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Half Year Results 2021

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Providence Resources P.l.c.
2021 Half Year Results

Dublin and London – September 29th, 2021 - Providence Resources P.l.c. (PVR LN, PRP ID), the Irish-based Energy Company, today announces its unaudited interim results for the half year ended June 30, 2021.

Business Review

  • Governance

James Menton was appointed as Senior Independent Non-Executive Director on 14 May 2021 as an initial step in adding to the quality and range of board competencies considered essential for shaping the future Providence Resources Plc business strategy.

Pat Plunkett stepped down from the Board following the Annual General Meeting (AGM) on 22 July 2021 and James Menton assumed the role of Chair following the AGM.

In line with the policy of strengthening the board, two new board members were identified and recruited to join Non-Executive Director Andrew MacKay who was appointed in July 2020. On 23 July 2021 Peter Newman was appointed as Senior Independent Non-Executive Director and Ann-Marie O’Sullivan was appointed as a Non-Executive Director.

  • Strategic review of development potential of Barryroe

A full strategic review of the development potential of the Barryroe field has been initiated by the new Board of Providence Resources Plc in order to prepare a robust case for the development of the field to optimise value for shareholders, while recognising the need for Irish energy security through the energy transition. Following termination of the farmout to SpotOn Energy, the strategic review, which will include independently evaluated assessments of the field’s development scenarios and their potential, is considered essential by the Board.

The results of this strategic review, encompassing both Providence’s Technical Strategy and it’s related Financial Strategy, will be completed in Q4 2021 and will determine the strategic plan for the development of the Barryroe Field.

  • Barryroe, Celtic Sea (SEL 1/11) - Subject to Lease Undertaking application

The Group holds an 80% working interest in and is operator of SEL 1/11 which contains the Barryroe oil accumulation. The Barryroe Standard Exploration Licence period continued up until the 13 July 2021. Prior to its expiry, and having met all the conditions attaching to that Licence, the Group applied for the follow-on permit, being a Lease Undertaking, which is subject to government approval. Initial documentation for an application for a Lease Undertaking was submitted to the regulatory authority in April 2021 and was completed in July 2021, prior to the expiry of SEL 1/11 in July 2021. The regulatory authority requested additional information in support of the application, which was provided. The Lease Undertaking application remains under consideration by the regulatory authority.

The Directors note that the Irish Government has stated that existing authorisations can continue to apply to progress through the licensing stages. This position is consistent with the recent legislative amendments made to the Petroleum and Other Minerals Development Act 1960 through the Climate Action and Low Carbon Development (Amendment) Act 2021.

In February 2021, the farmout agreement with SpotOn Energy Limited was extended to provide SpotOn with additional time to finalise project development funding. In April 2021, following SpotOn’s failure to meet key financing conditions, the agreement was terminated.

Providence immediately reassumed direct responsibility for progressing the development and recruited an experienced Oil & Gas team to refresh and optimise a phased development plan for the Barryroe field, with Providence as operator. This new team’s technical evaluation is nearing completion and includes independent contributions from specialist sub-surface, facilities, and drilling consultants. The aim is to prepare a phased project development plan which is operationally and economically robust. The results of this work will be incorporated into the full strategic review of the development potential of the Barryroe field to be completed in Q4 2021.

In February 2021 Providence Resources Plc subsidiary (Exola DAC) received consent to carry out a site survey. The survey is scheduled for October 2021.

  • Other License Areas

Dragon, St. George’s Channel (SEL 1/07)
Under discussion with the regulatory authority.

Hook Head, North Celtic Sea (SEL 2/07)
Subject of a Lease Undertaking application.

Helvick/Dunmore Celtic Sea (Lease Undertaking)

Subject to work programme finalisation. Extension is under consideration by the regulatory authority.

Avalon – Southern Porcupine (FEL 2/19)
The relinquishment documentation is in process with the regulatory authority.

Dunquin – Southern Porcupine (FEL 3/04)
The relinquishment documentation is in process with the regulatory authority.

  • Finance

Operating loss for the period was €1.065m versus €1.063m in the prior period.

Profit before tax for the period was €1.628m, due to a non-cash accounting gain in relation to the warrants revaluation (€3.155m net revaluation gain) which exceeded operating and administrative costs incurred in the period. The loss for the equivalent period was €9.247m (€7.764m net revaluation loss).

