R E S O U R C E S P .
l
. c .
Annual Report
for the year ended 31 December 2020
Stock Codes:
LSE AIM: PVR
Euronext Growth: PZQA
WELCOME TO THE PROVIDENCE RESOURCES P.L.C.
ANNUAL REPORT 2020
OIL AND GAS APPRAISAL AND DEVELOPMENT
Providence – set to play an important role in Ireland’s energy
transition
Providence Resources P.l.c. (“Providence” or the “Company”) is an
Irish based company progressing a portfolio of appraisal and
development energy transition assets located offshore Ireland.
The Company has a long history offshore Ireland and its board and
management have extensive experience in the energy sector having
worked closely with and for numerous major companies around the
world. Providence’s shares are quoted on the AIM in London and
the ESM in Dublin.
Strategy – to create shareholder value by delivering Barryroe
as a key energy transition asset
Providence’s core strategy is to progress the phased commercial
development of
the Barryroe Oil and Gas Field. A phased
development approach is expected to maximise economic returns
by delivering low cost cash flow and progressively converting
established resources to reserves.
Fully developed, the Barryroe field can become a processing hub,
similar to several
large field developments in the North Sea and
encourage development of several discovered fields within
Providence’s existing licenses in the North Celtic Sea.
Providence is assessing the potential to utilise depleted gas fields,
close to Barryroe which have CO2 storage potential, to reduce the
environmental impact of the development and, with government
support and encouragement, deliver an overall carbon neutral
hydrocarbon field development.
Providence will deliver on this strategy by:
Progressing the phased appraisal and development of the Barryroe
oil and gas field, managing development capex and risk to produce
early cashflow.
Transforming Barryroe 2C resources into 2P reserves and
maintaining a balanced portfolio of commercially attractive licenses
with Irish focus.
CONTENTS
(cid:1) Business Review
2020 Operational Highlights
Chairman’s Remarks
C.E.O. –Operations Review
(cid:1) Corporate Governance
Board of Directors
Directors’ Report
Statement of directors’
responsibilities
(cid:1) Financial Statements
Independent auditor’s report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Consolidated statement of
changes in equity
Consolidated statement of
cash flows
Notes forming part of the
consolidated financial statements
Company statement of
financial position
Statement of changes in
company equity
Notes to the company
financial statements
(cid:1) Investor Information
Notice of Annual General Meeting
Glossary of Terms
Corporate Information
1
2
3
6
8
15
16
20
21
22
23
24
25
43
44
45
50
52
54
Information on the Company and its oil and gas portfolio is available at www.providenceresources.com
(cid:1) Business Review
2020 Financial Highlights
● Operating loss for the period of €2.440 million versus
€25.936 million in 2019.
● Loss for the year €10.358 million versus €26.853 million
in 2019.
● Loss per share of 1.31 cents versus 4.39 cents in 2019.
● At 31 December 2020, total cash and cash equivalents
were €2.110 million versus €0.710 million in 2019.
● The Company has no debt as at 31 December 2020.
● In May 2020, the company raised c. €3.0 million (gross
proceeds) through the issue of ordinary shares which
comprised of one ordinary share, one £0.03 warrant
which expired on 6 May 2021 and one £0.09 warrant
which expires on 6 May 2022. The total proceeds raised
in 2020, by the equity raise and conversion of warrants
was c. €4.8 million gross.
– The total issued and voting share capital comprises
974,864,403 ordinary shares of €0.001 each as at
17 June 2020.
Post Year End Progress
● Barryroe, North Celtic Sea (SEL 1/11)
– A revised Lease Undertaking work programme was
in April 2021 as
submitted to the government
required by the regulatory authority.
– In April 2021, the Company terminated its farmout
agreement with SpotOn Energy and took direct
control of the project appraisal and development
programmes.
2020 OPERATIONAL HIGHLIGHTS
2020 Operations
Appraisal/ Development Projects
● Barryroe, North Celtic Sea (SEL 1/11)
– The Company entered into an exclusivity agreement
to farmout an interest in Barryroe with SpotOn
Energy in return for project development funding.
The conditional farmout was signed in November
2020 and subsequently terminated in April 2021.
– Providence is progressing field appraisal and an Early
Development Scheme (EDS) as operator and project
development manager.
– The K Site survey was approved by the Government
in January 2021 and is scheduled to proceed during
Q3 2021.
Exploration Prospects
● Dunquin South, Southern Porcupine (FEL 3/04)
– Providence has relinquished this license with an
effective date of 31 July 2020.
– The relinquishment documentation is in process with
the regulator.
● Avalon, Southern Porcupine (FEL 2/19)
– Providence has relinquished this license with an
effective date of 30 June 2020.
– The relinquishment documentation is in process with
the regulator.
Other License Activity
● Dragon, St. George’s Channel (SEL 1/07)
– Under discussion with the regulatory.
● Hook Head, North Celtic Sea (SEL 2/07)
– Subject of Lease Undertaking application.
● Helvick/Dunmore, Celtic Sea (Lease Undertaking)
– Subject to MFDevCO work programme.
● Kish Bank, Kish Bank Basin (SEL 2/11)
– This license expired during the period.
Providence Resources P.l.c. | Annual Report | 2020 1
CHAIRMAN’S REMARKS
Dear Shareholder,
I am pleased to present the 2020 Annual Report and to bring you
up to date on the activities of the Company during the year and in
the first six months of 2021.
2020 was a very challenging year for the oil and gas industry as
the Covid-19 pandemic led initially to a collapse in energy demand
and commodity prices while restrictions on travel and personal
interactions impacted on business development initiatives. In
parallel, energy markets are in a period of rapid change and
uncertainty as companies seek to revise their business models to
manage the transition to a carbon neutral future.
Following a restructuring of the Providence business in 2019 and
the implementation of a major cost reduction program, the
Company appointed Alan Linn as CEO in January 2020 with a
clear brief to refocus the Company’s efforts on the successful
appraisal of the Barryroe field.
Farm Out
Following a farm-out process early in 2020, which was very much
limited by the worst of the Covid -19 impact, the Board entered
into exclusive discussions with SpotOn Energy which resulted in
a conditional farmout agreement being signed in November 2020.
Despite having had the benefit of a period of exclusivity to
complete asset due diligence and to negotiate commercial
arrangements with funding parties, SpotOn Energy failed to fulfill
the key farmout commitment to fully fund the project development
with non-recourse financing. After providing SpotOn with full
support in exploring all alternatives options, Providence terminated
the agreement in April 2021.
Revised Strategy
Following a full review of the failed SpotOn farm-out, your Board
concluded that there was a clear opportunity to take control of the
project
funding and management by progressing existing
relationships with service providers and other funders to progress
the development and funding of an Early Development Scheme
at Barryroe. This approach would also allow Providence to
progress the project as operator and to optimise overall project
delivery. The Board and executive team are convinced that the
project benefits for both the company and the local economy,
combined with the potential to be carbon neutral, ensures that the
project will receive government approvals and attract the funding
support required to move the project efficiently through staged
appraisal and development and into production.
Funding
In May 2020, the Company completed an equity placing and
subscription raising EUR €3m (USD $3.3m) before costs to
provide working capital for the business through to end April 2021.
The Placing was actively supported by both existing and new
investors and included a one for one warrant issue at £0.03,
exercisable for 12 months and £0.09, exercisable for 24 months.
The exercise period for the £0.03 warrants expired on 6 May 2021
and it was pleasing to note that 74.9% of the warrants were
exercised by shareholders, providing working capital of
~USD$5.4 million in total over the exercise period.
2 Providence Resources P.l.c. | Annual Report | 2020
In addition to supporting day to day working capital, recent funds
raised will be deployed in the Barryroe project and used to
progress appraisal and development planning, progressing the
environmental
impact assessments, a predrill site survey,
anticipated Lease Undertaking Fees and an independent
recovery from the Early
assessment of
Development Scheme (EDS). The timely progression of these
activities will
furnish the supporting technical documentation
required to underpin the project fundraising activities.
the expected oil
Governance
Providence is keen to build upon its existing governance
performance and to continue to improve board experience and
diversity. We are strengthening our Board at a crucial time for our
business. Developing the Barryroe Discovery will require a multi-
disciplinary team with experience in delivering major projects and
investment.
Andrew Mackay joined the Board as a non-executive director in
July 2020. Andrew has extensive experience in the upstream oil &
gas business including both regulatory and drilling technical and
leadership roles. Andrew’s experience is being put to good use in
supporting the board and executive team in assessing and
finalising project development plans, and in ensuring rigorous risk
management is built into our overall development process.
James Menton joined the Board in May 2021 as Senior
Independent Non-Executive Director. James is a highly
experienced advisor to some of Ireland and the world’s leading
companies over two decades in professional advisory services as
a partner with KPMG and Andersen. He is an experienced Chair
and has led significant stakeholder engagement with Irish
Government State agencies, leading finance providers and the
investment community.
Closing thanks
I want to thank all our shareholders for their continuing support,
particularly considering our recent decision to terminate the
SpotOn Farmout agreement, and to progress the field appraisal
and development programme as operator and project manager. A
number of our key shareholders have invested considerable time
in understanding the issues which need to be
and effort
progressed as we move forward with the field development
programme, and have provided invaluable advice as we seek to
transition the business from a small exploration company to a fully-
fledged development and production business of scale. Your
contribution is fully appreciated by the board and executive team.
Pat Plunkett
Chairman
C.E.O. –OPERATIONS REVIEW
(cid:1) Business Review
Recent events
I joined the company in January 2020 with a mandate to focus
primarily upon the appraisal and development of the Barryroe oil
and gas field.
In March 2020, Providence entered a period of exclusivity with
SpotOn Energy to explore a farmout opportunity with the potential
to fully fund the development of the Barryroe Field.
SpotOn Energy, a privately owned Norwegian oil and gas
company, entered the farmout process offering an attractive
business model which involved partnering with an incentivised
consortium of “world-class” service companies to deliver low cost,
high-quality projects. The service providers offered to contribute to
the project funding by partially deferring their costs in return for an
agreed share of production revenues. SpotOn Energy also
committed to provide non-recourse financing for the full project
development capital requirement.
As noted, Providence successfully raised c. €3m (c.$3.3million
before costs) in May 2020, to provide working capital to fund the
farmout activity and complete a business re-structure.
Ultimately, the funding solutions proposed by SpotOn Energy
could not be implemented because the funding banks required
the asset owners to contribute equity within the project funding
structure. It was clear from this point in the process that non-
recourse debt financing, a cornerstone element of the farmout
agreement of the proposed financing package, was not available.
No acceptable alternative funding solution could be offered by
SpotOn Energy to compensate for the change in terms, therefore
Providence terminated the farmout agreement in April 2021.
Next Steps
The relationships with service providers, involved with the original
project development plan, continue to have significant value for
Providence. The original service companies have confirmed their
continuing interest in working directly with Providence, as the field
developer and operator, on broadly similar commercial terms.
Providence is also in discussion with several Norwegian banks on
raising a conventional bond to contribute a material portion of the
Early Development Scheme capital requirement.
Cash flow from the field, given the high rates of productivity
forecast
from the development wells, produces attractive
economic returns and subsequent development and appraisal
activities are expected to be funded from production, reducing
both reservoir development risk and the risk of over capitalising
the full field development.
Barryroe
The Barryroe field is one of the largest undeveloped offshore fields
in Europe, having originally been discovered by Exxon in 1973.
The Basal Wealden reservoir is, by North Sea standards, relatively
thin and extends over an area of ~271Km2, approximately twice
the area of Dublin. At the time of its discovery Barryroe had to
compete with a whole generation of giant field discoveries in the
North Sea. Understandably focus was quickly directed into the
North Sea oil boom of the 1970’s.
Since its discovery almost 50 years ago the field has undergone
several appraisal campaigns, with each one improving the
technical understanding of the field and confirming the oil and gas
potential and productivity. In tandem, the field development
technologies available for both appraising and producing
hydrocarbons have evolved significantly and today’s development
technologies are well suited to maximise the expected ultimate
recovery (EUR) from the Barryroe oil and gas field.
A Barryroe phased field development plan was first proposed in
2011, concentrating upon developing the central eastern area of
the field where considerable appraisal work had been completed
and which benefitted from 3D seismic.
Following the success of the 48-24/10Z appraisal well in 2012
Providence’s thinking switched to a “big” field development
approach and sought to bring in international partners, with the
financial capacity to fully appraise and develop the field in one
step.
A technically proven approach
The scale of the Barryroe field is independently documented. The
field is large; the reservoir demonstrably productive; the oil sweet,
light, waxy and a good petrochemical feedstock. (311MBO of
gross 2C resource based upon independent CPR competent
persons reports) The field also holds a substantial volume of gas
within the structural closure bounding the field (~0.5TCF
recoverable gross, based upon Providence’s recent remapping
exercise).
The development route selected for Barryroe is a ‘back to basics’
approach designed to manage capital expenditure and use proven
technologies to mitigate development risk. The approach has
been tried and tested in many field developments around the
world.
Drilling technologies have advanced significantly in recent years,
and long reach directionally drilled horizontal (HDD) wells are now
standard industry practice. A phased field development approach,
utilizing extended reach drilling technology and developing the field
in sections or panels provides the optimum route for generating
early commercial production from Barryroe,
resulting in a
progressively self-funding development.
Additional benefits from this development approach include
reducing the surface impact of the hydrocarbon development and
providing customised completions capable of maximizing overall
hydrocarbon recovery. The Barryroe development, whilst not
challenging by world standards, does require completion precision
to maximise access to the reservoir and deliver sustainably high
production rates.
Providence Resources P.l.c. | Annual Report | 2020 3
C.E.O. – OPERATIONS REVIEW (CONTINUED)
Barryroe Field – Main Reservoir Panels
During the testing of the 48-24/10Z appraisal well in 2012 the
rates of approximately
flowed at
basal wealden reservoir
4,000BOE/D. Subsequent production modelling estimates that
initial production rates of 12-15,000 BOPD can be achieved from
a 200 metre horizontal production completion. The appraisal and
early development scheme (EDS) production drilling programme is
likely to include three horizontal production wells, and at least one
water injection well, designed to support reservoir pressure from
commencement of production.
Barryroe has historically been considered primarily as an oil field,
with some gas.
The recently updated volumetric assessment of the Barryroe field,
using improved seismic imaging, indicates that a considerable gas
resource is present within the field and that the progressive
development of both oil and gas resources is expected to improve
project returns and significantly reduce the overall environmental
impact of the development.
A project of value
Technically and commercially the Barryroe oil and gas field has
come of age. The large fields in the North Sea are declining and
smaller more challenging fields are being developed. The Barryroe
the UK
field economics are competitive with the best of
development projects. The field is located in shallow water just
50km from shore, far enough offshore not to be visible from land
and close enough to access local services in Cork.
Currently the oil production is expected to be lifted offshore from
the Floating Production Storage Offshore (FPSO) vessel by shuttle
tankers. The gas, when brought into production, is expected to
be used to generate offshore power to both electrify the offshore
processing facilities and supply electricity to the national grid by
undersea cable. Commercial technology is available to introduce
carbon capture offshore by sequestering the power generation
exhaust gases which, with government support, will ensure that all
the electricity produced from gas offshore is carbon neutral.
Following the termination of the SpotOn farmout agreement,
Providence is building upon existing in-house project and technical
4 Providence Resources P.l.c. | Annual Report | 2020
competencies and building the team required to fully resource the
project and development. The phased nature of the field appraisal
and development this a pragmatic and practical decision for
Providence. Taking direct control of the project and working with
“blue chip” service providers to deliver the project will ensure the
project development expenditure is carefully managed and the
reservoir development optimized.
The Regulatory process
The Irish government introduced a ban on new oil exploration in
September 2019 in response to a call for direct action to reduce
the impacts of climate change.
The government has confirmed on many occasions that existing
licenses are unaffected. Moreover, it has confirmed it will continue
to progress existing licenses through their various stages, as the
regulations intended. The constitutional property rights over
existing licenses are expected to be further confirmed in the
Climate Action Bill, which is expected to be finalised in legislation
during 2021. The bill is designed to legislate for the introduction of
various measures designed to transform Ireland into a low carbon
economy by 2050.
In April 2019 the Barryroe Partners applied for a Lease
Undertaking to the Irish authorities. The Lease Undertaking
application did not progress as APEC was unable to comply with
the terms of
the farmout agreement which was ultimately
terminated. A Lease Undertaking submission is made to the
government when a field has been discovered and additional work
is proposed to confirm commerciality. An updated Lease
Undertaking was submitted on 9 April 2021, more than three
months before the end of the exploration license, as required by
the regulator. The submission includes an updated work
programme focusing upon proving commerciality for the EDS area
and, subject
to government approval, a declaration of
commerciality and the award of a Petroleum Lease, prior to
commencement of early production from the eastern panel area of
the Barryroe Field.
