Interim Results
Parkmead Group (The) PLC
08 February 2008
8 February 2008
The Parkmead Group plc ('Parkmead' or the 'Group')
Interim Results for the 6 months ended 31 December 2007 under IFRS
Interim results summary
• Increasingly focused on the oil and gas sector as a principal investor,
the Group has now made its first energy based investments with £7.7 million
invested in exploration, production and geo science assets
• Loss after taxation reduced to £28,897 (£455,499 (loss) for the twelve
months ended 30 June 2007)
• Disposal of Quayside Corporate Services Limited for up to £2,600,000
• Balance sheet remains strong with £4,889,001 cash and no debt.
• Loss per share of 0.01 pence per share (as at 30 June 2007 0.11 pence (loss))
Significant events
The Group's Chairman, Colin Goodall said, 'Parkmead has a strong management team
with in-depth expertise in the global energy industry. In line with our
strategy, the Group is increasingly focused on investing in energy based assets
demonstrated by the recent purchases of holdings in Faroe Petroleum plc, PA
Resources AB and Reservoir Exploration Technology ASA. We are actively working
on a range of investment opportunities covering exploration, production and
energy consulting with an emphasis on the Middle East and North Africa on which
we hope to make announcements in due course.'
'Our advisory business was quieter during the six months ended 31 December 2007
due to lower demand and therefore generated less revenue through success fees.
However, we remain comfortable with our trading prospects for the advisory
business over the coming months.
'With significantly reduced losses in the first half of the year and a strong
balance sheet with no debt, Parkmead is in a good position to continue to
implement its plans as an investor in energy opportunities, backed by a skilled
corporate advisory business.'
Ends
Enquiries
The Parkmead Group plc 020 7494 5770
Niall Doran (Chief Executive)
Gordon Ashworth (Chief Financial Officer)
Rick Thompson 020 7149 6000
Charles Stanley Securities
Madano Partnership (PR to The Parkmead Group plc) 020 7593 4000
Matthew Moth/Mark Way
Financial Review
The results for the six months ended 31 December 2007 have been prepared in
accordance with the accounting policies which will be adopted when the Group's
results for the year ending 30 June 2008 are prepared (the '2008 Results'). The
2008 Results will be prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union. Accordingly, the
Group has applied IFRS in respect of the six months ended 31 December 2007. The
comparative amounts within these results have been restated, a reconciliation of
which has been set out in Note 2 to these statements.
During the six months ended 31 December 2007 the Group recorded a loss after tax
of £28,897 (2006: £633,882 (profit) restated and for the 12 months ended 30 June
2007 a loss of £433,683 (restated)). At the operating level gross profits
declined to £156,167 on continuing business (2006: £3,116,473 (continuing) and
£3,123,166 (continuing) for the 12 months ended 30 June 2007). This decline is
explained by the absence of success fees earned in the period by the Group's
advisory business and also the inclusion within the comparative figures of the
gross profits of Yospace Technologies Limited and of Quayside Corporate Services
Limited, both now discontinued businesses. As noted, the Group has reasonable
confidence in the trading prospects of its corporate advisory division in the
second half of the year.
Administrative costs declined by 59% to £1,080,314 (compared with the 2006
interims), emphasising the Group's attention to cost control, leaving an
operating loss of £911,795 (£570,233 profit (restated) (continuing)). Following
the Group's disposal programme and the subsequent realisation of cash,
implemented in 2006 and the early part of 2007, interest income increased by 47%
to £338,295 (2006 interims: £229,682). A number of the Group's portfolio
investee companies refinanced during the second half of the year and as a result
the Group revalued upwards certain holdings in accordance with its accounting
policy for fixed asset investments. As a consequence a credit of £340,839
(2006: loss £303,264) was recorded leaving a loss overall for the period of
£28,897. The loss per share was 0.01 pence (2006: 0.16 pence (profits)).
The Group's balance sheet remains strong. The Group's fixed asset investments
increased to £10,905,944 from £9,176,402 as at 31 December 2006 and £3,852,797
as at 30 June 2007. This movement is explained by the sales of the former
portfolio assets and Quayside Corporate Services Limited and also the
acquisitions of holdings in Faroe Petroleum plc, PA Resources AB and Reservoir
Exploration Technology ASA. In line with the investments and sale proceeds
noted above cash balances declined to £4,889,001 (£7,374,554 as at 31 December
2006 and £12,758,804 as at 30 June 2007). The Group has no net debt.