Basic/diluted profit per share of 0.18 cents and 0.14 cents versus loss in prior year of 1.30 cents for both basic and diluted.

As at 30 June 2021, total cash and cash equivalents was €3.645m versus €2.269m at 30 June 2020.

The Group had no debt as of 30 June 2021. (2020: Nil).

During the period 86,061,529 warrants at £0.03 were exercised raising c. €2.9m. The remainder of the warrants expired on the 6 May 2021. The warrants were issued as part of the May 2020 fund-raising. 177,973,004 warrants with an exercise price of £0.09 remain exercisable until 6 May 2022.

The total issued and voting share capital as of 30 June 2021 was 974,864,403 ordinary shares of €0.001 each.

4,500,000 share options were granted to both James Menton and Andrew Mackay on 24 May 2021.

4,500,000 share options were granted to both Peter Newman and Ann-Marie O’Sullivan on 18 August 2021.

Providence Resources Plc CEO, Alan Linn commented on the importance of the Barryroe development:

"It is widely recognised that gas will be an essential energy supply for decades to come, in order to underpin and complement the growth of renewable energy sources. With the decline of the Corrib Gas Field within a five-year period, we are focused on progressing our strategic plan for Barryroe as a matter of urgency. The successful development of Barryroe would secure an indigenous oil and gas supply for Ireland, without which 100% of Ireland's gas will be imported by 2031. At a time when much of Europe is experiencing difficulties with energy supply, a coherent transition strategy is critical to avoid the prospect of energy blackouts becoming a common occurrence.”

ABOUT PROVIDENCE RESOURCES
Providence Resources Plc is an Irish based Energy Company with oil and gas assets located offshore Ireland. Providence's shares are quoted on the AIM in London and Euronext Growth Market in Dublin. Further information on Providence can be found on www.providenceresources.com

INVESTOR ENQUIRIES

Providence Resources P.l.c.

Tel: +353 1 219 4074

Alan S Linn
Chief Executive Officer



Investor Relations
Job Langbroek

J&E Davy

Tel: +353 1 679 6363

Anthony Farrell

MEDIA ENQUIRIES

Tel: +353 87 6909735

Murray Consultants
Joe Heron

PROVIDENCE RESOURCES P.l.c.
Condensed consolidated income statement
For the 6 months ended 30 June 2021

Notes



6 months ended 30 June 2021
Unaudited
€’000



6 months ended 30 June 2020
Unaudited
€’000



Year ended 31 December 2020
Audited
€’000

Continuing operations

Administration expenses

2

(1,065)

(1,063)

(2,163)

Pre-licence expenditure

-

-

(5)

Impairment of exploration and evaluation assets

5,9

-

-

(272)

Operating loss

(1,065)

(1,063)

(2,440)

Finance income

4

3,765

1

361

Finance expense

3

(1,072)

(8,185)

(8,279)

Profit/(loss) before income tax

1,628

(9,247)

(10,358)

Income tax expense

-

-

-

Profit/(loss) for the period

1,628

(9,247)

(10,358)

Profit/(loss) per share (cent) – continuing operations

Basic profit/(loss) per share

11

0.18

(1.30)

(1.31)

Diluted profit/(loss) per share

11

0.14

(1.30)

(1.31)

The total recognised profit/(loss) for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2021

Notes

6 months ended 30 June 2021
Unaudited
€’000

6 months ended 30 June 2020
Unaudited
€’000

Year ended 31 December 2020
Audited
€’000

Profit/(loss) for the financial period

1,628

(9,247)

(10,358)

OCI Items that may be reclassified into profit or loss

Foreign exchange translation differences

1,930

206

(5,453)

Total income recognised in other comprehensive income from continuing operations



1,930



206



(5,453)

Total comprehensive income/(expense) for the period

3,558

(9,041)

(15,811)

The total comprehensive income/(expense) recognised for the period is entirely attributable to equity holders of the Company.
The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of financial position
As at 30 June 2021

