(PMG) Parkmead Group

25 November 2011

The Parkmead Group plc

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

Preliminary Results for the year ended 30 June 2011

The Parkmead Group plc, a new independent oil and gas company, is pleased to report its preliminary results for the year ended 30 June 2011.

HIGHLIGHTS

·      Proven oil and gas team recruited to deliver the Group's growth plans

·      Acquisition of a strategic stake in the Platypus gas field and Possum gas prospect offering near term drilling and significant upside potential

·      Joint venture created with DEO Petroleum plc, providing a strong and focused alliance for growth in the UK Central North Sea

·      Revenue increased 58% to £3.75 million (2010: £2.36 million)

·      Total Assets rose to £12.33 million at 30 June 2011 (£11.34 million at 30 June 2010)

·      Cash balances of £1.3 million as at 30 June 2011

·      The Group is now fully funded following the provision of a shareholder loan for £8 million

Parkmead's Executive Chairman, Tom Cross commented:

"The last year has been a period of strategic transformation for the Group. I am delighted to have become Parkmead's Executive Chairman and relish the opportunity to drive the business forward into an exciting new chapter of its development. 2011 has been a successful year and I believe we are now well positioned with the essential skills and resources to build a significant new independent oil and gas company.

I am pleased to report on Parkmead's improved operating capability for the year to 30 June 2011. The Group's Turnover and Gross Profit both increased substantially and Net Assets have also increased.

We remain focused on the pursuit of value-adding acquisitions, at both asset and corporate levels, in line with the Group's strategy. The Board is pleased to be able to report that our first asset transaction in our core target market was completed earlier this month. In addition, the Group is now fully funded for its forward programme of drilling activities and is well positioned to capitalise on further strategic opportunities."

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Chairman's Statement

As Parkmead embarks upon this important new phase I am pleased to share with you the Group's ambitious strategy for growth, our progress to date and our financial performance for the year to 30 June 2011. The Group's Turnover and Gross Profit both increased substantially, Net Assets have also increased and the Group remains well funded.

Vision and Strategy

The Parkmead Board is working to build a significant new independent oil and gas company, on an accelerated basis, using a proven business model. The Group will draw on the experience of its core oil and gas team, which has a strong technical and commercial background, to exploit exploration and production opportunities.

The Group will focus on both asset and corporate level transactions as it looks to add exploration and production assets to its portfolio. Parkmead's team has been tasked with identifying and completing transactions in the Group's currently preferred geographies of Europe and Africa.

The Parkmead team will utilise its detailed technical knowledge of certain proven and frontier areas to identify and acquire assets and participate in licensing rounds. In addition, it will seek to use its existing government and industry relationships to access ground floor acreage positions.  A disciplined deal culture exists within the oil and gas team. This will ensure that the assets in which the Group invests will be in line with the Parkmead strategy and will serve towards maximising shareholder value. The core team has an excellent track record for commercial innovation and successful acquisitions.

During November 2011, the Group completed its first acquisition in the UK North Sea in line with its philosophy of acquiring known properties, in this case the Platypus gas field and Possum gas prospect.  The Parkmead technical and commercial experts have a long history and detailed knowledge of these assets making these an ideal first acquisition for the Group.

Parkmead will look to form joint-ventures with companies where the Group can achieve aligned strategies in a particular asset or area of operation. These partnerships will focus on the key strengths of each company. During 2011, Parkmead formed a strategic alliance with DEO Petroleum plc covering specific areas in the Central North Sea.  Parkmead and DEO will combine exploration and development skills to target acquisition opportunities and jointly participate in the UKCS 27th Licensing Round.