(cid:1) Business Review
Taking care of the environment
Licence portfolio review
Relinquishing our portfolio of deep-water west of
Ireland
exploration licences during 2020/21 was an important cost
reduction measure for Providence. The Company remains
low risk, near-field,
committed to exploration; primarily
infrastructure led exploration. The Barryroe field has been drilled
extensively over the years, but never into the Jurassic formation
which lies beneath the proven Wealden reservoirs. The seismic
signature is compelling and, as the field development progresses
the formation needs to be drilled. A successful outcome could
easily double the oil in place within the Barryroe field.
Providence has several existing licenses which contain discoveries
within its North Celtic Sea portfolio. Standalone, it is challenging to
make a compelling investment case for progressing the
commercial development of these discovered fields. With the
Barryroe development up and running, the economic case for
developing the Helvick, Dunmore and Hook Head discoveries
changes, encouraging their satellite development through the
established Barryroe infrastructure.
Conclusion
Providence has taken back control of the Barryroe appraisal and
development work programme and, with government support and
continuing shareholder backing, we expect
to deliver an
exceptional project which will support Ireland’s transition to a low
carbon economy and produce significant benefits for the local
economy through investment and employment at a time when the
country is looking for economic certainty.
I want to thank each one of our shareholders for their continuing
support. I firmly believe the Barryroe field has come of age and
with government support can be fully developed over the next few
years. Thank you for your patience and continuing support.
Alan Linn
Chief Executive
The regulations governing the development of oil and gas fields in
Ireland are rigorous and prescriptive. Providence personnel have
experience in delivering offshore projects. The application
processes for progressing the approvals, which must be in place
before operational activity on the Barryroe field appraisal and
development can begin in earnest, are already underway. Careful
management of the environmental impacts associated with the
project is a key deliverable for the company and the project team.
Providence Resources, as operator of the Barryroe field, will
ensure that all works are completed to a high standard and that
local involvement in the development is encouraged, ensuring that
local coastal communities are fully informed about the timing and
the
nature of
environmental
impact assessment will be critical path for the
overall operational schedule and a series of work streams,
designed to expedite the detailed research and data gathering
which underpin the environmental assessment process, have
commenced.
the planned works. Providence expects that
Barryroe – A energy transition opportunity
A growing number of Investors are seeking ethically balanced
investments, choosing to fund companies with strong social and
environmental programmes which complement financial returns.
Resource development companies who account for the full life
cycle of the hydrocarbon molecules produced and mitigate
impact are more likely to attract
potential environmental
investment.
The development of the Barryroe field aims to support both energy
security and stability as Ireland progresses toward a carbon
neutral economy by 2050.
Ireland imports 100% of its oil (~137KBOPD) and approximately
60% of its gas, (4.5Mtoe/annum) this is expected to increase to
100% of its gas by 2030, as the Corrib gas field declines. All future
energy forecasts for Ireland highlight the continuing importance of
oil and gas to the economy for many years to come. Natural Gas
has been identified as the transition fuel of choice to support the
development of
is clean,
efficient, and available on demand. These qualities will have a
continuing use in balancing the intermittent power supply provided
by renewable energy sources and in supporting the development
of the future technologies required to develop a continuous energy
supply from renewables.
renewable technology because it
The environmental and financial costs of importing oil and gas are
high, making indigenous oil and gas production beneficial for both
the environment and the exchequer. The environmental impact of
gas produced in Ireland is up to 13 times lower than gas which has
been imported to meet Ireland’s energy demand. The government
revenues associated with local hydrocarbon production are
material nationally, and local development will help ensure local
communities’ benefit through our commitment to preferentially
access local resources.
The Barryroe field development is coming of age and supports
Ireland’s ambition to become a low carbon economy by 2050 by
providing transition energy security and stability and helping
ensure the country fully benefits from the development of local
resources during energy transition, rather than depending upon
environmentally inferior and expensive oil and gas imports.
Providence Resources P.l.c. | Annual Report | 2020 5
BOARD OF DIRECTORS
Pat Plunkett
Non-Executive Chairman
Joined Board: 10/2016
Alan Linn
Chief Executive
Joined Board: 01/2020
Background
Pat Plunkett was appointed Non-Executive Chairman of the
Company in October 2016. He was previously Non-Executive
Chairman of Tullow Oil Plc from 2000 to 2011. He is currently
Executive Chairman of T5 Oil and Gas Limited (‘T5’), a private
company he founded in 2013. Pat has over 30 years’ experience
in the financial services sector. He was a founding partner of the
Riada & Co stockbroking and corporate finance businesses and,
following their acquisition by ABN AMRO NV, he continued to
manage these businesses until 1998.
Qualifications
Certified Accountant
Training/Upskilling
As a Certified Accountant, Pat ensures that his skills are kept up
to date.
As a non-executive director, he is kept informed on relevant
regulatory compliance and statutory matters through briefings by
external advisors and has access to the Company’s external
advisors as required.
Alan Linn was appointed Chief Executive Officer on 9 January
2020. Alan spent 10 years with Exxon before moving to the
independent O&G sector, working with Lasmo. After Lasmo, he
joined Cairn as Country Manager for India where under his tenure
the largest oil discovery in the world was made in 2004. After
leaving Cairn, he continued to work in the international oil and gas
sector. In 2008, he joined ROC Oil as COO and was appointed
CEO in 2010. In 2014, he joined Afren as CEO and in 2017, he
joined Third Energy as COO, then CEO. The business was sold in
July 2019.
Alan has a degree in Chemical Engineering from Strathclyde
University and is a Fellow of the Institute of Chemical Engineers.
The executive directors are kept informed on relevant regulatory
compliance and statutory matters through briefings by external
advisors and have access to the Company’s external advisors as
required.
Independent
No
Under the QCA principle, Pat is deemed to be non-independent on
the basis that he is Chairman of T5, a company in which Pageant
Holdings Limited, a notifiable shareholder of Providence (10.42%
as at 15 June 2021), is also a shareholder. The Board is satisfied
that it has in place effective processes and procedures to ensure
that any conflicts of interest that might arise can be managed
appropriately.
N/a
Skills
Pat has a comprehensive understanding of the challenges a
growing Oil and Gas business faces from his time spent at
Tullow Oil Plc.
Alan brings vast international strategy experience to the company
and has been involved in the successful restructuring and expansion
of a number of businesses.
Length of time on Board
4.5 Years
Committees
NARC
Key External Appointments
Executive Chairman of T5
1.5 Years
Chairman
C
R
Remuneration
Audit
A
Nomination
N
6 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Corporate Governance
Andrew Mackay
Non-Executive Director
Joined Board: 07/2020
James Menton
Senior Independent Non-Executive Director
Joined Board: 05/2021
Background
Andrew Mackay joined the Board as a Non-Executive Director in
July 2020. Andrew has over 40 years’ industry experience in the
upstream oil and gas business working for service companies. He
joined Halliburton in 1975. This was followed by two years working
in Norway and then three working in Saudi Aramco in numerous
drilling engineering roles. After returning to the UK, he worked with
the government until 1990. Andrew then joined Ranger Oil before
moving back to the UK Government in 1993 where he assisted in
the development and implementation of safety case regulations.
He joined Amoco in December 1993 as well operations division
and continued until 1999 as he concentrated on NRG. Andrew
founded NRG Group of Companies in 1988 and has served as
CEO and Chairman since.
Qualifications
Higher National Diploma in Mechanical Engineering
James Menton was appointed Senior Independent Non-Executive
Director in May 2021. James is a highly experienced advisor to
some of Ireland and the world’s leading companies over two
decades in professional advisory services. He was a partner with
KPMG Ireland, following its merger with Andersen in 2002 where
he had been a partner since 1986. During this time, he provided
advice to many of Ireland’s listed oil and gas companies among
other Plc clients.
B .Comm. (UCD ) and Fellow of Chartered Accountants Ireland
Training/Upskilling
As a non-executive director, he is kept informed on relevant
regulatory compliance and statutory matters through briefings by
external advisors and has access to the Company’s external
advisors as required.
As a non-executive director, he is kept informed on relevant
regulatory compliance and statutory matters through briefings by
external advisors and has access to the Company’s external
advisors as required.
Independent
Yes
Yes
Skills
Andrew brings a strong technical understanding to the Board.
James brings a wealth of experience gained from his years working
in professional advisory services.
Length of time on Board
11 Months
Committees
NAR
Key External Appointments
Chairman of the NRG Group
1.5 Months
NAR
Key External Appointments
St. Vincent’s Healthcare Group
Lisney
CWSI Security
St. Vincent's Holdings CLG
Chairman
C
R
Remuneration
Audit
A
Nomination
N
Providence Resources P.l.c. | Annual Report | 2020 7
DIRECTORS’ REPORT
The directors submit their annual report together with the audited
financial statements of Providence Resources Plc (“the Company”)
and its subsidiaries (together, “Providence” or “the Group”) for the
year ended 31 December 2020.
Principal activities, business review and future
developments
Information with respect to the Group’s principal activities and the
review of the business and future developments as required by
Section 327 of the Companies Act 2014 is contained in the
Chairman’s Remarks, the CEO – Operations Review on pages 3
to 5.
During the year the principal focus of management has been on
the Group’s Barryroe prospect, offshore Ireland.
The Group is monitoring the ongoing impact of Covid-19 on its
business and notes that it has had a negative impact on global
demand due to the lockdowns which have been implemented
around the world. While the Group does not currently produce oil
or gas, the pandemic could have an impact on the timelines for
working through our projects.
There have been no other significant events since the balance
sheet date which would require disclosure in or amendment of
these financial statements apart from the above.
Directors
The names of the persons who were directors at any stage during
the year and the subsequent period to date are set out below.
Except where indicated they served as directors for the entire year.
Pat Plunkett
Alan Linn (appointed 9 January 2020)
Andrew Mackay (appointed 3 July 2020)
James Menton (appointed 7 May 2021)
Angus McCoss (resigned 20 July 2020)
than the above,
Other
there have been no contracts or
arrangements during the financial year in which a Director of the
Company was materially interested and which was significant in
relation to the Company’s business.
Directors’ shareholdings and other interests
The interests of the directors and their spouses and minor children
who held office at 31 December 2020 or were subsequently
appointed in the share capital of the Company, all of which were
beneficially held, were as follows:
31 December
2019
Ordinary
Shares of
€0.001 each
31 December
2020
Ordinary
Shares of
€0.001 each
17 June
2021
Ordinary
Shares of
€0.001 each
1,750,000
2,750,000 3,750,000
–
882,961
882,961
– 13,833,333 13,833,333
–
–
–
–
706,368
706,368
Directors
Directors
Pat Plunkett
Alan Linn
Andrew Mackay
James Menton
Company secretary
Simon Brett
the year and state of affairs at
Results for
31 December 2020
the year ended
The consolidated income statement
31 December 2020 and the consolidated statement of financial
position at that date are set out on pages 20 and 22 respectively.
The loss for the year amounted to €10.36 million and net assets
at 31 December 2020 amounted to €49.39 million. No dividends
are recommended by the directors.
for
Important events since the year end
On 1 March 2021, the Company announced that it extended the
farm-out agreement with SpotOn Energy by an additional two
months until 30 April 2021 to allow it complete its funding
obligation as required under the farm-out agreement signed
30 November 2020.
the Company terminated the farm-out
On 22 April 2021,
agreement with SpotOn Energy as key financing requirements
were not met and Providence Resources Plc will now lead the
project.
(Pageant Holdings) has agreed to
A major shareholder
underwriting an equity placing up to $2.5m at £0.03p per share
and one warrant of £0.03p which would raise a similar amount
but underlines the support that the Company has from its
shareholders to keep the project moving forward. The offer
remains open until 30 June 2021.
By 6 May 2021, shareholders had exercised 86,061,529 of £0.03
warrants in the Company, raising another £2.6m ($3.6m) since the
year end. The overall conversion rate of the £0.03 warrants was
74.97% which shows the strong support that the Company has
received from its shareholders.
On 7 May 2021, James Menton was appointed Senior Independent
Non-Executive Director to the Board. He is a highly experienced
advisor to some of Ireland and the world’s leading companies with
over two decades in professional advisory services. He was a
partner with KPMG Ireland, following its merger with Andersen in
2002 where he had been a partner since 1986. During this time,
Ireland’s listed oil and gas
he provided advice to many of
companies, among other Plc clients.
8 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Corporate Governance
Details of outstanding options granted are as follows:
At 31 December
2019
At 31 December
2020
At 17 June
2021
Expiry
Price
Directors
Directors
Pat Plunkett
Alan Linn
Andrew Mackay
James Menton
Secretary
Simon Brett
1,750,000
–
–
–
–
275,000
–
1,750,000
9,500,000
15,000,000
4,500,000
–
–
275,000
5,000,000
Based on the closing share price on 31 December 2020, no options
over shares were capable of being exercised, as the targets for
vesting of the options had not been met. The closing market price
of the ordinary shares at 31 December 2020 was €0.055 and the
range during the financial year was €0.012 to €0.10.
Special business to be transacted at the Annual
General Meeting
1)
to Section 1022 and Section 1023(3) of
That the directors be, and they are hereby empowered
pursuant
the
Companies Act 2014 to allot equity securities (within the
meaning of Section 1023 of the Companies Act 2014) for
cash as if the said Section 1022(1) of the Companies Act
2014 did not apply to any such allotment, such power being
limited to:
a)
the allotment of equity securities in connection with or
pursuant to any offer of equity securities open for a
period fixed by the directors, by way of rights issue, open
offer or otherwise (an “Offering”) to the holders of
ordinary shares and/or any other persons entitled to
participate therein (including without
limitation any
holders of options under the Company’s share option
scheme(s) for the time being) in proportion (as nearly as
may be) to their respective holdings of ordinary shares
(or, as appropriate, the number of ordinary shares which
such other persons are for the purposes of such Offering
deemed to hold) on a record date fixed by the
directors(whether before or after the date of this meeting)
and subject to such exclusions or other arrangements
as the directors may deem necessary or expedient to
deal with any legal or practical problems under the laws
of any territory or the requirements of any regulatory
body or any stock exchange in any territory or in relation
to fractional entitlements or otherwise howsoever;
b) pursuant to the terms of any scheme for Directors and/or
employees etc. of the Company and/or its subsidiaries;
and
c) otherwise than pursuant to sub-paragraphs (a) and (b)
above, having in the case of the relevant shares (as
defined by the said Section 1023) the allotment of equity
securities up to a nominal aggregate amount equal to
€97,486 (representing approximately 10% of the issued
share capital of the Company as at the close of business
on 17 June 2021), provided in each case the power shall,
1,750,000
9,500,000
15,000,000
4,500,000
4,500,000
4,500,000
0.17 (Euro)
0.03 (GBP)
0.04 (GBP)
0.03 (GBP)
0.038 (Euro)
0.038 (Euro)
Date
June 2024
April 2027
January 2027
April 2027
May 2028
May 2028
275,000
5,000,000
0.142 (Euro)
0.03 (GBP)
August 2023
April 2027
unless revoked or renewed by special resolution or the
Constitution of the Company, expire on the earlier of
fifteen months from the date of passing this Resolution
and the conclusion of the next annual general meeting of
the Company unless previously renewed, varied or
revoked by the Company in general meeting, save that
the Company may before such expiry make an offer or
agreement which would or might require equity securities
to be allotted or issued after such expiry and the directors
may allot equity securities (as defined by the said Section
1023) in pursuance of such offer or agreement as if the
power conferred hereby had not expired.
The directors are of the opinion that the above proposals are in the
best interest of shareholders and unanimously recommend to you
to vote in favour of all resolutions as they intend to do in respect
of their own beneficial holdings.
in accordance with Section 225(2) of
Compliance policy statement
The directors,
the
Companies Act 2014, acknowledge that they are responsible for
securing the Company’s compliance with certain obligations
specified in that section (‘Relevant Obligations’). The directors
confirm that:
•
•
•
a compliance policy statement has been drawn up setting
out
in their opinion, are
appropriate with regard to such compliance;
the Company’s policies,
that,
appropriate arrangements and structures have been put in
in their opinion, are designed to provide
place that,
reasonable assurance of compliance in all material respects
with those relevant obligations; and
a review has been conducted, during the financial year, of
those arrangements and structure.
It is also the policy of the Company to review at least twice during
the course of each financial year the arrangements and structures
referred to above which have been implemented with a view to
determining if they provide reasonable assurance of compliance in
all material respects with Relevant Obligations.