Notes

30 June 2021
Unaudited
€’000

30 June 2020
Unaudited
€’000

31 December 2020
Audited
€’000

Assets

Exploration and evaluation assets

5

62,723

65,940

60,425

Property, plant and equipment

3

24

13

Total non-current assets

62,726

65,964

60,438

Trade and other receivables

6

154

240

223

Cash and cash equivalents

3,645

2,269

2,110

Total current assets

3,799

2,509

2,333

Total assets

66,525

68,473

62,771

Equity

Share capital

7

71,829

71,696

71,743

Share premium

7

260,271

253,239

256,773

Undenominated capital

623

623

623

Foreign currency translation reserve

6,564

10,293

4,634

Share based payment reserve

962

858

806

Retained deficit

(283,561)

(284,361)

(285,189)

Total equity attributable to equity holders of the company

56,688

52,348

49,390

Liabilities

Decommissioning provision

9

6,346

6,014

5,853

Warrant liability

10

-

4,356

3,555

Lease liability

-

-

-

Total non-current liabilities

6,346

10,370

9,408

Warrant liability

10

2,948

4,561

3,158

Trade and other payables

8

543

1,194

815

Total current liabilities

3,491

5,755

3,973

Total liabilities

9,837

16,125

13,381

Total equity and liabilities

66,525

68,473

62,771

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of changes in Equity
For the 6 months ended 30 June 2021

Share Capital €’000

Undenominated capital €’000

Share Premium €’000

Foreign Currency Translation Reserve €’000

Share Based Payment Reserve €’000

Retained Deficit €’000

Total €’000

At 1 January 2021

71,743

623

256,773

4,634

806

(285,189)

49,390

Profit for financial period

-

-

-

-

-

1,628

1,628

Currency translation

-

-

-

1,930

-

-

1,930

Total comprehensive income

-

-

-

1,930

-

1,628

3,558

Transactions with owners, recorded directly in equity

Shares issued in period

86

-

3,498

-

-

-

3,584

Share based payments in period

-

-

-

-

156

-

156

At 30 June 2021

71,829

623

260,271

6,564

962

(283,561)

56,688

At 1 January 2020

71,512

623

251,300

10,087

642

(274,898)

59,266

Loss for financial period

-

-

-

-

-

(9,247)

(9,247)

Currency translation

-

-

-

206

-

-

206

Total comprehensive income

-

-

-

206

-

(9,247)

(9,041)

Transactions with owners, recorded directly in equity

Shares issues in period

184

-

1,939

-

-

(216)

1,907

Share based payments in period

-

-

-

-

216

-

216

At 30 June 2020

71,696

623

253,239

10,293

858

(284,361)

52,348

At 1 January 2020

71,512

623

251,300

10,087

642

(274,898)

59,266

Loss for financial year

-

-

-

-

-

(10,358)

(10,358)

Currency translation

-

-

-

(5,453)

-

-

(5,453)

Total comprehensive income

-

-

-

(5,453)

-

(10,358)

(15,811)

Transactions with owners, recorded directly in equity

Share based payment expense

-

-

-

-

448

-

448

Share options lapsed in year

-

-

-

-

(284)

284

-

Shares issued in year

231

-

5,473

-

-

(217)

5,487

Transactions with owners, recorded directly in equity

231

-

5,473

-

164

67

5,935

At 31 December 2020

71,743

623

256,773

4,634

806

(285,189)

49,390

PROVIDENCE RESOURCES P.l.c.
Consolidated statement of cash flows
For the 6 months ended 30 June 2021

6 months ended 30 June 2021

6 months ended 30 June 2020

Year ended 31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Cash flows from operating activities

Profit/(loss) before income tax for the period

1,628

(9,247)

(10,358)

Adjustments for:

Depletion and depreciation

3

14

24

Impairment of exploration and evaluation assets

-

-

272

Finance income

(3,765)

(1)

(361)

Finance expense

1,072

8,185

8,279

Equity settled share based payment charge

156

216

448

Foreign exchange

(19)

34

21

Change in trade and other receivables

69

158

175

Change in trade and other payables

(272)

(321)

(700)

Net cash outflow from operating activities

(1,128)

(962)

(2,200)

Cash flows from investing activities

Interest received

-

1

1

Acquisition of exploration and evaluation assets

(331)

(390)

(845)

Acquisition of property, plant and equipment

(2)