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
Six months Six months Twelve
to 31 to 31 months to
December December 30 June
2007 2006 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
£ £ £
NOTES
Revenue 156,167 3,370,483 3,687,006
Cost of sales - (254,010) (563,840)
Gross Profit 156,167 3,116,473 3,123,166
Administration expenses (1,080,314) (2,628,240) (8,683,225)
Other operating income 12,352 82,000 150,987
Operating (loss)/profit (911,795) 570,233 (5,409,072)
Finance income 338,295 229,682 527,887
Finance costs (366) (182,436) (5,298)
Profit on sale of subsidiaries/ 16,393 155,559 4,612,428
investments
Provisions released/(made) against 340,839 (303,264) (154,286)
investments in the period
(Loss)/Profit before tax (216,634) 469,774 (428,341)
Taxation - (5,340) (5,342)
(Loss)/Profit after tax- continuing (216,634) 464,434 (433,683)
operations
Profit after tax- discontinued operations 3 187,737 169,448 (21,816)
(Loss)/Profit after tax 2 (28,897) 633,882 (455,499)
Attributable to:
Equity shareholders (28,897) 580,137 (405,648)
Minority interest - 53,745 (49,851)
(Loss)/Profit per 5 pence ordinary share (pence)
- basic 4 (0.01) 0.16 (0.11)
- diluted 4 (0.01) 0.16 (0.11)
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
At 31 At 31 At 30
December December June
2007 2006 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
NOTES £ £ £
Assets
Non current assets
Goodwill 5 - 5,919,379 2,177,829
Other intangibles - 309,073 -
Property, plant and equipment 237,244 131,970 127,660
Available for sale investments 10,668,700 2,815,980 1,547,308
Total non-current assets 10,905,944 9,176,402 3,852,797
Current assets
Trade and other receivables 961,395 2,117,941 905,168
Cash and cash equivalents 4,889,001 7,374,554 12,758,804
Total current assets 5,850,396 9,492,495 13,663,972
Total assets 16,756,340 18,668,897 17,516,769
Current liabilities
Short-term borrowings - (30,000) -
Current portion of capital lease obligations (11,645) - -
Trade and other payables (998,489) (1,695,740) (1,149,549)
Short-term provisions - - (343,798)
Total current liabilities (1,010,134) (1,725,740) (1,493,347)
Non-current liabilities
Long-term borrowings - (486,730) -
Long-term capital lease obligations (18,070) - -
Total non-current liabilities (18,070) (486,730) -
Total liabilities (1,028,204) (2,212,470) (1,493,347)
Net assets 15,728,136 16,456,427 16,023,422
Equity
Share capital 18,417,089 18,417,089 18,417,089
Merger reserve (952,109) (952,109) (952,109)
Revaluation reserve (109,450) - 235,943
Other reserve (1,128,008) (1,128,008) (1,128,008)
Retained earnings (499,386) 385,316 (549,493)
Shareholders' equity 2 15,728,136 16,722,288 16,023,422
Minority interests - (265,861) -
Total equity 15,728,136 16,456,427 16,023,422
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
Six months Six months Twelve
to 31 to 31 months to
December December 30 June
2007 2006 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
NOTES £ £ £
Operating activities
Cash flow from operations- continuing activities 6 (966,491) (69,787) (650,040)
Cash flow from operations- discontinued 899 (209,131) 386,379
operations
Interest received 437,037 229,679 452,676
Interest paid (366) (186,325) (138,592)
Taxation paid - - (791,859)
Net cash from operating activities (528,921) (235,564) (741,436)
Investing activities
Sale of subsidiary 594,130 1,267,717 5,506,445
Sale of investments - - 2,038,602
Cash/(Overdraft) disposed of with subsidiary (15,684) 128,745 67,870
Loan and finance leases acquired with subsidiary - 270,254 -
Purchase of investments (7,715,905) - -
Purchase of property, plant and equipment (165,818) (77,752) (113,104)
Sale of property, plant and equipment 13,530 - 423
Net cash from investing activities (7,289,747) 1,588,964 7,500,236
Financing activities
Income from debt and lease financing 37,564 - -
Finance lease principal payments (5,217) - -
Net cash from financing activities 32,347 - -
(Decrease)/Increase in cash and cash equivalents (7,786,321) 1,353,400 6,758,800
Movement in cash and cash equivalents
At start of year 12,758,804 6,000,004 6,000,004
(Decrease)/Increase (7,786,321) 1,353,400 6,758,800
Effects of exchange rate changes (83,482) 21,150 -
At end of year 7 4,889,001 7,374,554 12,758,804