Going concern
The Directors have prepared the financial statements on a going
concern basis which assumes that Group and Company will
continue in operational existence for at least twelve months from
the date of the approval of these financial statements.
Providence Resources P.l.c. | Annual Report | 2020 9
DIRECTORS’ REPORT (CONTINUED)
The Group had net assets of €49.4m, including cash on hand of
€2.1m at 31 December 2020. It recognised a loss after taxation of
€10.4 million. Consequently, the Directors have considered 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 financial statements.
In May 2020, the company raised c. €3.0m (gross proceeds)
through the issue of ordinary shares which comprised of one
ordinary share, one £0.03 warrant which expired on 6 May 2021
and one £0.09 warrant which expires on 6 May 2022. A total of
177,973,004 warrants of £0.03 and 177,973,004 warrants of
£0.09 were issued. By the 6 May 2021, 133,350,343 warrants of
£0.03 were converted into ordinary shares, raising a total of €4.5m
(£4.0m); €2.9m (£2.6m) of which was raised in 2021 with the
conversion of 86,061,529 warrants. This represents a total
conversion ratio of 74.9% for
the £0.03 warrants and
demonstrates the ongoing support of shareholders for the
company.
The Standard Exploration License (SEL1/11) for Barryroe expires
in July 2021 and the Company has applied for a Lease
Undertaking License, which is the follow-on permit. The Lease
Undertaking License, financial capability assessment and work
program are subject to government approval. The Directors
anticipate that the lease undertaking will be granted as the Group
has complied with all of the requirements for such approval. The
Directors note that the Irish Government has stated that all existing
licences will be allowed to run their full life cycle.
the Group’s cash flow forecasts,
The Directors have carefully considered the current financial
position of the Group and, within this context, have prepared cash
flow forecasts for the period to 30 June 2022. Based on their
consideration of
including
appropriate underlying assumptions ,and noting that the main risk
factors in these cashflow forecasts are the granting of the Lease
Undertaking on acceptable terms and conditions and the
completion of an appropriate financing exercise during the period,
the Directors are satisfied that the Group will have access to
sufficient funds to cover its working capital and capital expenditure
expected over this 12 month period.
The Directors have considered the matters set out above and
determined that the requirement to secure additional funding in
the next 12 months constitutes a material uncertainty that may
cast significant doubt upon the Group and Company’s ability to
continue as a going concern, and the Directors note that the
Group and Company may, as a consequence, be unable to realise
its assets and discharge its liabilities in the normal course of
business.
Nevertheless, after making enquiries and considering the
uncertainties described above, the Directors have a reasonable
expectation that the Group and Company will have 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
and Company has continued to have the strong support of
shareholders. For these reasons, the Directors have adopted the
going concern basis in preparing the annual financial statements
and do not include any adjustments that would be necessary if
this basis were inappropriate.
Corporate governance
The Group is committed to high standards of corporate
governance and recognises the role that good governance plays
in delivering long-term growth in shareholder value. As such, the
directors have elected to adopt the QCA’s ten principles of
Corporate Governance as a framework to communicate the
Group’s approach to good corporate governance in line with AIM
listing requirements.
Principle 1: Establish a strategy and business model which
promotes long-term value for shareholders
Providence Resources P.l.c. is an Irish based upstream oil and gas
company with assets located offshore Ireland. Operating for over
30 years, the Company (and its predecessor companies) has a well-
established background in the Irish oil and gas business, having
worked closely with many major international companies including
ExxonMobil, Repsol, Total, Eni, Petronas and Cairn Energy.
The Company’s core strategy is to economically appraise and
develop the Barryroe Field.
A phased Barryroe development is expected to maximise field
development returns by accelerating cash flow and progressively
increasing reserves.
Fully developed, the Barryroe Field will become a production hub,
and Providence envisages economically linking the Barryroe
facilities with discovered resources and near field exploration
opportunities off Ireland’s South Eastern coast.
The Group’s objectives are:
•
•
•
•
Create value for stakeholders by appraising Barryroe and
transforming 2C resources into 2P reserves
Progress a phased Barryroe development designed to
generate early cashflow and manage development capex
and risk
Make investment decisions designed to maximise overall
return and minimise overall risk
Explore new areas of opportunity such as Carbon Capture
and Sequestrations projects
Principle 2: Seek to understand and meet shareholder
needs and expectations
Providence has over 10,000 shareholders. There is regular
dialogue with all shareholders via announcements, the Company’s
website and participation in a wide range of industry and market
conferences. The Company also receives regular market feedback
from its brokers and advisors. Formal presentations are made at
the time of the release of the annual results, half-year results and
at the Annual General Meeting (AGM). The Company encourages
the year and
communication with shareholders throughout
welcomes their participation at General Meetings. The Company’s
website is www.providenceresources.com. This website is
regularly updated and provides an option for shareholders to
subscribe for email alerts which ensures that they receive direct
notice of all announcements from the Company. All Board
members attend the AGM and are available to answer questions.
Separate resolutions are proposed on substantially different issues
and the agenda of business to be conducted at the AGM includes
a resolution to receive and consider the Annual Report and
Accounts. The chairmen of the Board’s committees will also be
10 Providence Resources P.l.c. | Annual Report | 2020
for
directors
opportunity
shareholders,
available at the AGM. The Board regards the AGM as a particularly
important
and
management to meet and exchange views. Notice of the AGM
together with the Annual Report & Accounts is sent
to
shareholders in accordance with the Constitution of the Company
and details of the proxy votes for and against each resolution are
announced after the result of the hand vote. We place a good deal
of
importance on and dedicate significant resources to our
engagement with shareholders throughout the year. The formal
and informal engagement with shareholders as outlined above has
proven to be a useful source of information and feedback in
helping the directors and management understand shareholders’
wants and needs and, in turn, has played a key part in helping the
Company in its long-term strategic planning. The primary points of
contact for shareholders are the Chairman and CEO.
implications for
Principle 3: Take into account wider stakeholder and social
responsibilities and their
long-term
success
The Company recognises that it has a significant number of
important stakeholders that are core to the successful execution
of Providence’s strategy and that the Company’s success and
performance in turn has an impact on these stakeholders. The list
of stakeholders is non-exhaustive and includes Employees,
Shareholders, Advisors, Partners, Regulators and Service
Suppliers. The directors and management promote a culture of
open dialogue with all stakeholders and have a demonstrable
track record of considering and using stakeholder feedback as
part of the Company’s development and growth. The directors are
aware of the Company’s responsibilities to the communities within
which Providence operates and, as such, always strive to maintain
a positive and beneficial dialogue with those communities. The
impact of the Company’s activities is carefully
environmental
considered, and the maintenance of high environmental and safety
standards is a priority.
The experienced leadership team understands that
risk
management plays an essential role in the exploration and
development of natural resources and takes steps to mitigate risk
and deliver attractive returns for all stakeholders.
Sustainable development
Irish government’s
supports
Providence Resources
commitment to deliver a Carbon Neutral Ireland by 2050 and is
assessing technology which, when integrated with Barryroe field
development, supports a seamless energy transition process by:
the
•
•
Actively working to improve Ireland’s energy security by
developing indigenous sources of energy
Supporting the use of domestically produced gas as the
preferred transition fuel
(cid:1) Corporate Governance
•
•
•
Reducing the carbon footprint associated with development
activities
Using Irish resources
implementation
in project development and
Exploring the potential
Hydrogen technology linked with Barryroe development
for Carbon Capture and Blue
Principle 4: Embed effective risk management, considering
both opportunities and threats, throughout the organisation
Our management systems, organisational structures, processes,
standards, code of conduct and behaviours together form a
system of internal control that governs how we conduct the
business of Providence and manage all associated risks. This is
reviewed periodically to ensure that they are fit for purpose.
Internal control:
The directors have overall responsibility for the Group’s system of
internal control to safeguard shareholders’ investments and the
Group assets and have delegated responsibility for
the
implementation of this system to executive management. This
system includes financial controls which enable the Board to meet
its responsibilities for the integrity and accuracy of the Group’s
accounting records. The Board has established a process of
compliance involving the Board’s responsibility to maintain, review
and report on all internal controls, including financial, operational
and compliance risk management. Among the processes applied
in reviewing the effectiveness of the system of internal controls are
the following: Budgets are prepared for approval by executive
management and inclusion in a Group budget approved by the
Board. Expenditure is regularly compared to previously approved
budgets. The Board establishes risk policies, as appropriate, for
implementation by executive management. All commitments for
expenditure and payments are compared to previously approved
budgets and are subject to approval by personnel designated by
the board of directors or by the board of subsidiary companies.
Regular management meetings take place to review financial and
operational activities. Cash flow forecasting is performed on an
ongoing basis to ensure efficient use of cash resources. Regular
financial results are submitted to and reviewed by the board of
directors. The directors, through the Audit Committee, review the
effectiveness of the Group’s system of internal financial control. A
review of the effectiveness of the system of internal control
is
carried out annually. The board has considered the requirement
for an internal audit function. Based on the scale of the Group’s
operations and close involvement of the Board, the directors have
concluded that an internal audit function is not currently required.
Providence Resources P.l.c. | Annual Report | 2020 11
DIRECTORS’ REPORT (CONTINUED)
Principle 4: Embed effective risk management, considering
both opportunities and threats, throughout the organisation
(continued)
Risk management: currency risk
The Board reviews its annual Euro, Sterling and US dollar
requirements by reference to bank forecasts and prevailing
exchange rates and management is authorised to achieve best
available rates in respect of each forecast currency requirements.
Risk management: general industry risk
The Group’s business may be affected by the general risks
associated with all companies in the oil and gas industry. These
risks (the list of which is not exhaustive) include: general economic
activity, the world oil and gas prices, the marketability of the
hydrocarbons produced, action taken by other oil-producing
nations and the extent of governmental regulation and taxation.
All drilling to establish productive hydrocarbon reserves is
inherently speculative and, therefore, a considerable amount of
professional judgement is involved in the selection of any prospect
for drilling. In addition, even when drilling successfully encounters
oil and gas and a well is completed as a producing oil or gas well,
unforeseeable operating problems or climatic conditions may arise
which render it uneconomical to produce such oil and natural gas.
Estimates of potential reserves include a substantial proportion
which are undeveloped. These reserves require further capital
expenditure in order to bring them into production. No guarantee
can be given as to the success of drilling programmes in which the
Group has interests. The Group can operate in different political
jurisdictions where there could be risks pertaining to local
regulations, war or nationalisation of reserves.
Principle 5: Maintain the board as a well-functioning,
balanced team led by the chair
The Board is currently made up of one Executive and three Non-
Executive Directors. The Board formation is reviewed periodically
to ensure that it is fit for purpose. Biographies of each of the
directors can be found on pages 6 and 7. All directors bring
independent judgement to bear on issues affecting the Group and
all have full and timely access to information necessary to enable
them to discharge their duties. The directors have a wide and
varying array of experience in the industry. The Board agrees a
schedule of regular meetings to be held in each calendar year and
meets on other occasions as necessary. Meetings are held at the
head office in Dublin. Board meetings were held on 19 occasions
during 2020. An agenda and supporting documentation is
circulated in advance of each meeting.
The table below shows the attendance at Board and Committee meetings during 2020.
Director
Total in year
Alan Linn
Pat Plunkett
Andrew Mackay
Angus McCoss
Board
meetings
attended/
eligible
19
19/19
19/19
10/11
9/9
Resignation date
N/a
N/a
N/a
20 July 2020
Audit
Committee
Remuneration
Committee
Nomination
Committee
1
N/a
1/1
1/1
N/a
1
N/a
1/1
1/1
N/a
1
N/a
1/1
1/1
1/1
trading and capital budgets,
There is an agreed list of matters which the Board has formally
reserved to itself for decision, such as approval of the Group’s
financial
commercial strategy,
statements, board membership, acquisitions and disposals, major
capital expenditure, risk management and treasury policies.
Responsibility for certain matters is delegated to Board
Committees. There is an agreed procedure for directors to take
independent legal advice. The Company Secretary is responsible
for ensuring that Board procedures are followed, and all directors
have direct access to the Company Secretary. All directors receive
regular Group management financial statements and reports and
full Board papers are sent to each director in sufficient time before
Board meetings, and any further supporting papers and
information are readily available to all directors on request. The
chairman of each committee of the Board is available to give a
report on the committee’s proceedings at Board meetings if
appropriate. The Board has a process whereby each year every
director will meet the Chairman to review the conduct of Board
meetings and the general corporate governance of the Group. The
role of the Chairman (Mr. Pat Plunkett) is Non-Executive. The
Board considers their ability to act independently to be unaffected
by participation in the Company’s option scheme. Each year, one
third of the directors retire from the Board by rotation and every
Director is subject to this rule. Effectively, therefore, each director
will retire by rotation within each three-year period.
Principle 6: Ensure that between them the directors have
the necessary up-to-date experience, skills and capabilities
Full biographies for each individual director can be found on pages
6 and 7.
All appropriate resources (external and internal) that Directors
require to augment, improve and keep their skill set current will be
made available to them as needed.
The directors also have access to the advice and services of the
legal advisors who are
Company Secretary and external
responsible for ensuring that all Board procedures are
complied with.
12 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Corporate Governance
Principle 7: Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement
The Board evaluates its own processes and performance,
including the work of
its committees, to ensure its ongoing
effectiveness on a continuous basis. When appropriate, board
issues
evaluations are conducted by an external
highlighted in board evaluations are considered by the Board and
form an integral part of the broad spectrum of feedback the Board
considers in the evolution of the Company’s strategy and long-
term planning. The performance and contribution of all directors is
reviewed as part of the Board evaluation process.
firm. All
The board ensures that appropriate processes and systems are in
place to support succession planning both at board level and for
the executive management of the Company.
Principle 8: Promote a corporate culture that is based on
ethical values and behaviours
The board has designed and implemented a code of business
ethics which sets out formally the ethics and values we, as a team,
wish to adhere to. Our code of business ethics is based on our
values and sets clear expectations for how we operate and
interact with all stakeholders.
It applies to all Providence
employees and board members.
Employees, contractors or other third parties who have a question
about our code of business ethics or see something that they feel
is inappropriate can raise these issues directly with Providence or,
where appropriate, the relevant authorities. We take steps to
identify and correct areas of non-compliance and will take further
action as appropriate.
trading and capital budgets,
Principle 9: Maintain governance structures and processes
that are fit for purpose and support good decision-making
by the board
There is an agreed list of matters which the Board has formally
reserved to itself for decision, including approval of the Group’s
commercial strategy,
financial
statements, Board membership, acquisitions and disposals, major
capital expenditure, risk management and treasury policies.
Responsibility for certain matters is delegated to Board
Committees. There is an agreed procedure for Directors to take
independent legal advice. The Company Secretary is responsible
for ensuring that Board procedures are followed, and all Directors
have direct access to the Company Secretary. All Directors receive
regular Group management financial statements and reports and
full Board papers are sent to each Director in sufficient time before
Board meetings, and any further supporting papers and
information are readily available to all Directors on request. The
Board papers include the minutes of all committees of the Board
which have been held since the previous Board meeting, and the
chairman of each committee is available to give a report on the
committee’s proceedings at Board meetings if appropriate. The
Board has a process whereby each year every Director meets the
Chairman to review the conduct of Board meetings and the
general corporate governance of the Group. The Chairman
(Mr. Pat Plunkett) is Non-Executive. The Non-Executive Directors
are independent of management and have no material interest or
other relationship with the Group. Each year, one third of the
directors retire from the Board by rotation and every Director is
subject to this rule. Effectively, therefore, each Director will retire by
rotation within each three-year period.
Board Committees
The Board has implemented an effective committee structure to
assist in the discharge of its responsibilities. All committees of the
Board have written terms of reference dealing with their authority
and duties. Membership of
the Audit, Remuneration and
Nomination Committees is comprised exclusively of Non-
Executive Directors. The Company Secretary acts as secretary to
each of these committees.
Audit Committee
The Audit Committee reviews the accounting principles, policies
and practices adopted in the preparation of the interim and annual
financial statements and discusses with the Group’s Auditors the
results and scope of the audit. It also reviews the scope and
performance of the Group’s internal finance function and the
effectiveness and independence of the external Auditors. The
external Auditors are invited to attend the Audit Committee
meetings, and the Chief Financial Officer also attends. The external
auditors have the opportunity to meet with the members of the
Audit Committee alone at least once a year. The Audit Committee
comprises the Non-Executive Directors and is chaired by
Mr. James Menton. The partner responsible for the external Audit
is changed every 5 years to ensure audit independence.