-

(1)

Net cash used in investing activities

(333)

(389)

(845)

Cashflows from financing activities

Proceeds from issue of security instruments (see note 7)

2,974

3,277

4,836

Security instrument Issue costs

-

(350)

(349)

Net cash from financing activities

2,974

2,927

4,487

Net increase in cash and cash equivalents

1,513

1,576

1,442

Cash and cash equivalents at beginning of period

2,110

710

710

Effect of exchange rate fluctuations on cash and cash equivalents

22

(17)

(42)

Cash and cash equivalents at end of period

3,645

2,269

2,110

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROVIDENCE RESOURCES P.l.c.
Note 1 – Accounting Policies

General Information

Providence Resources P.l.c. (“the Company”) is a Company incorporated and domiciled in the Republic of Ireland. The registration number of the Company is 268662 and the address of the registered office is Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18, D18 R9C7. The unaudited consolidated interim financial statements of the Company for the six months ended 30 June 2021 (the "Interim Financial Statements") include the Company and its subsidiaries (together referred to as the "Group"). The Interim Financial Statements were authorised for issue by the Directors on 30 September 2021.

Basis of accounting

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2020 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The 30 June 2021 figures and the 30 June 2020 comparative figures do not constitute statutory financial statements of the Group within the meaning of the Companies Act, 2014. The consolidated financial statements of the Group for the year ended 31 December 2020, together with the independent auditor’s report thereon, were filed with the Irish Registrar of Companies following the Company’s Annual General Meeting and are also available on the Company’s Website. The auditor’s report on those financial statements was unqualified and contains a “material uncertainty related to going concern” paragraph.

The condensed set of financial statements included in this half-yearly financial report has been prepared on a going concern basis as the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future (See below for further details on the Directors assessment of going concern).

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual report.

The Interim Financial Statements are presented in Euro, rounded to the nearest thousand, which is the functional currency of the Company and also the presentation currency for the Group’s financial reporting.

PROVIDENCE RESOURCES P.l.c.
Accounting Policies (continued)

Significant accounting policies (continued)

The significant accounting policies applied in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ending 31 December 2020.

Amendments to standards and interpretations which are effective for the Group from 1 January 2021 do not have a material effect on the results or financial posting in the interim financial statements as at and for the period ending 30 June 2021.

Going concern

The Group had net assets of €56.7m, including cash on hand of €3.6m as at 30 June 2021. It recognised a profit after taxation of €1.6m for the six month period as a result of a gain arising from the revaluation of warrants issued in 2020. The Directors have carefully considered the financial position of the Group and, in that context, have prepared the interim financial statements on a going concern basis.

The company raised approximately €2.9 million in equity in the period January to June 2021, through the conversion of 86,061,529 warrants of £0.03 each, which were issued as part of the May 2020 fundraising. The total conversion rate for these £0.03 warrants was 74.9%. There are 177,973,004 £0.09 further warrants in issue which expire on 6 May 2022.

The Group’s principal interest is the development of the Barryroe oil and gas Field. The Barryroe Standard Exploration Licence period continued up until the 13 July 2021. Prior to its expiry, having met all the conditions attaching to that Licence, the Group applied for the follow-on permit, being a Lease Undertaking, which is subject to government approval. The approval process is ongoing and the Directors anticipate that the Lease Undertaking will be granted. The Directors note that the Irish Government has stated that existing authorisations can continue to apply to progress through the licensing stages. This position is consistent with the recent legislative amendments made to the Petroleum and Other Minerals Development Act 1960 through the Climate Action and Low Carbon Development (Amendment) Act 2021.

The Directors have carefully considered the financial position of the Group and have prepared cashflow forecasts for the next 12 months, considering both current and future expenditure commitments and the options available to fund such commitments, including equity funding and other financing options in the twelve month period from the date of approval of these interim financial statements. In making their cashflow forecasts, including the primary underlying assumptions, being the granting of the Barryroe Lease Undertaking on terms and conditions that are acceptable along with the completion of an appropriate fund raising in the period for the proposed Barryroe work programme, the Directors believe that the Group will have sufficient funds available over the next 12 months to meet all its commitments as they fall due.