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
Minority Total
interest Equity
Attributable to equity holders of the parent
Merger Revaluation Other Retained
reserve reserve reserve earnings
Share Total
capital
£ £ £ £ £ £ £ £
At 1 July 2006 18,417,089 (952,109) - (1,128,008) (243,049) 16,093,923 337,231 16,431,154
Retained profit
for the period - - - - 580,137 580,137 53,745 633,882
Currency translation - - - - 20,577 20,577 - 20,577
adjustment
Total recognised income
and expense for the
period - - - - 600,714 600,714 53,745 654,459
Credit to equity for
share-based payments - - - - 27,651 27,651 - 27,651
Disposal of subsidiary - - - - - - (656,837) (656,837)
At 31 December 2006 18,417,089 (952,109) - (1,128,008) 385,316 16,722,288 (265,861) 16,456,427
At 1 July 2006 18,417,089 (952,109) - (1,128,008) (243,049) 16,093,923 337,231 16,431,154
Retained loss for the - - - - (405,648) (405,648) (49,851) (455,499)
period
Currency translation on
disposal of subsidiary - - - - (9,772) (9,772) - (9,772)
Revaluation of available
for-sale investments - - 235,943 - - 235,943 - 235,943
Total recognised income
and expense for the
period - - 235,943 - (415,420) (179,477) (49,851) (229,328)
Credit to equity for
share-based payments - - - - 108,976 108,976 - 108,976
Disposal of subsidiary - - - - - - (287,380) (287,380)
At 30 June 2007 18,417,089 (952,109) 235,943 (1,128,008) (549,493) 16,023,422 - 16,023,422
Retained loss for the - - - - (28,897) (28,897) - (28,897)
period
Revaluation of
available-for-sale
investments - - (345,393) - - (345,393) - (345,393)
Total recognised income
and expense for the
period - - (345,393) - (28,897) (374,290) - (374,290)
Credit to equity
share-based payments - - - - 79,004 79,004 - 79,004
At 31 December 2007 18,417,089 (952,109) (109,450) (1,128,008) (499,386) 15,728,136 - 15,728,136
Notes to the Interim financial statements for the six months to 31 December 2007
1 Basis of preparation
The consolidated financial information has been prepared in accordance with
accounting policies which will be adopted in presenting the full year annual
report and accounts. The full year annual report and accounts will be prepared
for the first time in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
The group has therefore applied IFRS for the six month period ended 31 December
2007, with comparative figures for the six month period ended 31 December 2006
also prepared under IFRS as adopted by the European Union.
In preparing this consolidated financial information, the Group has elected to
take advantage of provisions within IFRS 1'First-time adoption of International
Financial Reporting Standards' ('IFRS 1'), which offer certain exemptions from
applying IFRS to the opening IFRS balance sheet prepared at 1 July 2006. In
particular:
IFRS 3, 'Business Combinations', has not been applied retrospectively to
business combinations that occurred prior to 1 July 2006. The carrying amount of
goodwill in the opening IFRS balance sheet at 1 July 2006 is therefore its
carrying amount at that date under UK GAAP;
The interim financial information is unaudited and does not constitute statutory
financial statements within the meaning of section 240 of the Companies Act
1985.
The Group's statutory consolidated financial statements for the year ended 30
June 2007 were presented under UK GAAP, and have been delivered to the Registrar
of Companies. The report of the auditors on those financial statements was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. Comparative figures for the year ended 30 June 2007
presented here are abridged and non-statutory, have been adjusted to reflect the
transition to IFRS and are unaudited.
2 Explanation of transition to IFRS
This note presents and explains the unaudited restatement to an IFRS basis of
the Group's results and shareholders' equity for the six months ended 31
December 2006 and the year ended 30 June 2007, and shareholders' equity at 1
July 2006, the date of transition to IFRS, which were previously reported under
UK Generally Accepted Accounting Practice ('UK GAAP'). The restated figures for
the year ended 30 June 2007 will form the comparative information for the
Group's first annual IFRS financial statements for the year ending 30 June 2008.