Remuneration Committee
The Remuneration Committee comprises the Non-Executive
Directors and is chaired by Mr. Andrew Mackay Emoluments of
Executive Directors and senior management are determined by
the Remuneration Committee. In the course of each financial year
the Remuneration Committee determines basic salaries as well as
the parameters for any possible bonus payments. The
Remuneration Committee applies the same philosophy in
determining Executive Directors’ remuneration as is applied in
respect of all employees. The underlying objective is to ensure that
individuals are appropriately
rewarded relative to their
responsibility, experience and value to the Group. The
Remuneration Committee is mindful of the need to ensure that, in
a competitive environment, the Group can attract, retain and
motivate executives who can perform to the highest levels of
expectation. Annual bonuses, if any, are determined by the
Remuneration Committee on the basis of objective assessments
based on the Group’s performance during the year in terms of key
financial
indicators, as well as a qualitative assessment of the
individual’s performance.
Nomination Committee
The Nomination Committee comprises the Non-Executive
Directors. The Nomination Committee, which is chaired by Mr. Pat
Plunkett, formally agrees criteria for new Non-Executive Director
appointments, including experience of the industry in which the
Group operates and professional background
Providence Resources P.l.c. | Annual Report | 2020 13
DIRECTORS’ REPORT (CONTINUED)
Principle 10: Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Shareholders
There is regular dialogue with institutional shareholders and
presentations are made at the time of the release of the annual
and interim results. The Company encourages communication
with private shareholders throughout the year and welcomes their
participation at general meetings. The Company’s website is
www.providenceresources.com. This website is regularly updated.
All Board members attend the Annual General Meeting and are
available to answer questions. Separate resolutions are proposed
on substantially different issues and the agenda of business to be
conducted at the Annual General Meeting includes a resolution to
receive and consider the Annual Report and Accounts. The
chairmen of the Board’s committees will also be available at the
Annual General Meeting. The Board regards the Annual General
Meeting as a particularly important opportunity for shareholders,
Directors and management to meet and exchange views. Notice
of the Annual General Meeting together with the Annual Report
and accounts is sent to shareholders in accordance with the
Constitution of the Company and details of the proxy votes for
and against each resolution are announced after the result of the
showing hand vote.
Substantial shareholdings
So far as the Board is aware, no person or company, other than
those mentioned below, held 3% or more of the ordinary share
capital of the Company at 17 June 2021.
Pageant Holdings Limited
M&G Investment Management Limited
Kite Lake Capital Management (UK) LLC
Merseyside Pension Fund
R. O’Riordan and S. O’Driscoll
Nick Furlong
SpotOn Energy Limited
10.42%
9.94%
9.75%
8.84%
4.10%
3.22%
3.10%
Political donations
There were no political donations during the year (2019: Nil).
Books and accounting records
The directors are responsible for ensuring that adequate
accounting records, as outlined in Section 281 of the Companies
Act 2014, are kept by the Company. The directors, through the
use of appropriate procedures and systems and the employment
of competent persons, have ensured that measures are in place
to secure compliance with these requirements. These books and
accounting records are maintained at the Company’s registered
address is Paramount Court, Corrig Road, Sandyford Business
Park, Dublin 18, D18 R9C7, Republic of Ireland.
Relevant audit information
The directors believe that they have taken all steps necessary to
make themselves aware of any relevant audit information and have
established that the Group’s statutory auditors are aware of that
information. In so far as they are aware, there is no relevant audit
information of which the Group’s statutory auditors are unaware.
Auditors
KPMG have indicated their willingness to continue in office in
accordance with Section 383 (2) of the Companies Act 2014.
Shareholders will be asked to authorise the directors to fix
their remuneration.
Pat Plunkett
Chairman
18 June 2021
Alan Linn
Chief Executive
14 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Corporate Governance
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the directors’ 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 they have
elected to prepare the Group financial statements in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the EU and the Company financial statements in accordance
with FRS 101 Reduced Disclosure Framework and applicable law.
Under company law the directors must not approve the Group
and Company financial statements unless they are satisfied that
they give a true and fair view of the assets, liabilities and financial
position of the Group and Company and of the Group’s profit or
loss for that year. In preparing the Group and Company financial
statements, the directors are required to:
•
•
•
•
•
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable and
prudent;
state whether applicable Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
assess the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to
going concern; and
use the going concern basis of accounting unless they either
intend to liquidate the Group or Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
assets, liabilities, financial position and profit or loss of the Group
and Company and which enable them to ensure that the financial
statements are prepared in accordance with the applicable
accounting framework and comply with the provisions of the
Companies Act 2014. They are responsible for such internal
controls as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and other
irregularities. The directors are also responsible for preparing a
directors’ report that complies with the requirements of the
Companies Act 2014.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the Republic of Ireland governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
On behalf of the directors
Pat Plunkett
Chairman
18 June 2021
Alan Linn
Chief Executive
Providence Resources P.l.c. | Annual Report | 2020 15
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF PROVIDENCE RESOURCES P.L.C.
constitute a material uncertainty that may cast significant doubt
on the Group’s and the Company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Going Concern
Refer to page 25 to 26 (accounting policy)
The risk
There is judgement involved in the director’s conclusion that risks
and circumstances described in note 1 to the financial statements
represent a material uncertainty over the ability of the Group and
Company to continue as a going concern for a period of at least
one year from the date of approval of the financial statements.
Clear and full disclosure of the facts and the directors’ rationale for
the use of the going concern basis of preparation, including that
there is a related material uncertainty, is a key financial statement
disclosure and so was the focus of our audit in this area.
How the risk was addressed in our audit
Our audit procedures included, among others, assessing the
completeness and accuracy of the going concern disclosure by:
•
•
•
•
•
•
•
Inspecting management’s going concern paper, which
outlines the status of the various factors impacting on going
concern,
the risks attaching to the various potential
outcomes and the likely future developments;
Inspecting management’s assessment of the cash flow
projections prepared by Group management
the
14-month period from 1 June 2021 to 31 July 2022 and the
related key underlying assumptions;
for
Inspecting and challenging the key assumptions made and
corroborating these assumptions with supporting evidence
where possible;
Performing a sensitivity analysis on management’s cash flow
projections;
Performing inquiries of management and the Audit
Committee;
Inspecting Board minutes up to the date of approval of the
financial statements; and
Considering the adequacy of the Group’s disclosures in note
1 on page 25 to 26 in respect of going concern, and whether
the disclosures properly reflect, the risks that the Group faces
in respect of its ability to continue as a going concern.
Based on the audit evidence obtained, we found management’s
conclusion that the financial statements should be prepared on a
going concern basis,
including a description of a material
uncertainty, to be reasonable. We found the disclosure of the
material uncertainty to be appropriate in the circumstances.
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Providence
Resources Plc (‘the Company’) and its consolidated undertakings
(‘the Group’) for the year ended 31 December 2020 set out on
pages 20 to 49, which comprise the Consolidated Income
Statement,
the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated
Statement of Cash flows, the Company Statement of Financial
Position, the Company Statement of Change in Equity and related
notes, including the summary of significant accounting policies set
out in note 1. The financial reporting framework that has been
applied in their preparation is Irish Law and International Financial
Reporting Standards (IFRS) as adopted by the European Union.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the
assets, liabilities and financial position of the Group and
Company as at 31 December 2020 and of the Group’s loss
for the year then ended;
the Group financial statements have been properly prepared
in accordance with IFRS as adopted by the European Union;
the Company financial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union, as applied in accordance with the
provisions of the Companies Act 2014; and
the Group and Company financial statements have been
properly prepared in accordance with the requirements of the
Companies Act 2014.
Basis for opinion
We conducted our audit
in accordance with International
Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are further described in
the financial
the Auditor’s Responsibilities for
statements section of our report. We have fulfilled our ethical
responsibilities under, and we remained independent of the Group
in accordance with ethical requirements that are relevant to our
financial statements in Ireland, including the Ethical
audit of
Standard issued by the Irish Auditing and Accounting Supervisory
Authority (IAASA), as applied to listed entities.
the audit of
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 to the financial statements which
indicates that, in order to fund current and future expenditure
commitments, the Group and Company is dependent upon its
ability to complete an appropriate funding exercise. These events
and conditions, along with the other matters explained in note 1,
16 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
Other Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, 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.
In addition to the matter described in the material uncertainty
related to going concern section, in arriving at our audit opinion
above, the additional key audit matter for the Group is outlined
below. The Exploration and Evaluation (“E&E”) Assets within the
Company were fully impaired in the prior year and therefore we do
no consider the carrying value of E&E assets to be a key audit
matter for the Company in our current year audit:
Carrying value of Exploration and Evaluation (“E&E”) assets
Refer to pages 28 to 29 (accounting policy) and page 33(financial
disclosures)
The key audit matter
How the matter was addressed in our audit
The carrying value of E&E assets at 31 December 2020 is
€60.425m.
The assessment of the carrying value of E&E assets requires
management to exercise judgement and this judgement requires
consideration of a number of factors, including but not limited to,
an interpretation and assessment of the results of drilling and other
appraisal activities during the year, the Group’s intention and ability
to proceed with a future work programme for a prospect or
licence, and an assessment of the likely economic opportunity.
We evaluated management’s assessment of E&E assets with
reference to the criteria of IFRS 6: Exploration for and Evaluation
of Mineral Resources and the Group’s accounting policy.
The audit procedures we performed included, but were not limited
to, obtaining a understanding of the Group’s ongoing E&E activity
by interviewing executive and finance staff in relation to all key
licences, and gathering audit evidence to assess the value of E&E
assets carried forward. Such evidence included approved
and
evidence of ongoing appraisal
forecasts,
communications with joint venture partners and shareholders.
activity
Where an asset has demonstrated indicators of impairment but
has been retained on the statement of financial position, we have
gathered evidence to assess the status of current and future
appraisal activity, the allocation of budgeted expenditure and any
conclusion on commerciality.
Where assets have been impaired we inspected evidence of the
impairment and challenged management on the events that led
to the impairment.
Based on evidence obtained we found that the judgements
exercised, and conclusions reached, by management are
appropriate.
Our application of materiality and an overview of the
scope of our audit
We define materiality as the magnitude of misstatement that
makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would
be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
We determined materiality for the Group to be €0.32 million (2019:
€0.33 million), which is 0.5% of total assets. We determined
materiality for the Company to be €0.23 million (2019: €0.23
million), which is 0.5% of total assets. We considered total assets
to be the appropriate benchmark for determining materiality due
to the relative stability of this measure in recent years. We
considered quantitative and qualitative factors such as
understanding the entity and its environment, history of
misstatements, complexity of the Group and reliability of the
control environment.
Providence Resources P.l.c. | Annual Report | 2020 17
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
We agreed with the Audit Committee that we would report to it all
audit differences in excess of €0.016 million (2019: €0.015 million)
for the Group and in excess of €0.011 million (2019: €0.011) for
the Company, as well as differences below this threshold that, in
our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements. Our audit scope included a full audit of Providence
Resources Plc and Exola Designated Activity Company,
accounting for 99 per cent of the Group’s total loss before tax and
net assets. Our audit of the Group and the Company was
undertaken to the materiality levels specified above and was
performed by a single engagement team in Dublin.
Going concern basis of preparation
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the group or the
company, or
to cease their operations, and as they have
concluded that the group and the company’s financial position
means that this is realistic for at least a year from the date of
approval of the financial statements (“the going concern period”).
As stated above in our report, they have also concluded that there
is a material uncertainty related to going concern.
An explanation of how we evaluated management’s assessment
of going concern is set out above in our report. Our conclusions
based on this work:
•
•
we consider that the Directors’ use of the going concern
basis of accounting in the preparation of
the financial
statements is appropriate;
we have nothing material to add or draw attention to in
relation to the Directors’ statement in Note 1 to the financial
statements on the use of the going concern basis of
accounting, and their identification therein of a material
uncertainty over the Group and Company’s ability to continue
to use that basis for the going concern period.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Based solely on our work on the other information undertaken
during the course of the audit, we report that:
•
•
•
we have not
directors’ report;
identified material misstatements in the
in our opinion, the information given in the directors’ report is
consistent with the financial statements; and
in our opinion, the directors’ report has been prepared in
accordance with the Companies Act 2014.
Our opinions on other matters prescribed the Companies
Act 2014 are unmodified
We have obtained all the information and explanations which we
consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were
sufficient to permit the financial statements to be readily and
properly audited and the Company’s financial statements are in
agreement with the accounting records.
We have nothing to report on other matters on which we
are required to report by exception
The Companies Act 2014 requires us to report to you if, in our
opinion:
•
the disclosures of directors’ remuneration and transactions
required by Sections 305 to 312 of the Act are not made.
We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Other information
Directors’ responsibilities
As explained more fully in their statement set out on page 15, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing
the Group and 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 they either
intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for the preparation of the other
information presented in the Annual Report together with the
financial statements. The other
information comprises the
information included in the directors’ report and the non-financial
statement
at
the
https://www.providenceresources.com/ and the Business Review
and Corporate Governance Section of the Annual Report.
company’s website
included
on
The financial statements and our auditor’s report thereon do not
comprise part of the other information. Our opinion on the financial
statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
18 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
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 (Ireland) 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.
A fuller description of our responsibilities is provided on IAASA’s
website at http://www.iaasa.ie/Publications/Auditing-standards/
International-Standards-on-Auditing-for-use-in-Ire/Description-of-
the-auditor-s-responsibilities-for.
The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company’s members, as a body,
in accordance with Section 391 of the Companies Act 2014. Our
audit work has been undertaken so that we might state to the
Company’s members those matters 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 and the
Company’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
Keith Watt
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
18 June 2021
Providence Resources P.l.c. | Annual Report | 2020 19
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
Continuing operations
Administrative expenses
Pre-licence expenditure
Impairment of exploration and evaluation assets
Operating loss
Finance income
Finance expense
Loss before income tax
Income tax expense
Loss for the financial year
Loss per share (cent)
Basic and diluted loss per share
The total loss for the year is entirely attributable to equity holders of the Company.
The notes on pages 25 to 42 to the financial statements form an integral part of the statements.
Note
2
8
10
8
3
4
5
9
2020
€’000
2019
€’000
(2,163)
(5)
(272)
(2,440)
361
(8,279)
(10,358)
–
(10,358)
(4,542)
(273)
(21,121)
(25,936)
30
(947)
(26,853)
–
(26,853)
(1.31)
(4.39)
20 Providence Resources P.l.c. | Annual Report | 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
(cid:1) Financial Statements
Loss for the financial year
Other comprehensive income
Items that may be reclassified into profit or loss:
Foreign exchange translation differences
Total comprehensive expense for the year
Note
2020
€’000
2019
€’000
(10,358)
(26,853)
(5,453)
1,195
(15,811)
(25,658)
The total comprehensive expense for the year is entirely attributable to equity holders of the Company.
The notes on pages 25 to 42 to the financial statements form an integral part of the statements.
Providence Resources P.l.c. | Annual Report | 2020 21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Assets
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Undenominated capital
Foreign currency translation reserve
Share based payment reserve
Retained deficit
Total equity attributable to equity holders of the Group
Liabilities
Decommissioning provision
Lease liability
Warrant liabilities
Total non-current liabilities
Trade and other payables
Warrant liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
On behalf of the board
Pat Plunkett
Chairman
Alan Linn
Chief Executive
The notes on pages 25 to 42 to the financial statements form an integral part of the statements.