The Directors have considered the matters set out above and determined that the assumptions of the grant of the Barryroe Lease Undertaking and the related raising of additional funding in the next 12 months represents a material uncertainty that may cast significant doubt upon the Group’s ability to continue as a going concern, and the Directors note that the Group may, as a consequence, be unable to continue realising its assets and discharge its liabilities in the normal course of business.

PROVIDENCE RESOURCES P.l.c.

Going concern (continued)

The Directors, after making enquiries and considering the uncertainties described above, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future. The Directors anticipate that an appropriate financing exercise will be successfully completed and note that the Group has continued to have the strong support of its shareholders.

For these reasons, the Directors have adopted the going concern basis in preparing the interim financial statements which do not include any adjustments that would be necessary if this basis were subsequently adjudged to be inappropriate.

Note 2 – Administration Expenses

6 months ended 30 June 2021

6 months ended 30 June 2020

Year ended 31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Corporate, exploration and development expenses

1,084

1,035

2,142

Foreign exchange (gains)/losses net

(19)

28

21

Total administration expenses for the period

1,065

1,063

2,163

Capitalised in exploration and evaluation assets

-

-

-

Total charged to the income statement

1,065

1,063

2,163

Note 3 – Finance Expense

6 months ended 30 June 2021

6 months ended 30 June 2020

Year ended 31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Unwinding of discount on decommissioning provision (note 8)

302

287

565

Foreign exchange on decommissioning provision

159

-

-

Interest on right to use asset

1

1

1

Issued costs associated with the warrants

-

133

132

Movement in fair value of warrants (note 10)*

610

7,764

7,581

Total finance expense recognised in income statement

1,072

8,185

8,279

*The €0.6m finance expense arises on the £0.03 warrants instruments exercised during the period from 1 January 2021 to 5 May 2021. The £0.6m is a non-cash items and reflects the difference between the fair value of the instrument exercised and the price paid by the warrant holder to acquire the instrument.

PROVIDENCE RESOURCES P.l.c.
Note 4 – Finance Income

6 months ended 30 June 2021

6 months ended 30 June 2020

Year ended 31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Bank deposit interest income

-

1

1

Movement in fair value of warrants (note 10)*

3,765

-

-

Foreign exchange on decommissioning provision (note 9)

-

-

360

Total finance expense recognised in income statement

3,765

1

361

*The €3.7m of finance income is a non-cash item and relates to a fair value gain on the Group’s warrants instruments. €3.1m of this gain relates to the release of the unexercised £0.03 warrants which expired on 5 May 2021, the balance of €0.6m reflects the movement in the assumptions underpinning the £0.09 warrant valuations.

Note 5 – Exploration and evaluation assets

€’000

Cost and book value

At 1 January 2020

65,377

Additions

390

Foreign exchange translation

173

At 30 June 2020

65,940

At 1 January 2020

65,377

Additions

902

Cash calls received in year

(57)

Impairment charge

(272)

Foreign exchange translation

(5,525)

At 31 December 2020

60,425

At 1 January 2021

60,425

Additions

331

Foreign exchange translation

1,967

At 30 June 2021

62,723

The exploration and evaluation asset balance as at 30 June 2021 relates to the Group’s Barryroe interest.

Note 6 – Trade and other receivables

30 June 2021

30 June 2020

31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

VAT recoverable

22

46

28

Prepayments

98

155

162

Amounts due from joint operation partner

34

39

33

Total

154

240

223

PROVIDENCE RESOURCES P.l.c.
Note 7 – Share Capital and Share Premium

Number

Authorised:

000

€’000

At 1 January 2021

Deferred shares of €0.011 each

9,944,066

109,385

Ordinary shares of €0.001 each

986,847

987

At 30 June 2021

Deferred shares of €0.011 each

9,944,066

109,385

Ordinary shares of €0.001 each

1,800,000

1,800

Number

Share Capital

Share Premium

Issued:

‘000

€’000

€’000

Deferred shares of €0.011 each

At 1 January 2020

6,441,373

70,855

5,691

At 31 December 2020 and 30 June 2021

6,441,373

70,855

5,691

Ordinary share of €0.001 each

At 1 January 2020

657,425

657

245,609

Shares issued in period

184,089

184

1,939

At 30 June 2020

841,514

841

247,548

Warrants exercised in year

47,289

47

3,534

At 31 December 2020 (Ordinary Shares of €0.001)