A reconciliation of the changes is as follows:
Six months ended/as at Year ended/as at As at
31 December 2006 30 June 2007 1 July 2006
Profit/(Loss) Shareholders' Loss after Shareholders' Shareholders'
after tax equity tax equity equity
£ £ £ £ £
As reported under UK GAAP (117,904) 18,514,554 (458,671) 16,030,022 16,093,923
Provision for share options1 (27,651) - - - -
Other share based awards2 476,713 (2,092,851) - - -
Staff holidays3 (5,054) (5,054) (6,600) (6,600) -
Exchange gain4 - - 9,772 - -
Goodwill amortisation5 307,778 305,639 - - -
As restated under IFRS 633,882 16,722,288 (455,499) 16,023,422 16,093,923
1. Provision for share options
IFRS 2 requires that a charge to the value of outstanding share options be made
over their vesting period. In the period ended 31 December 2006 this charge was
£27,651. No adjustment is needed at 1 July 2006 or 30 June 2007 as these have
already been made in the 30 June 2007 accounts when FRS 20 was adopted.
2. Other share based awards
The adoption of IFRS 2/FRS 20 has meant that a share award previously disclosed
as a loan is now disclosed in equity. At 31 December 2006 a provision had been
made against this loan, this provision is no longer required and has been
reversed.
3. Staff holidays
IAS 19 requires that all liabilities in respect of employees are recognised, the
provisions made at 31 December 2006 and 30 June 2007 represent unclaimed holiday
entitlement.
4. Exchange gain
IAS 21 requires that on disposal cumulative translation differences relating to
a foreign entity are transferred to the income statement and included in gain on
disposal.
5. Goodwill amortisation
IFRS 3 requires that goodwill is assessed by impairment reviews which means that
the amortisation that was calculated under UK GAAP has to be reversed.
3 Discontinued operations
The results of discontinued operations were as follows:
Six months Six months Twelve
to 31 to 31 months to
December December 30 June
2007 2006 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
£ £ £
Revenue 62,982 2,816,283 3,960,081
Cost of sales 92,111 (1,741,233) (1,741,234)
Gross Profit 155,093 1,075,050 2,218,847
Administration expenses 32,455 (901,710) (2,107,369)
Operating profit 187,548 173,340 111,478
Finance income 189 - -
Finance costs - (3,892) (133,294)
Profit/(Loss) before tax 187,737 169,448 (21,816)
Taxation - - -
Profit/(Loss) after tax 187,737 169,448 (21,816)
4 Earnings per share
Six months ended Six months ended Year ended
31 December 31 December 30 June
2007 2006 2007
(Loss)/Profit attributable to
ordinary shareholders (£) (28,897) 580,137 (405,648)
Weighted average number of
shares - number
-Basic 368,341,780 368,341,780 368,341,780
-Diluted 368,341,780 373,222,362 368,341,780
(Loss)/Profit per 5 pence
ordinary shares (pence)
-Basic (0.01) 0.16 (0.11)
-Diluted (0.01) 0.16 (0.11)
5 Goodwill
£
Deemed cost on transition to IFRS at 1 July 2006 7,841,211
Disposed of with subsidiary (1,557,681)
Disposals (364,151)
At 31 December 2006 5,919,379
Disposals (58,900)
Impairment (3,682,650)
At 30 June 2007 2,177,829
Disposals (2,177,829)
At 31 December 2007 -
6 Reconciliation of operating profit to net cash from operating activities
Six months to Six months to Twelve months
31 December 31 December to 30 June
2007 2006 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
£ £ £
Operating (loss)/profit (911,795) 570,233 (5,409,072)
Depreciation 31,812 12,056 72,688
Impairment of goodwill - - 3,682,650
Gain on disposal on property, plant and equipment (3,624) - (1,144)
Provision for share based payments 79,003 27,651 108,976
(Increase)/Decrease in debtors (210,789) 142,048 856,095
Increase/(Decrease) in creditors 392,700 (821,775) (204,031)
(Decrease)/Increase in other provisions (343,798) - 243,798
Net cash from operations- continuing activities (966,491) (69,787) (650,040)
7 Cash and cash equivalents
Six months to 31 Six months to 31 Twelve months to 30
December 2007 December 2006 June 2007
(unaudited) (unaudited) (unaudited)
RESTATED RESTATED
Cash at bank and in hand 4,889,001 7,374,554 12,758,804
4,889,001 7,374,554 12,758,804
Interim statement
Copies of the Interim statement will be available to the public free of charge
from the Company's registered office: 2nd Floor, 1-4 Vigo Street, London W1S
3HT. A copy of the Interim statement will also be made available on the Group's
website, www.parkmeadgroup.com.
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