Note
2020
€’000
2019
€’000
10
11
12
13
14
14
15
15
16
19
18
19
60,425
13
60,438
223
2,110
2,333
62,771
65,377
38
65,415
398
710
1,108
66,523
71,743
256,773
623
4,634
806
(285,189)
71,512
251,300
623
10,087
642
(274,898)
49,390
59,266
5,853
–
3,555
9,408
815
3,158
3,973
13,381
62,771
5,733
9
–
5,742
1,515
–
1,515
7,257
66,523
22 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
At 1 January 2020
71,512
623
251,300
Share Undenominated
capital
capital
€’000
€’000
Share
premium
€’000
Foreign
currency
translation
reserve
€’000
10,087
Share
based
payment
reserve
€’000
Retained
deficit
€’000
Total
€’000
642
(274,898)
59,266
Total comprehensive expense
Loss for financial year
Currency translation
Total comprehensive expense
Transactions with owners,
recorded directly in equity
Share based payment expense
Share options lapsed in year
Shares issued in year
Transactions with owners,
recorded directly in equity
–
–
–
–
–
231
231
–
–
–
–
–
–
–
At 31 December 2020
71,743
623
256,773
4,634
At 1 January 2019
71,452
623
247,918
Share Undenominated
capital
capital
€’000
€’000
Share
premium
€’000
Total comprehensive expense
Loss for financial year
Currency translation
Total comprehensive expense
Transactions with owners,
recorded directly in equity
Share based payment expense
Share options lapsed in year
Shares issued in year
Transactions with owners,
recorded directly in equity
–
–
–
–
–
60
60
–
–
–
–
–
–
–
–
–
–
–
–
3,382
3,382
–
–
–
–
(5,453)
(5,453)
–
–
–
(10,358)
–
(10,358)
(10,358)
(5,453)
(15,811)
–
–
5,473
5,473
–
–
–
–
Foreign
currency
translation
reserve
€’000
8,892
–
1,195
1,195
448
(284)
–
164
806
Share
based
payment
reserve
€’000
1,745
–
284
(217)
67
(285,189)
448
–
5,487
5,935
49,390
Retained
deficit
€’000
Total
€’000
(248,759)
81,871
–
–
–
(26,853)
–
(26,853)
(26,853)
1,195
(25,658)
–
–
–
–
40
(1,143)
–
–
1,143
(429)
(1,103)
714
40
–
3,013
3,053
59,266
At 31 December 2019
71,512
623
251,300
10,087
642
(274,898)
The notes on pages 25 to 42 to the financial statements form an integral part of the statements.
Providence Resources P.l.c. | Annual Report | 2020 23
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Loss after tax for the year
Adjustments for:
Depletion and depreciation
Impairment of exploration and evaluation assets
Finance income
Finance expense
Share based payment charge
Foreign exchange
Change in trade and other receivables
Change in trade and other payables
Net cash outflow from operating activities
Cash flows from investing activities:
Interest received
Acquisition of exploration and evaluation assets
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Issue costs
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents at end of year
The notes on pages 25 to 42 to the financial statements form an integral part of the statements.
2020
€’000
2019
€’000
(10,358)
(26,853)
24
272
(361)
8,279
448
21
175
(700)
(2,200)
1
(845)
(1)
(845)
4,836
(349)
4,487
35
21,121
(30)
947
40
(122)
66
825
(3,971)
30
(6,075)
(56)
(6,101)
3,442
(429)
3,013
1,442
(7,059)
710
(42)
2,110
7,617
152
710
24 Providence Resources P.l.c. | Annual Report | 2020
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(cid:1) Financial Statements
Accounting policies
1
Reporting entity
Providence Resources Plc (“the Company”) is a company domiciled in Ireland. The registered number of the Company is 268662 and
the address of its registered office is Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18, D18 R9C7.
The consolidated financial statements of the Group for the year ended 31 December 2020 are comprised of the financial statements
of the Company and its subsidiaries, together referred to as “the Group”.
Statement of compliance
As required by AIM and ESM rules and permitted by Company Law, the Group financial statements have been prepared in accordance
with IFRS as adopted by the EU. The individual financial statements of the Company (Company financial statements) have been
prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”) in accordance with the
Companies Act 2014 which permits a Company, that publishes its Company and Group financial statements together, to take
advantage of the exemption in Section 304 of the Companies Act 2014, from presenting to its members its Company income statement
and related notes that form part of the approved Company financial statements. The IFRS’s adopted by the EU as applied by the
Company and the Group in the preparation of these financial statements are those that were effective for accounting periods
commencing on or before 1 January 2020 or were early adopted as indicated below.
Basis of preparation
The consolidated financial statements are presented in euro, rounded to the nearest thousand (€’000) except where otherwise indicated.
The euro is the functional currency of the parent company. The consolidated financial statements are prepared under the historical cost
basis except for share options which are measured at grant date fair value, and derivative financial instruments which are measured
at fair value at each reporting date.
The preparation of financial statements requires management to use judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected. Details of critical judgements are disclosed in ‘judgements and
estimates’ below on page 27.
Under the provisions of Section 304 of the Companies Act 2014, the Company is not presenting a separate profit and loss account.
A loss of €19,787,000 (2019: €28,144,000) for the financial year ended 31 December 2020 has been dealt with in the separate profit
and loss account of the Company.
The financial statements were authorised for issue by the board of directors on 18 June 2021.
Going concern
The Directors have prepared the financial statements on a going concern basis which assumes that Group and Company will continue
in operational existence for at least twelve months from the date of the approval of these financial statements.
The Group had net assets of €49.4m, including cash on hand of €2.1m at 31 December 2020. It recognised a loss after taxation of
€10.4 million. Consequently, the Directors have considered 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 financial statements.
In May 2020, the company raised c. €3.0m (gross proceeds) through the issue of ordinary shares which comprised of one ordinary
share, one £0.03 warrant which expired on the 6 May 2021 and one £0.09 warrant which expires on the 6 May 2022. A total of
177,973,004 warrants of £0.03 and 177,973,004 warrants of £0.09 were issued. By the 6 May 2021, 133,350,343 warrants of £0.03
were converted into ordinary shares, raising a total of €4.5m (£4.0m); €2.9m (£2.6m) of which was raised in 2021 with the conversion
of 86,061,529 warrants. This represents a total conversion ratio of 74.9% for the £0.03 warrants and demonstrates the ongoing
support of shareholders for the company.
The Standard Exploration License (SEL1/11) for Barryroe expires in July 2021 and the Company has applied for a Lease Undertaking
License, which is the follow-on permit. The Lease Undertaking License, financial capability assessment and work program are subject
to government approval. The Directors anticipate that the lease undertaking will be granted as the Group has complied with all of the
requirements for such approval. The Directors note that the Irish Government has stated that all existing licences will be allowed to run
their full life cycle.
The Directors have carefully considered the current financial position of the Group and, within this context, have prepared cash flow
forecasts for the period to 30 June 2022. Based on their consideration of the Group’s cash flow forecasts, including appropriate
underlying assumptions ,and noting that the main risk factors in these cashflow forecasts are the granting of the Lease Undertaking
on acceptable terms and conditions and the completion of an appropriate financing during the period, the Directors are satisfied that
the Group will have access to sufficient funds to cover its working capital and capital expenditure expected over this 12 month period.
Providence Resources P.l.c. | Annual Report | 2020 25
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Accounting policies (continued)
1
The Directors have considered the matters set out above and determined that the requirement to secure additional funding in the next
12 months constitutes a material uncertainty that may cast significant doubt upon the Group and Company’s ability to continue as a
going concern, and the Directors note that the Group and Company may, as a consequence, be unable to realise its assets and
discharge its liabilities in the normal course of business.
Nevertheless, after making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation
that the Group and Company will have 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 and Company has continued
to have the strong support of shareholders. For these reasons, the Directors have adopted the going concern basis in preparing the
annual financial statements and do not include any adjustments that would be necessary if this basis were inappropriate.
Recent accounting pronouncements
New and Amended Standards and Interpretations effective during 2020
The Group has applied the following standards, interpretations and amendments with effect from 1 January 2020
•
•
•
•
Amendment to IFRS 16 Leases Covid 19 - Related Rent Concessions
Amendments to IAS 1 and IAS 8: Definition of Material
Amendments to References to the Conceptual Framework in IFRS Standards
Amendments to IFRS 3 Business Combinations; definition of a business
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform
The amendments and interpretations listed above did not result in material changes to the Group’s Consolidated Financial Statements.
New and Amended Standards and Interpretations Issued but not yet Effective or Early Adopted
A number of new standards and interpretations have been issued but are not yet effective for the Group. These standards are either
not expected to have a material effect on the Consolidated Financial Statements or they are not currently relevant for the Group.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16. The Group
presents right-of-use assets in ‘property, plant and equipment’, in the same line item as it presents underlying assets of the same
nature that it owns.
The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses
and adjusted for certain remeasurements of the lease liability. The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, restoration costs and lease payments made at or before the commencement date less any lease
incentives received. The right-of-use asset is depreciated on a straight-line basis over the shorter of its estimated useful life and the
lease term. Where the lease contains a purchase option the asset is written off over the useful life of the asset when it is reasonably
certain that the purchase option will be exercised. Right-of-use assets are subject to impairment testing.
The lease liability is initially measured at the present value of certain lease payments to be made over the lease term. The lease payments
include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include
the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a
lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an
index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. The Group
has elected to avail of the practical expedient not to separate lease components from any associated non-lease components.
The lease payments are discounted using the lessee’s incremental borrowing rate as the interest rate implicit in the lease is generally
not readily determinable.
After the commencement date, the lease liability is subsequently increased by the interest cost on the lease liability and decreased by
the lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate,
a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the
assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably
certain not to be exercised.
The Group has elected to apply the recognition exemptions for short-term and low-value leases and recognises the lease payments
associated with these leases as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases
with a lease term of 12 months or less.
26 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
1
Accounting policies (continued)
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to or has the right to variable returns from
its involvement with the entity and has the ability to affect those returns through its power of the entity. In assessing control, potential
voting rights that are substantive are taken into account. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases. Intra-Group balances, and any unrealised
income and expenses arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Jointly controlled operations
Jointly controlled operations are those activities over which the Group exercises joint control with other participants, established by
contractual agreement. The Group recognises, in respect of its interests in joint operations, the assets that it controls, the liabilities that
it incurs, the expenses that it incurs and the share of the income that it earns from the sale of goods or services by the joint operation.
Judgements and estimates
Preparation of financial statements pursuant to EU IFRS requires a significant number of judgemental assumptions and estimates to
be made. These impact on the income and expenses recognised both within the income statement and the statement of
comprehensive income together with the valuation of the assets and liabilities in the statement of financial position. Such estimates and
judgements are based on historical experience and other factors, including expectation of future events that are believed to be
reasonable under the circumstances and are subject to continual re-evaluation. It should be noted that some assumptions and
estimates used in valuations can have a material impact on the reported results. The following are key sources of estimation uncertainty
and critical accounting judgements in applying the Group’s accounting policies.
Exploration and evaluation assets
i)
The carrying value of exploration and evaluation assets was €60.4 million (2019: €65.4 million) at 31 December 2020. The directors
carried out a review, in accordance with IFRS 6 Exploration for and Evaluation of Mineral Interests, of the carrying value of these assets
and are satisfied that these are recoverable, acknowledging however that their recoverability is dependent on future successful
exploration efforts and the granting of the lease undertaking which is subject to government approval; see note 10.
ii) Decommissioning
The decommissioning provision amounts to €5.9 million (2019: €5.7 million) at 31 December 2020 and represents management’s best
estimate of the costs involved in decommissioning the various exploration licence areas to return them to their original condition. These
estimates include certain management assumptions with regard to future costs, timing of activity, inflation rates and discount rates;
see note 16.
iii) Warrants
The warrants were issued as part of the placing in May 2020. There were two sets of warrants attached to each share. The duration
for the £0.03 was one year and for the £0.09 was two years. At 31 December, the warrants valuation amount to €6.2m and represents
management best estimates of the liability. The period of 18 months has been used for the volatility calculation for the £0.09 warrants
which expire on 6 May 2022 and the £0.03 warrants expired 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 a key component when calculating the fair value using Black Scholes; see note 19.
Employee benefits
(i) Defined contribution pension plans
A defined contribution plan is a post employment benefit plan under which an entity pays a fixed contribution into a separate entity and
will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans
are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in future payments is available.
(ii) Share based payment transactions
The Company’s schemes are equity-settled share-based payment arrangements with non-market performance conditions which fall
within the scope of and are accounted for under the provisions of IFRS 2 – Share Based Payment. Accordingly, the grant date fair value
of the options granted under these schemes is recognised as a personnel expense with a corresponding increase in “the Share based
payment reserve”, within equity, over the vesting period. The fair value of these options is measured using an appropriate option pricing
model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of share options that vest, except where forfeiture is only due to share prices not achieving the
threshold for vesting.
Providence Resources P.l.c. | Annual Report | 2020 27
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Accounting policies (continued)
1
Finance income and expenses
Finance income comprises interest income on funds invested and foreign exchange gains. Interest income is recognised as it accrues,
using the effective interest method.
Finance expenses comprise interest on leased assets, unwinding of any discount on provisions, fair value movement of warrants, and
foreign exchange movements in the retranslation of non-euro denominated liabilities.
Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. Foreign currency gains or losses are generally recognised in the income statement.
Gains and losses arising on loans are classified as part of finance costs. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value
was determined.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated to euro at exchange rates at the reporting date. The income and expenses
of foreign operations are translated to euro at exchange rates at the dates of the transactions.
Foreign currency differences associated with the retranslation of foreign operations are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of the relevant amount in the FCTR
is transferred to the income statement.
Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that
it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and
jointly controlled entities to the extent that they are unlikely to reverse in the foreseeable future. Deferred tax is measured at the tax rates
that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities on a net basis or their tax assets and liabilities will be
settled simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding for the effects of all potentially dilutive ordinary shares.
Exploration and evaluation assets and development and production assets
The Group has adopted IFRS 6 Exploration for and Evaluation of Mineral Resources in preparing these financial statements.
(i)
Exploration and evaluation assets
Expenditure incurred prior to obtaining the legal rights to explore an area is written off to the income statement. Expenditures incurred
on the acquisition of a licence interest are initially capitalised on a licence by licence basis considering the degree to which the
expenditure can be associated with finding specific reserves. Exploration and evaluation expenditure incurred in the process of
determining exploration targets within licensed areas is also capitalised. No value is attributed to exploration licenses granted. These
expenditures are held undepleted within the exploration licence asset until such time as the exploration phase on the licence area is
complete or commercial reserves have been discovered.
28 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
Accounting policies (continued)
1
Exploration and evaluation drilling costs are capitalised within each licence area until the success or otherwise of the well has been
established. Unless further evaluation expenditures in the licence area have been planned and agreed or unless the drilling results
indicate that hydrocarbon reserves exist and there is a reasonable prospect that these reserves are commercial, drilling costs are
written off. Where applicable, the Group’s administrative internal costs are capitalised where it is evident that these costs are directly
attributable to the evaluation or exploration of those assets. Interest is capitalised within exploration and evaluation assets if it is directly
attributable to the evaluation or exploration of those assets.
Expenditure on exploration and evaluation assets is held undepleted within the exploration licence asset until such time as the
exploration phase on the licence area is complete or commercial reserves have been recognised, subject to any impairment losses
recognised. This is in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources.
(ii) Development and production oil and gas assets
Following appraisal of successful exploration wells and the establishment of commercial reserves, the related capitalised exploration
and evaluation expenditures are reclassified as development and production assets. Farm out transactions are accounted for based
on the specific terms of the individual farm out agreement.
Subsequent expenditure is capitalised only where it either enhances the economic benefits of the development and production assets
or replaces part of the existing development and production assets. Any costs associated with the replacement of assets are expensed
to the income statement.
(iii) Depletion
The Group will deplete expenditure on development and production assets on a unit of production basis, based on proved and probable
reserves on a licence by licence basis. Capitalised costs, together with anticipated future development costs calculated at price levels
ruling at the reporting date, will be amortised on a unit of production basis.
Amortisation will be calculated by reference to the proportion that production for the period bears to the total of the estimated remaining
commercial reserves as at the beginning of the period. Changes in reserves quantities and cost estimates will be recognised prospectively.
(iv) Joint arrangements and cash calls
The Group has shared interests in a number of licences. In cases where the Group acts as operator of these licence areas, requests
for cash from other partners, known as cash calls (or invoices), are made in accordance with agreed budgets. These cash call amounts
are recognised as a credit to evaluation, exploration, development and production assets, where appropriate, to ensure that costs
capitalised reflect the Group’s interest only.
(v)
Impairment
Exploration and evaluation assets are reviewed regularly for indicators of impairment and costs are written off where circumstances
indicate that the carrying value might not be recoverable. In such circumstances, the exploration and evaluation asset is allocated to
development and production assets within the same cash generating unit and tested for impairment. Any such impairment arising is
recognised in the income statement for the period. Where there are no development and production assets, the impaired costs of
exploration and evaluation are charged immediately to the income statement.
(vi) Decommissioning costs and provisions
Provision is made for the decommissioning of oil and gas wells and other oilfield facilities. The cost of decommissioning is determined
through discounting the amounts expected to be payable to their present value at the date the provision is recorded, and this calculation
is reassessed at each reporting date. The unwinding of the discount is reflected as a finance cost in the income statement over the
expected remaining life of the well. Changes in the decommissioning cost estimates are dealt with prospectively by recording an
adjustment to the provision and a corresponding adjustment to the related asset. The decommissioning provision is reviewed annually.
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is recognised on a straight-line basis
over the estimated useful lives of the related assets.