888,803

888

251,082

Warrants exercised in period

86,062

86

3,498

At 30 June 2021

974,865

974

254,580

At 30 June 2021 (Total deferred and Ordinary shares)

7,416,238

71,829

260,271

On 5 May 2020, the Company issued 177,973,004 Ordinary Shares as part of a placing and subscription agreement which raised c. €3.1m from security instruments before expenses. Each of these security instruments comprised of one Ordinary Share of €0.001, one £0.03 warrant and one £0.09 warrant.

On issuance, a fair value of €1.9m was attributed to the Ordinary Shares (share capital / share premium outlined above) and €1.2m to the Warrant instruments based on the effective share price at that date. In line with the Group’s accounting policies these Warrants are presented as financial liabilities (note 10).

The holder of each warrant can exercise its rights under the instrument which allows that holder to convert the warrant into one ordinary share, with a par amount of €0.001, by payment of the exercise price of £0.03 or £0.09, as applicable. The warrants are non-transferrable.

During the period from January 2021 to June 2021, 86,061,529 £0.03 warrants were converted in Ordinary Shares raising an additional €2.9m for the company. The £0.03 warrants expired on the 6 May 2021. The £0.03 warrants were issued as part of the fund raising in 2020.
PROVIDENCE RESOURCES P.l.c.
Note 8 – Trade and other payables

30 June 2021

30 June 2020

31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Accruals

379

487

361

Other payables

164

690

445

Lease liability

-

17

9

Total

543

1,194

815

Note 9 – Decommissioning provision

30 June 2021

30 June 2020

31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

At beginning of year

5,853

5,733

5,733

Unwinding of discount

302

287

565

Foreign exchange loss/(gain)

159

-

(360)

Translation adjustment

32

(6)

(85)

Total

6,346

6,014

5,853

The provision for decommissioning is reviewed annually. The provision has been calculated assuming industry established oilfield decommissioning techniques and technology at current prices and is discounted at 10% per annum, reflecting the associated risk profile.

PROVIDENCE RESOURCES P.l.c.
Note 10 - Warrants

On 5 May 2020, the Company raised c. €3.1m by the issue of security instruments with each security instrument comprising one ordinary share, with a par amount of €0.001, one £0.03 warrant (expires in May 2021) and one £0.09 warrant (expires in May 2022). The fair value of the warrants was calculated using Black Scholes model. The following key input assumptions were applied to the initial valuation on issuance of these instruments:

£0.03 Warrants

£0.09 Warrants

Number of warrants

177,973,004

177,973,004

Volatility

148%

148%

Time period

1 Year

2 Years

Dividend yield

0%

0%

Risk free interest rate

(0.01%)

(0.01%)

Exercise price

£0.03

£0.09

Placing effective Share price

0.01068

0.01068

Initial value of security

0.00299

0.00349

Fair value

€531,444

€621,982

The c. €3.1m raised before expenses, from previous and new shareholder investors, for the security instruments in May 2020 was considered the transaction price fair value. The split of this fair value on issuance of these security instruments, based on a placing effective share price of €0.01068, was €0.531m for the £0.03 Warrants, €0.622m for the £0.09 Warrants and €1.901m for the Ordinary Shares (split between share capital and share premium account (note 7)).

On 30 June 2020, the warrants were fair valued using appropriate inputs including the closing share price on that day of €0.0448. The fair value movement being the difference between initial valuation and 30 June 2020 valuation in the amount of €7.764m going through the finance expense line in the income statement.

£0.03 Warrants

£0.09 Warrants

Number of warrants

177,973,004

177,973,004

Volatility

148%

148%

Time period

.85 Year

1.85 Years

Dividend yield

0%

0%

Risk free interest rate

(0.01%)

(0.01%)

Exercise price

£0.03

£0.09

Closing share price 30 June

€0.0448

€0.0448

Fair value as at 30 June 2020

€4,560,940

€4,356,476

During 2020, 47,288,814 of the £0.03 warrants were exercised. There were a number of warrants transactions exercised in each of the months. The key assumptions used in the calculation of their fair value at the exercise date are included in the table below. The weighted average closing price was used to reflect the number of transactions in each month.

