred share payments – cash settled R Finlay and C MacLaren participated in deferred share payments (DSPs) arrangements for Non-Executive Directors. R Findlay will receive 166,666 shares for fulfilling a three year service commitment and a further 380,952 shares subject to them fulfilling a further three year service commitment. C MacLaren will receive 235,756 shares for fulfilling a three year service commitment and a further 230,769 shares subject to them fulfilling a further 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 2024 is £65,000 (2023: £53,000). (Credit)/expense arising from share based payments The (credit)/expense recognised for employee services received during the year is shown as follows: 2024 £’000 2023 £’000 Equity-settled share based payments 42 – Cash-settled share based payments (661) (1,218) (619) (1,218) The SARs are settled by cash and are therefore revalued with the movement in share price. Movements in the year The movement in share option awards during the year ended 30 June 2024 is as follows: 2024 2023 Number Weighted average exercise price Number Weighted average exercise price Outstanding at 1 July 1,240,000 £0.28 1,295,767 £0.31 Granted 190,000 £0.19 690,000 £0.31 Lapsed (450,000) £0.32 (745,767) £0.31 Outstanding at 30 June 980,000 £0.25 1,240,000 £0.28 Exercisable at 30 June 100,000 £0.27 300,000 £0.35 Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 71 25. Share based payments (continued) Share options outstanding at the end of the year have the following expiry date and exercise prices: Expiry date Exercise price 2024 2023 1 December 2029 £0.35 – 300,000 21 December 2030 £0.27 100,000 250,000 15 August 2032 £0.45 200,000 200,000 14 June 2033 £0.19 490,000 490,000 8 January 2024 £0.19 40,000 – 11 January 2024 £0.19 150,000 – 980,000 1,240,000 The options outstanding at 30 June 2024 had a weighted average remaining contractual life of 8.6 years (2023: 8.5 years). The fair value of the share options granted have been calculated using the Black-Scholes-Merton model. The inputs into the model and resulting fair values were as follows: Share price Exercise price Volatility Vesting period Expected life Expected dividend yield Risk free rate Fair value December 2020 £0.37 £0.27 55.9% 3 years 10 years 0% 0.2% £0.23 August 2022 £0.45 £0.45 60.7% 3 years 10 years 0% 2.5% £0.28 June 2023 £0.19 £0.19 63.8% 3 years 10 years 0% 4.4% £0.12 Jan 2024 £0.18 £0.19 63.4% 3 years 10 years 0% 3.7% £0.11 Volatility was calculated from an average of the Group’s shares monthly volatility from November 2021. The Parkmead Group plc Annual Report 2024 72 25. Share based payments (continued) The movement in SARs during the year ended 30 June 2024 is as follows: 2024 2023 Number Weighted average exercise price Number Weighted average exercise price Outstanding at 1 July 10,078,154 £0.33 10,778,154 £0.33 Lapsed – – (700,000) £0.27 Outstanding at 30 June 10,078,154 £0.33 10,078,154 £0.33 Exercisable at 30 June 10,078,154 £0.33 6,101,734 £0.38 The fair value of the SARs granted at 30 June 2024 have 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 2024 Exercise price Volatility Vesting Period Expected life Expected dividend yield Risk free rate December 2015 3,212,334 £0.13 £0.41 66.1% 1 year 10 years 0% 4.17% December 2017 1,444,700 £0.13 £0.35 66.1% 1 year 10 years 0% 4.17% December 2017 1,444,700 £0.13 £0.35 66.1% 2 years 10 years 0% 4.17% December 2020 3,976,420 £0.13 £0.27 66.1% 3 years 10 years 0% 4.17% The fair value of the SARs granted at 30 June 2023 have 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 2023 Exercise price Volatility Vesting Period Expected life Expected dividend yield Risk free rate December 2015 3,212,334 £0.15 £0.41 63.8% 1 year 10 years 0% 4.40% December 2017 1,444,700 £0.15 £0.35 63.8% 1 year 10 years 0% 4.40% December 2017 1,444,700 £0.15 £0.35 63.8% 2 years 10 years 0% 4.40% December 2020 3,976,420 £0.15 £0.27 63.8% 3 years 10 years 0% 4.40% Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 73 26. Reconciliation of operating profit/(loss) to net cash flow from continuing operations Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Operating profit/(loss) 1,336 (35,224) 1,473 (55,489) Depreciation 1,027 722 19 68 Amortisation and exploration write-off – 32,834 – – Profit/(loss) on sale of property, plant and equipment 2 (36) – – Provision for share based payments 42 – 42 – Currency translation adjustments (9) 74 – 3 Impairment of property, plant and equipment – 13,030 – – Reversal of impairment of investment – – (703) – Impairment of investments – – 457 212 Decrease/(increase) in receivables (691) 1,077 (2,680) 56,052 Decrease in stock 16 26 – – Increase/(decrease) in payables (207) (1,089) 281 1,514 1,516 11,414 (1,111) 2,361 27. Reconciliation of liabilities arising from financing activities The Group have a loan from financing activities which can be seen in Note 20. The Company have no liabilities from financing activities. 