The estimated useful lives for the current and comparative periods are as follows:
•
Furniture and equipment
• Right-of-use assets
3 years
0.5 years
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of less than 90 days.
Providence Resources P.l.c. | Annual Report | 2020 29
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
1
Accounting policies (continued)
Trade and other receivables
Trade and other receivables are initially measured at fair value and are thereafter measured at amortised cost using the effective interest
method less any provision for impairment. A provision for impairment of trade and other receivables is recognised based on the
expected credit losses (‘ECL’) for those trade and other receivables. ECLs are a probability–weighted estimate of credit losses. Credit
losses are measured as the present value of all expected cash shortfalls related to the receivable. Loss allowances are based on
lifetime ECLs, except for the following which are measured as 12 month ECLs:
•
Other receivables which have been determined to be low risk at the reporting date.
Trade and other payables
Subsequent to initial recognition, trade and other payables are measured at amortised cost.
Financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not carried at fair value through the income
statement, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative
financial instruments are measured at amortised cost.
A financial instrument is recognised where the Group becomes a party to the contractual provisions of the instrument. Financial assets
are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial
asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are derecognised
if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Warrants
The Group classifies instruments issued as financial liabilities or equity instruments in accordance with the substance of the contractual
terms of the instruments. The warrants issued (as outlined in note 19) are derivative in nature and are liability classified. They do not
qualify for equity classification as any cash settlement on exercise of these warrants will be received in a foreign currency (to the Group's
functional currency), £ sterling. The warrant liabilities are recognised at their fair value on initial recognition and subsequently are
measured at fair value through profit or loss. Any incremental direct costs associated with the issuance of warrants is taken as an
immediate charge to finance costs through the income statement.
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are
recognised as a deduction from retained earnings, net of any tax effects.
Operating segments
All exploration and evaluation assets held by the Group are located in the Republic of Ireland and accordingly the Group has identified
one reporting segment, being:
•
2
Republic of Ireland exploration assets: oil and gas exploration assets in the Republic of Ireland.
Administrative expenses
Corporate, exploration and development expenses
Restructuring costs
Foreign exchange gain
Total administration expenses for the year
Capitalised in exploration and evaluation assets (note 10)
Total charged to the income statement
3
Finance income
Bank deposit interest income
Foreign exchange on decommission provision (note 16)
Total finance income
30 Providence Resources P.l.c. | Annual Report | 2020
2020
€’000
2,142
–
21
2,163
–
2,163
2020
€’000
1
360
361
2019
€’000
3,897
1,170
(120)
4,947
(405)
4,542
2019
€’000
30
–
30
4
Finance expense
Unwind of discount on decommissioning provision (note 16)
Foreign exchange loss on decommissioning provision
Interest on right to use asset
Issue costs associated with the warrants
Movement in fair value of warrants (note 19)
Total finance expense recognised in income statement
5
Income tax result
Current tax expense
Current year
Deferred tax expense
Origination and reversal of temporary differences
Total income tax charge for year
(cid:1) Financial Statements
2020
€’000
565
–
1
132
7,581
8,279
2020
€’000
–
–
–
2019
€’000
521
424
2
–
947
2019
€’000
–
–
–
A reconciliation of the expected tax benefit computed by applying the standard Irish tax rate to the loss before tax to the actual tax
result is as follows:
Loss before tax
Irish standard tax rate
Tax credit at the Irish standard rate
Expenses not deductible for tax purposes
Losses carried forward
Other
Tax result for the year
6
Employee expenses and numbers
Wages and salaries
Social welfare costs
Defined contribution pension costs
Redundancy costs
Share-based payment expense (note 19)
The following expenses, which are included in the above amounts, were capitalised during the year:
Wages and salaries
2020
€’000
(10,358)
12.5%
(1,295)
201
1,094
–
–
2020
€’000
493
79
34
–
448
1,054
2020
€’000
–
2019
€’000
(26,853)
12.5%
(3,357)
3,637
(280)
–
–
2019
€’000
1,284
162
158
722
40
2,366
2019
€’000
246
The average number of persons employed during the year (including executive directors) by activity was as follows:
Exploration and evaluation
Corporate management and administration
2020
Number
2019
Number
–
2
2
5
6
11
The Group contributes to an externally funded defined contribution scheme to satisfy the pension arrangements in respect of certain
management personnel. The total pension cost charged for the year was €34,000 (2019: €158,000).
Providence Resources P.l.c. | Annual Report | 2020 31
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7 Directors’ remuneration and transactions with key management personnel
Directors’ emoluments are analysed as follows:
Resignation date
(if applicable)
6 December 2019
7 August 2019
20 July 2020
30 September 2019
12 September 2019
30 September 2019
Executive
Alan Linn
Tony O’Relly
John O’Sullivan
Sub-total
Non-executive
Angus McCoss
Lex Gamble
James McCarthy
Philip O’Quigley
Andrew Mackay
Pat Plunkett
Sub-total
Total
Salaries and
other emoluments
2020
€’000
295
–
–
295
–
–
–
–
–
–
–
2019
€’000
–
954
256
1,210
–
–
–
–
–
–
–
295
1,210
Fees
Total
2020
€’000
2019
€’000
2020
€’000
–
–
–
–
25
–
–
–
22
100
147
147
–
–
–
–
45
34
32
34
–
100
245
245
295
–
–
295
25
–
–
–
22
100
147
442
2019
€’000
–
954
256
1,210
45
34
32
34
–
100
245
1,455
The share-based payments expense in relation to directors amounted to €431,000 (2019: €40,000). The share based payment expense
for Alan Linn in 2020 was €400,000.
Key management personnel are considered to be the board of directors and other key management. The compensation of key
management personnel was as follows:
Wages, salaries and fees (including termination payments):
Executive directors
Non-executive directors
Other key management salaries
Social welfare costs
Defined contribution pension costs
Share-based payment expense
8
Statutory and other information
Auditor’s remuneration
– Audit
– Audit of subsidiary entities
– Taxation services
Operating lease rentals on property
Depreciation on property, plant and equipment
Amortisation of intangible assets
Impairment of evaluation and exploration assets
Fair value adjustment of abandonment provision
Pre-licence exploration expenditure
Directors’ emoluments
– Fees
– Salaries and other emoluments
32 Providence Resources P.l.c. | Annual Report | 2020
2020
€’000
295
147
198
640
79
34
448
2019
€’000
1,177
245
327
1,749
59
75
40
1,201
1,923
2020
€’000
2019
€’000
54
9
8
68
24
–
272
–
5
147
295
54
9
8
258
35
–
23,763
(2,642)
273
245
1,210
(cid:1) Financial Statements
Earnings per share
9
Earnings per share are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year.
Loss attributable to equity holders of the Company
The weighted average number of ordinary shares in issue is calculated as follows:
In issue at beginning of year (‘000s)
Adjustment for share issue in year
Weighted average number of ordinary shares (‘000s)
Basic and diluted loss per share (cent)
Total
2020
€’000
Total
2019
€’000
(10,358)
(26,853)
2020
2019
657,425
130,519
787,944
597,659
14,308
611,967
cent
(1.31)
cent
(4.39)
There is no difference between the basic loss per ordinary share and the diluted loss per ordinary share for the current year as all
potentially dilutive ordinary shares outstanding are anti-dilutive in relation to continuing operations. There were 37,850,000 (2019:
4,650,000) anti-dilutive share options in issue at 31 December 2020.
10 Exploration and evaluation assets
Cost and net book value
At 1 January 2019
Additions
Administration expenses
Impairment charge (see below)
Foreign exchange translation
At 31 December 2019
Additions
Cash calls received in year
Impairment charge
Foreign exchange translation
At 31 December 2020
Republic of
Ireland
€’000
81,867
5,670
405
(23,763)
1,198
65,377
902
(57)
(272)
(5,525)
60,425
The exploration and evaluation asset balance at 31 December 2020 relates to the Barryroe asset.
The directors assessed all activities ongoing within exploration and evaluation assets and determined that an impairment charge of
€0.27 million (2019: €23.8 million) was required at 31 December 2020. The €0.27 million relates to residual costs for Dunquin and Avalon
that were incurred in 2020. These licences have now been relinquished.
In 2019, the impairment charge was against West of Ireland licences (Dunquin, Avalon and Newgrange). Following this assessment
and impairment of certain assets, the directors reassessed the probable decommissioning period which resulted in a fair value credit
of €2.6m to the income statement in the abandonment provision (see note 16). The net of these adjustments in 2019, €21.2m, was
presented as impairment of exploration and evaluation assets within the income statement.
The directors recognise that the future realisation of the Barryroe asset is dependent on the granting of the lease undertaking which is
subject to government approval and future successful appraisal activities and the subsequent economic production of hydrocarbon
reserves.
Providence Resources P.l.c. | Annual Report | 2020 33
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11 Property, plant and equipment
Cost
At 1 January 2019
Additions in year
Recognition of right to use asset on initial
application of IFRS 16
Disposal
At 31 December 2019
Additions in year
Translation
At 31 December 2020
Depreciation
At 1 January 2019
Charge for year
Disposal
At 31 December 2019
Charge for year
Translation
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
12 Trade and other receivables
VAT recoverable
Prepayments
Amounts due from joint operation partners
Amounts due from joint operation partners are normal billings, due on demand.
13 Cash and cash equivalents
Held in bank accounts
Cash and cash equivalents
14 Share capital and share premium
Authorised
Deferred shares of €0.011 each (a) at beginning of year
Deferred shares of €0.011 each (a) each at end of year
Ordinary shares of €0.001 each at beginning of year
Ordinary shares of €0.001 each at end of year
Right of
use assets
€’000
Furniture
and
equipment
€’000
–
–
46
–
46
–
(3)
43
–
19
–
19
17
(1)
35
8
27
712
10
–
(590)
132
1
–
133
684
16
(579)
121
7
–
128
5
11
2020
€’000
28
162
33
223
2020
€’000
2,110
2,110
Total
€’000
712
10
46
(590)
178
1
(3)
176
684
35
(579)
140
24
(1)
163
13
38
2019
€’000
53
242
103
398
2019
€’000
710
710
Number
(‘000)
9,944,066
9,944,066
986,847
1,800,000
€’000
109,385
109,385
987
1,800
(a)
The deferred shares do not entitle the shareholder to receive a dividend or other distribution, do not entitle the shareholder to
receive notice of or vote at any general meeting of the Company, and do not entitle the shareholder to any proceeds on a return
of capital or winding up of the Company.
34 Providence Resources P.l.c. | Annual Report | 2020
14 Share capital and share premium (continued)
Issued
Deferred Shares of €0.011 each
At 31 December 2019
At 31 December 2020
Ordinary Shares of €0.001 each
At 31 December 2019
Shares issued during the year
Warrants exercised in year
At 31 December 2020 (Ordinary Shares of €0.001)
(cid:1) Financial Statements
Number
000’s
Share
capital
€’000
6,441,373
70,855
6,441,373
70,855
657,425
184,089
47,289
888,803
657
184
47
888
Share
premium
€’000
5,691
5,691
245,609
1,939
3,534
251,082
At 31 December 2020 (Total Deferred and Ordinary Shares)
7,330,176
71,743
256,773
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. 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.
The £0.03 warrants expired in May 2021 while the £0.09 warrants expire in May 2022.
On 28 May 2020, the Company issued 6,116,208 Ordinary Shares through a subscription agreement which raised c. €0.2m.
During the year, there were 47,288,814 of the £0.03 warrants exercised out of the 177,973,004 that were issued as part of the equity
raise in May 2020.
15 Reserves
The statement of changes in equity outlines the movement in reserves during the year. The reserves included within that statement are
further explained below:
a)
b)
The currency translation reserve comprises all foreign exchange differences from 1 January 2006, arising from the translation of
the net assets of the Group’s non-euro denominated operations, including translation of the profits of such operations from the
average exchange rate to the rate at the reporting date.
The share-based payment reserve comprises the fair value of all share options which have been charged over the vesting period,
net of amounts relating to share options forfeited, exercised or lapsed during the year, which are reclassified to retained earnings.
16 Decommissioning provisions
At beginning of year
Unwinding of discount
Foreign exchange (gain)/loss
Fair value adjustment in provision liability
Translation adjustment
At end of year
2020
€’000
5,733
565
(360)
–
(85)
5,853
2019
€’000
7,406
521
448
(2,642)
–
5,733
Decommissioning costs are expected to be incurred over the remaining lives of the fields, which are estimated to be between 2025
and 2027.
In 2019, the Group reassessed the estimated decommissioning period and this resulted in a fair value adjustment of €2.6m. This
adjustment was netted against the exploration and evaluation impairment line within the income statement. 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% (2019: 10%) per annum, reflecting the associated risk profile.
Providence Resources P.l.c. | Annual Report | 2020 35
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
17 Deferred taxation
The Group has not recognised a potential deferred tax asset of €26.4 million (2019: €26.9 million) which mainly relates principally to
unutilised tax losses available to carry forward, all of which arose in Ireland, on the basis that it is not probable that the Group will have
taxable profits available in future periods against which this asset could be utilised.
Substantially all of the unutilised losses may be carried forward, indefinitely, as long as oil production commences within 25 years from
the date of the losses originating.
18 Trade and other payables
Accruals
Other payables
Leases
19 Share and warrant schemes
The Group operates employee share schemes as follows:
2009 Scheme
2020
€’000
361
445
9
815
2019
€’000
385
1,112
18
1,515
In 2009, the directors adopted a share option scheme which contains share growth performance criteria. The option price is the market
price immediately preceding the date of grant. “the 2009 scheme” operates as an equity-settled share option scheme and the options
are granted subject to the following conditions:
(i)
(ii)
50% of total options granted are exercisable after one year from the date of grant provided that the market price of the Company’s
shares has increased by a minimum of 25% and has maintained such increase over a period of three months prior to the exercise
of any option.
The remaining 50% of the total options granted are exercisable after two years from the grant date provided the market price of
the Company’s shares has increased by a minimum of 50% from date of grant and has maintained such increase over a period
of three months prior to the exercise of any option.
At 31 December 2020, options over 3,850,000 (2019: 4,650,000) shares remained outstanding at subscription prices ranging from
€0.142 to €0.170, with a weighted average price of €0.152 (2019: €0.16). These options expire at varying dates up to June 2024, with
none exercisable at year end.
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. The “2020 scheme” was approved at the EGM on
the 5 May 2020.
The applicable criteria for the exercise of the options are;
(i)
(ii)
(iii)
33% of the total number of options granted are exercisable after one year of grant provided that the agreed criteria by the
Remuneration committee have been met.
33% of the total number of options granted are exercisable after two years of grant provided that the agreed criteria by the
Remuneration committee have been met.
The remaining 33% of the total number of options granted are exercisable after a further year has elapsed provided that the
agreed criteria by the Remuneration committee have been met.
36 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
19 Share and warrant schemes (continued)
During the period, 36,500,000 share options were granted under the 2020 Share option scheme. 31,500,000 options were granted
to the Directors (including 2,500,000 for Angus McCoss) and 5,000,000 options were granted to employees.
Grant Date
Number of options granted
Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price
13 January 2020
6 April 2020
15,000,000
103%
7 Years
0%
(0.01%)
£0.04
21,500,000
108%
7 Years
0%
(0.01%)
£0.03
Charge
The share-based payment charge for the year was €448,000 (2019: €40,000).
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:
Number of warrants
Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price
Placing effective Share price
Initial value of security
Fair value
£0.03 Warrants
£0.09 Warrants
177,973,004 177,973,004
148%
2 Years
0%
(0.01%)
£0.09
0.01068
0.00349
€621,982
148%
1 Year
0%
(0.01%)
£0.03
0.01068
0.00299
€531,444
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 14)).
During 2020, 47,288,814 of the £0.03 warrants were exercised. There were a number of warrant 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.
Number of warrants
Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price
Weighted average closing share price
Fair value
September 20
October 20
December 20
24,648,335
125%
0.58 Year
0%
(0.6%)
£0.03
€0.07
€1,138,828
10,966,667
125%
0.50 Year
0%
(0.6%)
£0.03
€0.08
€557,901
11,673,812
125%
0.33 Years
0%
(0.6%)
£0.03
€0.06
€324,687
The fair value of the warrants exercised during the year is recognised as a finance expense of €2.02m in the income statement (see
note 4) with a corresponding increase in share premium.