PROVIDENCE RESOURCES P.l.c.
Note 10 – Warrants (continued)

September 20

October 20

December 20

Number of warrants

24,648,335

10,966,667

11,673,812

Volatility

125%

125%

125%

Time period

0.58 Year

0.50 Year

0.33 Year

Dividend yield

0%

0%

0%

Risk free interest rate

(0.6%)

(0.6%)

(0.6%)

Exercise price

£0.03

£0.03

£0.03

Weighted average closing share price

€0.07

€0.08

€0.06

Fair value

€1,138,828

€557,901

€324,687

The fair value of the warrants exercised during the year 2020 is recognised as a finance expense of €2.02m in the income statement (see note 3) with a corresponding increase in share premium.

On 31 December 2020, the warrants were fair valued using appropriate inputs including the closing share price on that day of €0.055. The period of 18 months was used for the volatility calculation for the £0.09 warrants which would expire on 6 May 2022 and the £0.03 warrants which expire on 6 May 2021. The 4-month period for the £0.03 warrants was too short and would distort the volatility calculation as it is key component when calculating the fair value using Black Scholes. The fair value movement being the difference between the initial valuation and 31 December 2020 valuation in the amount of €5.56m is recorded as a finance expense in the income statement.

£0.03 Warrants

£0.09 Warrants

Number of warrants

130,684,190

177,973,004

Volatility

125%

125%

Time period

0.33 Year

1.33 Year

Dividend yield

0%

0%

Risk free interest rate

(0.06%)

(0.06%)

Exercise price

£0.03

£0.09

Closing share price 31 December 2020

€0.055

€0.055

Fair value as at 31 December 2020

€3,157,748

€3,555,240

During 2021, there were 86,061,529 £0.03 warrants exercised before they expired on the 6 May 2021.

January 21

February 21

March 21

April 21

May 21

Number of warrants

287,372

1,666,666

1,000,000

65,975,822

17,131,669

Volatility

135%

135%

135%

206%

208%

Time period

0.30 Year

0.18 Year

0.10 Year

0.016 Year

0.003 Year

Dividend yield

0%

0%

0%

0%

0%

Risk free interest rate

(0.61%)

(0.61%)

(0.61%)

(0.61%)

(0.61%)

Exercise price

€0.0337

€0.0342

€0.035

€0.035

€0.035

Weighted average closing share price

€0.075

€0.075

€0.054

€0.0392

€0.038

Fair value

€12,685

€71,219

€23,419

€439,557

€62,804

The fair value of the warrants exercised during the period to June 2021 is recognised as a finance expense of €0.61m in the income statement (see note 3) with a corresponding increase in share premium.

PROVIDENCE RESOURCES P.l.c.
Note 10 – Warrants (continued)

At 30 June 2021, the £0.09 warrants were fair valued. The assumptions are shown in the table below.

£0.09 Warrants

Number of warrants

177,973,004

Volatility

176%

Time period

0.83 Year

Dividend yield

0%

Risk free interest rate

(0.61%)

Exercise price

£0.09

Closing share price 30 June 2021

€0.043

Fair value as at 30 June 2021

€2,948,469

The table below shows the fair value movements.

Number of Warrants

£0.03 Warrants
€’000

Number of Warrants

£0.09 Warrants
€’000

Total



€’000

Initial Valuation

177,973,004

€531

177,973,004

€622

€1,153

Fair value as at 30 June 2020

177,973,004

€4,561

177,973,004

€4,356

€8,917

Total Fair value movement recognised in the income statement at 30 June 2020 (see note 3)

€4,030

€3,734

€7,764

September 20 exercised

24,648,335

€1,139

-

-

€1,139

October 20 exercised

10,966,667

€558

-

-

€558

December 20 exercised

11,673,812

€324

-

-

€324

Exercised fair value

47,288,814

€2,021

-

-

€2,021

Fair value as at 31 December 2020

130,684,190

€3,158

177,973,004

€3,555

€6,713

Fair value 2020

€5,179

€3,555

€8,734

Total fair value movement recognised in the income statement for year 2020 (see note 3)