Results

The Group's revenue has increased significantly in 2011 to £3.7 million (2010: £2.4 million). The increase in turnover was driven by revenue generated from Aupec, highlighting Aupec's strength in its core fields of valuation, benchmarking and energy sector economics. Revenues generated to 30 June 2011 represent the Group's first full year of trading following the acquisition of Aupec by Parkmead in November 2009. Following the investment in a substantial new exploration and production team to deliver Parkmead's growth plans, the Group's operating loss for the year was £3.6 million (2010: £1.5 million). A profit from the realisation of available-for-sale financial assets of £0.11 million resulted from the sale of shares in Prevx Group Limited. The loss after tax was £3.6 million (2010: £1.5 million).

A profit of £1.73 million from discontinued operations was recognised from the value of the deferred consideration due, which was paid in full during the year, from the sale of Quayside Corporate Services Limited in 2007.

Total comprehensive income for the year was £35k (2010: £113k).

The Group's total assets increased to £12.3 million (2010: £11.3 million), including increased available-for-sale financial assets of £7.1 million (2010:£5.4 million) and increased cash and cash equivalents of £1.3 million (2010: £0.3 million). The total current liabilities decreased to £1.1 million (2010: £2.8 million) mainly due to decreased payables of £0.8 million (2010: £2.7 million).

The Group's net asset value increased to £9.0 million (2010: £8.5 million). Some 5,965,925 new ordinary shares were issued on the exercise of options, bringing the Group's total ordinary shares in issue to 609,601,823 (2010: 603,635,898).

As at 30 June 2011 Parkmead remained debt free.

The Board is focused on building a portfolio of high potential oil and gas interests and therefore is not recommending the payment of a dividend in 2011 (2010: nil).

Investments

The Group's principal investment is in Faroe Petroleum plc ("Faroe") (LSE AIM: FPM.L.). As at 30 June 2011 the value of this investment had increased by some 37% to £7.05 million (30 June 2010: £5.15 million).

Faroe's share price rose from 118p to 160p over the 12 months to 30 June 2011, following a successful year for the company. Faroe enjoyed significant exploration success with the Maria oil discovery in the Norwegian Sea, which it subsequently traded with Petoro AS for a number of oil and gas producing assets in Norway. Further production was added to the company through the acquisition of an 18.0% interest in the Blane oil field from ENI UK Limited and ENI ULX Limited.

Faroe completed a placing of 37,718,024 new ordinary shares at a placing price of 165 pence per ordinary share in November 2010. The placing raised £62.2 million of new funding. Parkmead holds 4,377,039 ordinary shares in Faroe representing 2.1% of the issued share capital of Faroe. We remain of the view that Faroe has significant medium and long-term upside. The investment is held as available-for-sale and the increase in its value has been reflected in equity.

During the year, the Group disposed of its holding in Prevx Group Limited, a private technology company. A profit of £0.11 million was realised from the sale of this asset.

Outlook

The Directors of Parkmead are confident that attractive opportunities exist in our key target areas and, with the appointment of our proven oil and gas team, the Group now has the technical and commercial capabilities to exploit these opportunities in order to maximise shareholder value.  In addition, the Board is pleased to report that Parkmead's first asset deal in the UK North Sea was completed earlier this month. Coinciding with this acquisition, Parkmead secured a flexible shareholder loan of £8 million ensuring the Group is now fully funded for its forward programme of drilling activities and well positioned to capitalise on further strategic opportunities.

Parkmead's wholly-owned subsidiary, Aupec, continues to perform well and the Directors believe that the Group will benefit from the experience, technical capabilities and relationships that have been built up over more than 25 years of success within Aupec.

The last 12 months has been a period of significant development within Parkmead and the Board remains focused on the pursuit of value-adding acquisitions, at both asset and corporate levels, in line with the Group's strategy. We will continue to update shareholders as we make further progress.

Tom Cross

Executive Chairman

24 November 2011

Group income statement

For the year ended 30 June 2011

Group and company statement of comprehensive income

For the year ended 30 June 2011

Group and company statement of financial position

As at 30 June 2011

Group statement of changes in equity

For the year ended 30 June 2011

Company Statement of changes in equity

For the year ended 30 June 2011