Providence Resources P.l.c. | Annual Report | 2020 37
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
19 Share and warrant schemes (continued)
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 has been used for the volatility calculation for the £0.09 warrants which would expire on 6 May 2022 and the
£0.03 warrants which expired on 6 May 2020. The 4-month period for the £0.03 warrants was too short and would distort the volatility
calculation as it is a key component when calculating the fair value using Black Scholes. The fair value movement being the difference
between 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
130,684,190 177,973,004
125%
1.33 Years
0%
(0.06%)
£0.09
€0.055
3,555,240
125%
.33 Year
0%
(0.06%)
£0.03
€0.055
3,157,748
Total
€,000
€1,153
€1,139
€558
€324
€2,021
€6,713
€8,734
-
-
-
-
€3,555
€3,555
€2,933
€7,581
Number of warrants
Volatility
Time period
Dividend yield
Risk free interest rate
Exercise price
Closing share price 31 December 2020
Fair value as at 31 December 2020
The following table shows the fair value movement:
Initial valuation
September 20 Exercised
October 20 Exercised
December 20 Exercised
Exercised fair value
Number of
Warrants
£0.03 Warrants
€’000
Number of
Warrants
£0.09 Warrants
€’000
177,973,004
€531 177,973,004
€622
24,648,335
10,966,667
11,673,812
47,288,814
€1,139
€558
€324
€2,021
-
-
-
-
Fair value as at 31 December 2020
130,684,190
€3,158 177,973,004
Fair value 2020
Total Fair value movement recognised in the
income statement (see note 4)
€5,179
€4,648
20 Financial instruments
Financial risk management objectives, policies and processes
The Group has exposure to the following risks from its use of financial instruments:
(a)
(b)
(c)
Interest rate risk
Foreign currency risk
Liquidity risk
(d) Credit risk
The board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and framework in relation to the risks faced.
38 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
20 Financial instruments (continued)
(a)
Interest rate risk
The Group currently finances its operations through a mixture of shareholders’ funds and bank deposits. Short term cash funds are
generally invested in short term interest bearing bank deposits. The Group did not enter into any hedging transactions with respect to
interest rate risk; however, the requirement for such instruments is kept under ongoing review.
The interest rate profile of these interest-bearing financial instruments was as follows:
Variable rate instruments
Financial assets – cash and cash equivalents
2020
€’000
2,110
2019
€’000
710
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (‘bps’) in interest rates at 31 December 2020 and 31 December 2019 would have increased/(decreased)
the reported loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates,
remain constant.
31 December 2020
Variable rate instruments
31 December 2019
Variable rate instruments
(b) Foreign currency risk
Profit
100 bps
increase
€’000
100 bps
decrease
€’000
16
6
(1)
(5)
The Group is exposed to currency risk on purchases and bank deposits that are denominated in a currency other than the functional
currency of the entities of the Group. The bank deposits are held in Irish Banks.
It is Group policy to ensure that foreign currency risk is managed wherever possible by matching foreign currency income and
expenditure. During the years ended 31 December 2020 and 2019 the Group did not utilise either foreign currency forward contracts
or derivatives to manage foreign currency risk on future net cash flows.
The Group’s foreign currency risk exposure in respect of the principal foreign currencies in which the Group operates was as follows:
31 December 2020
31 December 2019
VAT recoverable
Other debtors
Cash and cash equivalents
Trade and other payables
Total exposure
Euro
€’000
–
–
–
–
–
GBP
€’000
–
–
534
(10)
524
Not at risk
EUR
€’000
USD
€’000
28
162
1,536
(772)
–
33
40
(33)
40
Total
€’000
28
195
2,110
(815)
954
1,518
Euro
€’000
–
–
–
–
–
GBP
€’000
–
–
257
(110)
147
Not at risk
EUR
€’000
53
241
131
(589)
(164)
USD
€’000
–
104
322
(816)
(390)
Total
€’000
53
345
710
(1,515)
(407)
The following are the significant exchange rates that applied against 1 euro during the year:
1 GBP
1 USD
Average rate
Spot rate at 31 December
2020
0.8893
1.1470
2019
0.8759
1.1195
2020
0.8990
1.2271
2019
0.8508
1.1234
Providence Resources P.l.c. | Annual Report | 2020 39
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
20 Financial instruments (continued)
Sensitivity analysis
A 10% strengthening and weakening of the euro against the following currencies, based on outstanding financial assets and liabilities
at 31 December 2020 and 31 December 2019 would have increased/(decreased) the reported loss and equity by the amounts below
as a consequence of the retranslation of foreign currency denominated financial assets and liabilities at those dates. It is assumed that
all other variables, especially interest rates, remain constant in the analysis.
31 December 2020
GBP
USD
31 December 2019
GBP
USD
(c) Liquidity risk
Profit/(loss)
Equity
10%
increase
€’000
10%
decrease
€’000
10%
increase
€’000
10%
decrease
€’000
(52)
(1)
(23)
49
52
1
23
(49)
143
(86)
476
(118)
(174)
105
(581)
144
Liquidity is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
adverse conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by regularly monitoring cash flow projections and rolling forecasts of expected cash flows against
actual cash flows. The nature of the Group’s exploration and appraisal activities can result in significant differences between expected
and actual cash flows. Consequently, a conservative approach to cash forecasting is taken and appropriate contingency planning is
put in place to ensure that the Group can discharge its financial obligations as they fall due.
The contractual maturities of financial liabilities as at 31 December 2020 and 2019 are within six months or less and therefore are the
same as the carrying amounts.
(d) Credit risk
Credit risk is the risk of financial loss to the Group if a cash deposit is not recovered. Group deposits are placed only with banks with
appropriate credit ratings.
The carrying amount of financial assets represents the maximum credit exposure. Receivables, which generally have 30 day terms, are
initially recorded at fair value and, at subsequent reporting dates, amortised cost. An assessment of whether an asset is impaired is
made at least at each reporting date. The maximum exposure to credit risk at 31 December was:
Cash and cash equivalents
VAT recoverable
Other receivables
Maximum exposure to credit risk
(e) Fair values versus carrying amounts
2020
€’000
2,110
28
195
2,333
2019
€’000
710
53
345
1,108
Due to the short term nature of all of the Group’s financial assets and liabilities at 31 December 2020, the fair value equals the carrying
amount in each case.
(f) Capital management
The Group has historically funded its activities through a combination of share rights issues and placing, warrants and bank borrowings.
The Group’s capital structure is kept under review by the board and it is committed to capital discipline and continues to maintain
flexibility for future growth, both organic and through acquisitions. The board considers capital to comprise shareholders’ equity and
long term borrowings and endeavours to ensure an appropriate mix of equity and debt is maintained.
40 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
21 Commitments and contingencies
(a) Exploration and evaluation activities
The Group has capital commitments of approximately €3.6 million in respect of its share of costs of exploration and evaluation and
appraisal activities to be incurred in 2021.
(b) Leases
Total commitments under non-cancellable lease rentals, all of which relate to property, are as follows:
Payable:
Within one year
Between two and five years
Total operating lease commitments
(c) Contingencies
2020
€’000
10
–
10
2019
€’000
86
9
95
From time to time the Group is involved in claims and legal actions which arise in the normal course of business. There are currently
no ongoing claims or legal actions.
22 Related party transactions
Providence Resources Plc used NRG for carrying out studies in 2020. The value of the work undertaken was €14,305.
Andrew Mackay who is a non-executive Director of Providence Resources Plc was the founder and is part owner of NRG.
23 Group transparency disclosures
In accordance with Chapter 10 of the relevant EU Accounting Directive (2013/34/EU), companies operating in the extractive sector are
required to disclose payments made to national Governments.
The payments disclosed are based on where the obligation arose which, in the case of the Group, is Ireland. Payments are disclosed
by license where the aggregate of the payment in the year exceeds €100,000; otherwise they are combined into a corporate level
payment which consolidates individual payments of less than €100,000.
2020
Licence
Barryroe
Corporate**
Total Ireland
2019
Licence
Corporate**
Total Ireland
Licence
number
SEL 1/11
Licence
number
Licence
fees
€’000
179
42
221
Licence
fees
€’000
90
90
PIP
fees
€’000
–
–
–
PIP
fees
€’000
153
153
CRU
fees
€’000
–
–
–
CRU
fees
€’000
–
–
Total
€’000
179
42
221
Total
€’000
243
243
** Corporate is the consolidated total of all Irish licences where the total of each licence payment in the year is less than €100,000.
All of the payments disclosed have been made to National Governments, covering both direct and indirect payments.
The payments type covered by this disclosure are
a)
b)
c)
Licence fees
PIP fees
CRU fees
Providence Resources P.l.c. | Annual Report | 2020 41
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
23 Group transparency disclosures
Licence fees
Licence fees cover the costs associated with holding licences. These cover rental fees, assignment fees, Expand Offshore Group
Fees, Prospective Licence and any application fees.
PIP (Petroleum Infrastructure Programme) fees
The PIP (Petroleum Infrastructure Programme) was set up by the Petroleum Affairs Division in 1997 as a private company.
PIP fees are paid on condition of granting a Frontier Exploration Licence.
The overall aim of PIP is to promote hydrocarbon exploration and development in Ireland and it undertakes research programmes
around Ireland. The research under the programme goes beyond normal licence specific work and is designed not to duplicate work
carried out by other Groups or commercial entities.
CRU (Commission for Regulation of Utilities)
CRU is Ireland’s independent energy and water regulator with responsibilities for economic, customer protection and safety.
The CRU reviews all exploration, appraisal and production activities in Ireland to ensure that they meet the highest international
safety standards.
24 Post balance sheet events
On 1 March 2021, the Company announced that it extended the farm-out agreement with SpotOn Energy by an additional two months
until 30 April 2021 to allow it to complete its funding obligation as required under the farm-out agreement signed 30 November 2020.
On 22 April 2021, the Company terminated the farm-out agreement with SpotOn Energy as the key financing requirements were not
met and announced that Providence Resources Plc will now lead the project.
A major shareholder (Pageant) has agreed to underwriting an equity placing up to $2.5m at £0.03p per share and one warrant of
£0.03p which would raise a similar amount but underlines the support that the Company has from its shareholders to keep the project
moving forward. The offer remains open until 30 June 2021.
By 6 May 2021, shareholders had exercised 86,061,529 of £0.03 warrants in the Company raising an additional £2.6m ($3.6m) since
the year end. The overall conversion rate of the £0.03 warrants was 74.97% which shows the strong support that the Company has
received from its shareholders.
On 7 May 2021, James Menton was appointed Senior Independent Non-Executive Director to the Board. He is a highly experienced
advisor to some of Ireland and the world’s leading companies with over two decades in professional advisory services. He was a
partner with KPMG Ireland, following its merger with Andersen in 2002 where he had been a partner since 1986. During this time, he
provided advice to many of Ireland’s listed oil and gas companies among other Plc clients.
The Group is monitoring the impact of Covid-19 on its business and notes that it has had a negative impact on global demand due to
the lockdowns which have been implemented around the world. While the Group does not currently produce oil or gas, the pandemic
could have an impact on the timelines for working through our projects.
There have been no other significant events since the balance sheet date which would require disclosure in or amendment of these
financial statements apart from the above.
25 Approval of financial statements
The financial statements were approved by the board of directors on 18 June 2021.
42 Providence Resources P.l.c. | Annual Report | 2020
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Fixed assets
Oil and gas interests
Tangible assets
Financial assets
Total non-current assets
Current assets
Debtors
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Non current liabilities
Provision for liabilities
Credtiors: amounts falling due over one year
Total non current liabilites
Net assets
Capital and reserves
Called up share capital
Share premium
Undenominated capital
Share based payment reserve
Profit and loss account
Shareholders’ funds - equity
On behalf of the board
Pat Plunkett
Chairman
Alan Linn
Chief Executive
(cid:1) Financial Statements
Note
2020
€’000
2019
€’000
2
3
4
5
6
7
8
9
9
9
9
9
–
5
2
7
43,644
2,102
45,746
(3,702)
42,044
42,051
(4,879)
(3,555)
(8,434)
–
11
2
13
52,786
699
53,485
(1,250)
52,235
52,248
(4,779)
–
(4,779)
33,617
47,469
71,743
256,773
623
806
(296,328)
71,512
251,300
623
642
(276,608)
33,617
47,469
Providence Resources P.l.c. | Annual Report | 2020 43
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
At 1 January 2020
Loss for financial year
Total comprehensive loss
Transactions with owners,
recorded directly in equity
Share based payment
expense
Share options lapsed
Shares issued in year
Transactions with owners,
recorded directly in equity
At 31 December 2020
At 1 January 2019
Loss for financial year
Total comprehensive loss
Transactions with owners,
recorded directly in equity
Share based payment
expense
Share options lapsed
Shares issued in year
Transactions with owners,
recorded directly in equity
At 31 December 2019
–
–
–
–
–
Share
premium
€’000
251,300
–
–
–
–
5,473
5,473
Share
premium
€’000
247,918
–
–
623
256,773
Called up
share Undenominated
capital
€’000
capital
€’000
71,512
–
623
–
–
–
–
231
231
71,743
Called up
share Undenominated
capital
capital
€’000
€’000
71,452
–
–
–
–
60
60
623
–
–
–
–
–
–
Share
based
payment
reserve
€’000
642
–
–
448
(284)
–
164
806
Share
based
payment
reserve
€’000
1,745
–
Profit
and loss
account
€’000
(276,608)
(19,787)
(19,787)
Total
€’000
47,469
(19,787)
(19,787)
–
448
284
(217)
–
5,487
67
(296,328)
5,935
33,617
Profit
and loss
account
€’000
(249,178)
(28,144)
–
(28,144)
Total
€’000
72,560
(28,144)
(28,144)
40
–
3,013
3,053
47,469
–
–
3,382
40
(1,143)
–
–
1,143
(429)
3,382
(1,103)
714
71,512
623
251,300
642
(276,608)
44 Providence Resources P.l.c. | Annual Report | 2020
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
(cid:1) Financial Statements
Accounting policies
1
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). There have been no material departures from the Standards.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International
Financial Reporting Standards as adopted by the EU (“Adopted IFRS”), but makes amendments where necessary in order to comply
with the Companies Act 2014 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the Company has adopted certain disclosure exemptions available under FRS 101. These include:
•
•
•
•
•
a cash flow statement and related notes;
disclosures in respect of the compensation of key management personnel;
disclosures in respect of transactions with wholly owned subsidiaries;
disclosures in respect of capital management; and
the effects of new but not yet effective IFRSs.
As the consolidated financial statements of ultimate holding undertaking include the equivalent disclosures, the Company has also taken
the exemption under FRS 101 available in respect of the following:
•
•
Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument
Disclosures; and
Certain disclosures required by IAS 36 Impairment of Assets.
These financial statements are presented in Euro, being the functional currency of the Company. All financial information presented in
Euro has been rounded to the nearest thousand, except where otherwise stated.
The accounting policies applied in the Company only financial statements are consistent with the Group accounting policies as set out
on pages 25 to 42.
Going concern
Refer to basis of preparation of consolidated financial statements information on the going concern on the Group and Company on
page 25.
Use of estimates and judgements
In preparing these financial statements management has made judgements, estimates and assumptions that affect application of the
Company accounting policies and the reported amounts of assets, liabilities, income and expenses. Such estimates and judgements
are based on historical experience and other factors, including expectation of future events that are believed to be reasonable. Actual
outcomes may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. The
details and critical judgements are disclosed in the Group accounting policies.
2 Oil and gas interests - exploration expenditure
Cost
At 1 January 2020
Exploration and appraisal expenditure
Administration expenses capitalised
Impairment charge
At 31 December 2020
Ireland
2020
€’000
–
274
–
(274)
–
The directors have assessed the current activities ongoing within exploration and evaluation assets and have determined that an
impairment charge of €0.27 million (2019: €23.8 million) is required at 31 December 2020. The impairment charge is for residual costs
on Dunquin and Avalon. These licences have now been relinquished.
In 2019, the impairment was against the West of Ireland licences (Dunquin, Avalon and Newgrange). Following this assessment and
impairment of certain assets, the directors reassessed the probable decommissioning period in 2019 which resulted in a fair value credit
to the abandonment provision of €2.2m (see note 7).
Providence Resources P.l.c. | Annual Report | 2020 45
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)
3
Tangible fixed assets
Cost
At 1 January 2020
Additions in year
Disposal
At 31 December 2020
Depreciation
At 1 January 2020
Charge for year
Disposal
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
4
Financial fixed assets
Investments in subsidiaries at start and end of year
At 31 December 2020, the Company had the following principal subsidiaries, all of which are wholly owned:
Furniture and
equipment
€’000
87
1
–
88
76
7
–
83
5
11
2020
€’000
2
Name
Providence Resources UK Limited
Providence Renewables DAC
Exola DAC
Chrysaor E&P Ireland DAC
5 Debtors
VAT
Prepayments
Amounts due from subsidiaries
Registered office/
Country of incorporation
5th Floor, 6 St. Andrews Street,
London, EC4A 3AE, UK
Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18, D18 R9C7
Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18, D18 R9C7
Paramount Court, Corrig Road, Sandyford
Business Park, Dublin 18, D18 R9C7
Activity
Dormant
Interest in
Ordinary share
capital
100%
Holding company
100%
Oil and Gas exploration
100%
Oil and Gas exploration
100%
2020
€’000
23
129
43,492
43,644
2019
€’000
50
228
52,508
52,786
All of the above amounts fall due within one year.