€4,648

€2,933

€7,581

January 21 exercised

287,372

€13

-

-

€13

February 21 exercised

1,666,666

€71

-

-

€71

March 21 exercised

1,000,000

€23

-

-

€23

April 21 exercised

65,975,822

€440

-

-

€440

May 21 exercised

17,131,669

€63

-

-

€63

Exercised fair value movement recognised in the income statement to 30 June 2021 (see note 3)

86,061,529

€610

-

-

€610

Fair value as at 30 June 2021

-

177,973,004

€2,948

€2,948

Total fair value movement recognised in the income statement for the period to 30 June 2021 (see note 4)

(€3,158)

(€607)

(€3,765)

PROVIDENCE RESOURCES P.l.c.
Note 11 – Earnings per share

6 months ended 30 June 2021

6 months ended 30 June 2020

Year ended 31 December 2020

Unaudited

Unaudited

Audited

€’000

€’000

€’000

Profit/(loss) attributable to equity holders of the company from continuing operations

1,628

(9,247)

(10,358)

The basic weighted average number of Ordinary shares in issue (‘000)

In issue at beginning of year and end of period

888,803

657,425

657,425

Adjusted for share issue in period

30,675

55,739

130,519

Weighted average number of ordinary shares

919,478

713,164

787,944

Basic profit/(loss) per share (cent)

0.18

(1.30)

(1.31)

Dilutive shares

217,900

-

-

Weighted average number of ordinary shares

1,137,378

-

-

Diluted profit/(loss) per share (cent)

0.14

(1.30)

(1.31)

There is a difference in the basic and dilutive profit for ordinary share in the period to 30 June 2021.

However, for prior period, there is no difference between the loss per ordinary share and the diluted loss per share for the reported periods as all potentially dilutive ordinary shares outstanding are anti-dilutive.

There were 39,927,000 (2020: 41,150,000) anti-dilutive share options and 177,973,004 (2020: 355,946,008) anti-dilutive warrants in issue as at 30 June 2021.

Note 12 – Share schemes

Share option schemes were introduced in August 1997 (expired August 2007), May 2005 (expired October 2015) and June 2009 (expired in June 2019) under which share options may be offered to employees, Directors and consultants. In addition, a long-term incentive plan was introduced in 2016. Options are recommended at a level to attract retain and motivate participants in the competitive environment in which the Group operates, The Remuneration Committee reviews and assesses proposals to grant share options to participants.

The Group operates the following employee share schemes:

2020 Scheme

In 2020, the directors adopted a share option scheme which contains certain performance criteria. No options can be issued after 10 years of the scheme. The option price is the market price immediately preceding the date of the grant. The “2020 scheme” operates as an equity-settled share option scheme and the options granted are subject to certain conditions. No option is exercisable more than seven years after grant date and no option is exercisable within one year of grant.

PROVIDENCE RESOURCES P.l.c.
Note 12 – Share schemes (continued)

The applicable criteria for the exercise of the options are;

(i) 33% of the total number of options granted are exercisable after one.


(ii) 33% of the total number of options granted are exercisable after two years.


(iii) The remaining 33% of the total number of options granted are exercisable after a further year has elapsed.

During the period, 9,000,000 share options were granted under the 2020 Share option scheme. The 9,000,000 options were granted to the Directors.

Grant Date

21 May 2021

Number of options granted

9,000,000

Volatility

150%

Time period

7 Years

Dividend yield

0%

Risk free interest rate

(0.0156%)

Exercise price

€0.038

The total share based payments expense in the period to 30 June 2021 charged to the income statement was €156,000 (2020: €216,000).

Note 13 - Commitments

As at 30 June 2021, the Group has capital commitments of approximately €1.5m (30 June 2020: €0.3m) to contribute to its share of costs of exploration and evaluation activities.

Note 14 – Post Balance Sheet Events

Pat Plunkett resigned from the Board and chairman on 22 July 2021. James Menton was appointed chairman.

Ann-Marie O’Sullivan and Peter Newman were appointed to the Board on 23 July 2021.

There were 4,500,000 share options awarded to both Ann-Marie O’Sullivan and Peter Newman on the 18 August 2021.

There have been no other significant events since the balance sheet date which would require disclosure in or amendment of these interim financial statements.


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