28. Leases The Group and Company have 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: Group Company 2024 £’000 2023 £’000 2024 £’000 2023 £’000 Within one year 146 116 – – Within two to five years 115 242 – – More than five years 227 239 – – 488 597 – – The Parkmead Group plc Annual Report 2024 74 29. 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 £3,112,000 (2023: £722,000). The Parkmead Group plc received dividends from subsidiaries of £nil (2023: £nil). Any balances outstanding at 30 June 2024 and 2023 in respect of the above transactions are shown in Note 18 and Note 20. Transactions with Directors In November 2015, the Company entered into a 10 year lease for 8 Albyn Terrace with Tilestamp Limited. In August 2012, the Company entered into a 10 year lease for 4 Queen’s Terrace with Tilestamp Limited, a company where T P Cross is a director and a shareholder. The original lease had been extended via tacit relocation. On 28 August 2024, the Company entered into a new 10 year lease (with a termination option at year 5) for 4 Queen’s Terrace with Tilestamp. Payments in relation to the leases during the period amounted to £322,000 (2023: £335,000). As at 30 June 2024 a right of use asset for leased buildings was held on the balance sheet of £140,000 (2023: £215,000). As at 30 June 2024 a lease liability for buildings was held on the balance sheet of £164,000 (2023: £253,000). 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 22 July 2024 for an additional year, 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 16. 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: 2024 £’000 2023 £’000 Short-term employee benefits 648 705 Post-employment pension benefits 10 9 Share-based payment transactions (661) (1,218) (3) (502) Notes to the financial statements (continued) The Parkmead Group plc Annual Report 2024 75 30. Jointly Controlled Assets Fields in production or under development as at 30 June 2024: Country Licence Block Destination Field Name Field Operator Net unit Interest (%) Netherlands Andel Va Andel Va Brakel Vermilion Energy Netherlands BV 15 Netherlands Andel Va Andel Va Wijk en Aalburg Vermilion Energy Netherlands BV 15 Netherlands Drenthe IV Drenthe IV Grolloo Vermilion Energy Netherlands BV 15 Netherlands Drenthe V Drenthe V Geesbrug Vermilion Energy Netherlands BV 15 Netherlands Drenthe VI Drenthe VI Diever Vermilion Energy Netherlands BV 7.5 Exploration acreage and discoveries as at 30 June 2024: Country Licence Block Destination Field Name Field Operator Net unit Interest (%) Netherlands Andel Va Andel Va Ottoland Vermilion Energy Netherlands BV 15 Netherlands Andel Vb Andel Vb Kerkwijk Vermilion Energy Netherlands BV 7.5 Netherlands Papekop Papekop Papekop Vermilion Energy Netherlands BV 15 UK P.218 15/21a Residual, 15/21a Gamma, 15/21e Dolphin Parkmead (E&P) Limited 100 UK P.2400 30/12c, 30/13c, 30/17h, 30/18c Skerryvore Parkmead (E&P) Limited 50 31. Post balance sheet events Changes were announced to the Energy Profits Levy (“EPL”) in a policy paper published on 29 July 2024 as part of announcements made by the Chancellor of the Exchequer, and followed up with the following changes in the Autumn Budget on 30 October 2024: • EPL to increase to 38% from 1 November 2024, bringing the headline rate of tax on upstream oil and gas activities to 78% - applicable for our UK Oil and Gas assets • EPL to be extended to 31 March 2030 with the Energy Security Investment Mechanism remaining in place meaning the levy will cease to apply if prices fall consistently to, or below, historically normal levels for a sustained period • The EPL’s main 29% investment allowance for qualifying expenditure incurred will be removed from 1 November 2024 • Retain decarbonisation investment expenditure rules, reduced to 66%, previously at 80% from 1 November 2024 The Company has continued its occupation of its headquarters building in Aberdeen by entering into a new ten-year lease, with reduced rent and a termination option at year five at the Company’s sole discretion, with Tilestamp Ltd at 4 Queen’s Terrace, Aberdeen, effective from 28th August 2024. The loan with Energy Management Associates Limited has been extended post year end by a further year to 27 July 2025 on the same terms. Further details of the loan are provided in Note 16 and Note 29. The Parkmead Group plc Annual Report 2024 76 Officers and professional advisors Directors T P Cross A J Smith C J MacLaren R J D Finlay Group Head Office 4 Queen’s Terrace Aberdeen AB10 1XL Auditors Gravita Audit Limited Aldgate Tower 2 Leman Street London E1 8FA Bankers Bank of Scotland 39 Albyn Place Aberdeen AB10 1YN Solicitors Brodies LLP Brodies House 31-33 Union Grove Aberdeen AB10 6SD Registrars Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Nominated Adviser & Broker Cavendish One Bartholomew Close London EC1A 7BL Secretary and Registered office A J Smith One Angel Court, 13th Floor London, England, EX2R 7HJ Registered number 03914068 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 The Parkmead Group plc 4 Queen’s Terrace Aberdeen AB10 1XL United Kingdom www.parkmeadgroup.com