The Parkmead Group PLC swings to loss as revenue hit by record low gas prices

The Parkmead Group PLC () swung to an annual loss after the energy group said its revenues had suffered a hit from “record-low gas prices”.

For the year ended June 30, the AIM-listed firm reported a pre-tax loss of £792,000 compared to a £4.8mln profit in the previous year, while revenues in the year fell to £4.08mln from £8.3mln.

The company highlighted that gas prices had fallen from highs of around €25.7 per megawatt hour (MWh) in October 2018 to lows “not seen in over a decade” of around €5 per MWh in June due to an oversupply of liquefied natural gas into the European market as well as the impact of coronavirus.

Looking ahead, Parkmead said the outlook was “bright” despite the fall to loss during the year, highlighting that gas prices had “rebounded strongly” in November to around €14 per MWh. The firm also said it is analysing “a number of high-growth opportunities to create value for shareholders and strengthen the group going forward”.

“Despite revenues being impacted by the low gas price environment, Parkmead has delivered growth in its asset base whilst retaining financial strength. This creates a strong foundation from which to build and Parkmead remains robust in the context of broader global uncertainty brought about by the [coronavirus] pandemic”, Parkmead’s executive chairman Tom Cross said in a statement.

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

In a note on Friday, analysts at house broker finnCap initiated the firm with a price target of 155p, saying Parkmead’s portfolio contained a “broad spectrum of high quality UK growth opportunities, encompassing material development projects and an attractive range of risk/reward exploration”.

“A core strength of this management team is its commercial acumen and portfolio-driven approach to optimising value. Parkmead has been in portfolio construction mode to date but is now well positioned to start crystallising its intrinsic value… Investors would do well to get on-board with a management team that has a strong track record of delivering shareholder value”, the broker added.

The company’s shares jumped 2.3% to 28.3p in mid-morning trading.

–Adds broker initiation and share price–