Amounts owed from subsidiaries are interest free and fall due on demand.
The recoverability of amounts due from Exola DAC is largely dependent on the future cash flows generated from the exploration and
evaluation assets owned by that entity. A provision for receivables is made where there is objective evidence that the Company will not
be able to collect all amounts due.
46 Providence Resources P.l.c. | Annual Report | 2020
6 Creditors: amounts falling due within one year
Trade creditors
Accruals
Amounts due to joint operating partners
Warrant liabilities (note 8)
Amounts owed to subsidiaries are interest free and fall due on demand.
7
Provision for liabilities – Decommissioning
At 1 January
Unwind of discount
Decrease in abandonment provision
Foreign exchange differences
Balance at 31 December
(cid:1) Financial Statements
2020
€’000
219
325
–
3,158
3,702
2020
€’000
4,779
444
–
(344)
4,879
2019
€’000
400
153
697
–
1,250
2019
€’000
5,973
434
(2,218)
590
4,779
Decommissioning costs are expected to be incurred over the remaining lives of the fields, which are estimated up to 2025.
In 2019, the Group reassessed the estimated decommissioning period and this resulted in a fair value adjustment of €2.2m. 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% (2019: 10%) per annum, reflecting the
associated risk profile.
8 Warrants
See note 19 on pages 36 to 38 to the Group financial statements.
Share capital
9
See notes 14 and 15 on pages 34 and 35 to the Group financial statements.
10 Commitments
Exploration and evaluation activities
The Company has capital commitments of approximately €0.1 million to contribute to its share of costs of exploration and evaluation
activities during 2021.
Leases
Operating leases annual commitments exist under non-cancellable property leases expiring as follows:
Within one year
2020
€’000
–
2019
€’000
68
Providence Resources P.l.c. | Annual Report | 2020 47
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
(CONTINUED)
11 Statutory information
Under the provisions of Section 304 of the Companies Act 2014, the Company is not presenting a separate profit and loss account.
A loss of €19,787,000 (2019: loss of €28,144,000) for the financial year ended 31 December 2020 has been dealt with in the separate
profit and loss account of the Company.
Auditor’s remuneration
2020
€’000
54
2019
€’000
54
During the year the Company employed 2 (2019: 11 people) and incurred payroll costs of € 0.56 million (2019: €1.4 million), which
includes social welfare costs of €0.08m (2019: €0.2m).
The Company incurred a restructuring charge of €Nil during 2020 (2019: €0.7m).
The Company contributes to an externally administered defined contribution retirement benefit scheme to satisfy the retirement
benefit arrangements in respect of certain management personnel. The retirement benefit cost charged for the year was €0.03 m
(2019: €0.2m).
The Company capitalised €Nil (2019: €0.25m) of the €0.56m gross payroll cost within the Company’s carrying value of its exploration
and evaluation assets.
12 Related party transactions
Providence Resources Plc used NRG for carrying out studies in 2020 on behalf of Exola DAC. The value of the work undertaken
was €14,305.
Andrew Mackay who is a non-executive Director of Providence Resources Plc was the founder and is part owner of NRG.
13 Company transparency disclosures
In accordance with Chapter 10 of EU Accounting Directive (2013/34/EU), companies operating in the extractive sector are required to
disclose payments made to National Governments.
The payments disclosed are based on where the obligation arose which in the case of the Company is Ireland. Payments are disclosed
by license where the aggregate of the payment in the year exceeds €100,000; otherwise they are combined into a corporate level
payment which consolidates individual payments of less than €100,000.
2020
Licence
Corporate**
Total Ireland
2019
Licence
Corporate**
Total Ireland
Licence
number
Licence
number
Licence
fees
€’000
42
42
Licence
fees
€’000
65
65
PIP
fees
€’000
–
–
PIP
fees
€’000
153
153
CRU
fees
€’000
–
–
CRU
fees
€’000
–
–
Total
€’000
42
42
Total
€’000
218
218
** Corporate is the consolidated total of Irish licences where the total of each licence payment in the year is less than €100,000.
All of the payments disclosed in accordance with the Directive have been made to the Irish Government and include both direct and
indirect payments.
The payments type covered by this disclosure are
a)
b)
c)
Licence fees
PIP fees
CRU fees
48 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Financial Statements
13 Company transparency disclosures (continued)
Licence fees
Licence fees cover the costs associated with holding our licences. These cover rental fees, assignment fees, Expand Offshore Group
Fees, Prospective Licence and any application fees.
PIP (Petroleum Infrastructure Programme) fees
The PIP (Petroleum Infrastructure Programme) was set up by the Petroleum Affairs Division in 1997 as a private company.
PIP fees are paid as part of the granting of a Frontier Exploration Licence. The overall aim of PIP is to promote hydrocarbon exploration
and development in Ireland, and it undertakes research programmes around Ireland.
The research under the programme goes beyond normal licence specific work and is designed not to duplicate work carried out by
other Groups or commercial entities.
Commission for Regulation of Utilities (CRU)
CRU is Ireland’s independent energy and water regulator with responsibilities for economic, customer protection and safety.
The CRU reviews all exploration, appraisal and production activities in Ireland to ensure that they meet the highest international safety
standards.
14 Post balance sheet events
See note 24 on page 42 to the Group notes, this same post balance sheet events note is relevant for both Group and Company.
15 Approval of financial statements
The financial statements were approved by the board of directors on 18 June 2021.
Providence Resources P.l.c. | Annual Report | 2020 49
NOTICE OF ANNUAL GENERAL MEETING
COVID-19 – In light of current and anticipated public health guidelines related to COVID-19, and the importance of the health
and safety of shareholders, staff and others, shareholders are asked to comply with certain unprecedented but urgent
recommendations for the Annual General Meeting.
Shareholders are requested not to attend the Annual General Meeting in person and, instead, to avail of the proxy voting
service (see Note 4 of this Notice of Annual General Meeting for instructions on how to use this service) and the following
teleconferencing facilities:
Audience Event Link:
https://globalmeet.webcasts.com/starthere.jsp?ei=1465012&tp_key=13344f67b9
Click on the link above to attend the presentation from your laptop, tablet or mobile device. Audio will stream through your selected
device, so be sure to have headphones or your volume turned up. A full replay of the presentation will be available at the same link
shortly after the conclusion of the live presentation (if applicable).
Audio Conference Details:
Please see the phone information with your dial in numbers and Passcode to access the webcast by phone.
Passcode:
Ireland
433085
+353 (0) 1 2465637
United Kingdom
+44 (0) 330 3369104
Notice is hereby given that the Annual General Meeting of Providence Resources P.l.c. will be held at The Hilton Hotel, Charlemont Place,
Saint Kevin’s, Dublin, D02 A893 , Ireland, on 22 July 2021 at 11.00am for the purpose of considering, and if thought fit, passing the
following Resolutions, of which Resolutions numbered (1) to (4) will be proposed as Ordinary Resolutions, and Resolution numbered
(5) will be proposed as Special Resolutions.
Ordinary Resolutions
(1)
To receive and consider the Directors’ Report and Financial Statements for the year ended 31 December 2020.
(2)
(3)
(4)
To elect Mr. Andrew Mackay as a Director.
To elect Mr. James Menton as a Director.
To authorise the Directors to fix the remuneration of the Auditors.
Special Resolutions
(5)
That the Directors be and they are hereby empowered pursuant to Section 1022 and Section 1023(3) of the Companies Act
2014 to allot equity securities (within the meaning of Section 1023 of the Companies Act 2014) for cash as if the said Section
1022(1) of the Companies Act 2014 did not apply to any such allotment, such power being limited to:
a.
b.
c.
the allotment of equity securities in connection with or pursuant to any offer of equity securities open for a period fixed by
the Directors, by way of rights issue, open offer or otherwise (an “Offering”) to the holders of ordinary shares and/or any other
persons entitled to participate therein (including without limitation any holders of options under the Company’s share option
scheme(s) for the time being) in proportion (as nearly as may be) to their respective holdings of ordinary shares (or, as
appropriate, the number of ordinary shares which such other persons are for the purposes of such Offering deemed to hold)
on a record date fixed by the Directors (whether before or after the date of this meeting) and subject to such exclusions or
other arrangements as the Directors may deem necessary or expedient to deal with any legal or practical problems under
the laws of any territory or the requirements of any regulatory body or any stock exchange in any territory or in relation to
fractional entitlements or otherwise howsoever;
pursuant to the terms of any scheme for Directors and/or employees etc. of the Company and/or its subsidiaries; and
otherwise than pursuant to sub-paragraphs (a) and (b) above, having in the case of the relevant shares (as defined by the said
Section 1023 the allotment of equity securities up to a nominal aggregate amount equal to €97,486 (representing
approximately 10% of the issued share capital of the Company as at the close of business on 17 June 2021),
provided in each case the power shall, unless revoked or renewed by special resolution or the articles of association of the Company,
expire on the earlier of fifteen months from the date of passing this Resolution and the conclusion of the next annual general meeting
of the Company unless previously renewed, varied or revoked by the Company in general meeting, save that the Company may
before such expiry make an offer or agreement which would or might require equity securities to be allotted or issued after such
expiry and the Directors may allot equity securities (as defined by the said Section 1023) in pursuance of such offer or agreement
as if the power conferred hereby had not expired.
Dated 18 June 2021, by order of the Board, Paramount Court, Corrig Road, Sandyford Business Park, Dublin 18, D18 R9C7, Republic
of Ireland.
50 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Investor Information
Notes:
Entitlement to attend and vote
1. Pursuant to Section 1105 of the Companies Act 2014 (as modified by section 1087G of that Act) and Regulation 14 of the Companies
Act 1990 (Uncertificated Securities) Regulations 1996, entitlement to attend and vote at the AGM and the number of votes which may be
cast thereat will be determined by reference to the Register of Members of the Company at 6.00 p.m. on (Sunday 18 July 2021), on the
day before the day which is 72 hours before the scheduled time of the AGM. Changes to entries on the Register of Members after that
time shall be disregarded in determining the rights of any person to attend and vote at the AGM.
Appointment of proxies
2. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy as an alternate to attend, speak, ask
questions and vote instead of him/her/it and may appoint more than one proxy to attend on the same occasion in respect of shares held
in different securities accounts. A member acting as an intermediary on behalf of one or more clients may grant a proxy to each of its clients
or their nominees and such intermediary may cast votes attaching to some of the shares differently from other shares held by it. The
appointment of a proxy will not preclude a member from attending, speaking, asking questions and voting at the meeting or at any
adjournment thereof should the member subsequently wish to do so. A proxy need not be a member of the Company. If you wish to
appoint more than one proxy, please contact
to
clientservices@computershare.ie during normal business hours.
the Company, Computershare, by sending an email
the Registrars of
3. A Form of Proxy is enclosed with this Notice of Annual General Meeting. To be effective, the Form of Proxy duly completed and executed,
together with any original power of attorney or other authority under which it is executed or a copy of such authority certified notarially or
by a practicing solicitor in the Republic of Ireland, must be deposited by hand at the offices of the Company’s Registrar, Computershare
Investor Services (Ireland) Limited, 3100 Lake Drive, Citywest Business Campus, Dublin 24, D24 AK82, Ireland, or returned by post to
Computershare Investor Services (Ireland) Ltd, PO Box 13030, Dublin 24, Ireland, in any case so as to be received no later than 48 hours
before the time appointed for the Annual General Meeting or any adjournment thereof or (in the case of a poll taken otherwise than at or
on the same day as the Annual General Meeting or adjourned Annual General Meeting) at least 48 hours before the taking of the poll at
which it is to be used. Any alteration to the Form of Proxy must be initialed by the person who signs it.
4.
In addition to Note 2 above, and subject to the Constitution of the Company, and provided it is received at least 48 hours before the time
appointed for the holding of the Annual General Meeting or any adjournment thereof or (in the case of a poll taken otherwise than at or on
the same day as the Annual General Meeting or adjourned Annual General Meeting) at least 48 hours before the taking of the poll at which
it is to be used, the appointment of a proxy may;
4.1
4.2
by submitted by fax to +353 1 447 5572, provided it is received in legible form; or
submitted electronically,
be
voting website
www.eproxyappointment.com, entering the Control Number, SRN and PIN all located on the Proxy Form. Shareholders will be
required to have their Shareholder Reference Number ("SRN") as printed on the face of the accompanying form of Proxy. Full details
of the procedures, including voting instructions are given on the website.
accessing the Company's Registrar's proxy
internet by
the
via
5. To appoint more than one proxy please contact the Registrar on +353 1 477 5590. Euroclear Bank participants and CDI holders in CREST
should consult the Euroclear Bank Services Description and the CREST International Manual. The Company may treat as invalid a proxy
instruction in the circumstances set out in Regulation 35(5)(a) of the Companies Act, 1990 (Uncertified Securities) Regulations, 1996.
6.
In the case of a corporation, the Form of Proxy must be either executed under its common seal, signed on its behalf by a duly authorised
officer or attorney, or submitted in accordance with Note 3 above.
Voting rights and total number of issued shares in the Company
7. As a member, you have a number ways of exercising your vote: (a) by attending the Annual General Meeting in person; or (b) by appointing
a proxy to vote on your behalf. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other registered holders, and for this purpose seniority shall be determined by the order
in which the names stand in the register of members of the Company in respect of the joint holding.
8. The total number of issued ordinary shares on the date of this Notice of Annual General Meeting is 974,864,403 ordinary shares. On a vote
on a show of hands, every member present in person and every proxy has one vote (but no individual shall have more than one vote). On
a poll every member shall have one vote for every share carrying rights of which he is the holder.
9. Where a poll is taken at an Annual General Meeting any member, present in person or by proxy, holding more than one share is not obliged
to cast all his/her votes in the same way.
10. Ordinary resolutions are required to be passed by a simple majority of members voting in person or by proxy. Special resolutions are
required to be passed by a majority of not less than 75% of votes cast by those who vote either in person or in proxy.
11. On any other business which may properly come before the Annual General Meeting, or any adjournment thereof, and whether procedural
or substantive in nature (including without limitation any motion to amend a resolution or adjourn the meeting) not specified in this Notice
of Annual General Meeting, the proxy will act at his/her discretion.
Other resolutions
12. The Annual General Meeting is being convened to consider the specific resolutions as incorporated in this Notice of Annual General
Meeting. As a result, it is not proposed that any other resolution would be considered at the meeting.
COVID-19
13. The Company will take all appropriate safety measures as the Directors may in their absolute discretion determine from time to time, and
in any individual case, to be necessary or desirable at, during or prior to the AGM to ensure the safety of any attendees and others involved
with it. Such measures may include, without limitation, the restriction of the number of attendees, and health and/or compliance related
checks and requirements.
Providence Resources P.l.c. | Annual Report | 2020 51
GLOSSARY OF TERMS
“$” or “US$” or “U.S. Dollar” United States Dollars, the lawful
currency of the United States of America
“£” or “Pounds Sterling” Pounds Sterling, the lawful currency of
the United Kingdom
“CCS” Carbon Capture and Sequestration is the process of
capturing carbon dioxide, transporting it to a storage site, and
depositing it in an underground geological formation
“CEPIL” Chrysaor Exploration and Production Ireland Limited
“€” or “Euro” Euro, the lawful currency of Ireland
“CODM” Chief operating decision maker
“°C” Degree Celsius
“°F” Degree Fahrenheit
“1C” Low estimate scenario of contingent resource
“2C” Best estimate scenario of contingent resource
“2D” Two dimensional
“3C” High estimate scenario of contingent resource
“3D” Three dimensional
“AA” Appropriate Assessment
“AAPG” American Association of Petroleum Geologists
“AGM” The Annual General Meeting of the Company to be held
at The Hilton Hotel, Charlemont Place, Saint Kevin's, Dublin 2,
D02 A893 on 22 July 2021 at 11am, including any adjournment
thereof, and notice of which is set out herein
“AIM Rules” The AIM rules for Companies published by the
London Stock Exchange in May 2014 (as amended) governing
the admission to and the operation of AIM
“AIM” Alternative Investment Market operated by the London
Stock Exchange
“AMLR” Atlantic Ireland Licencing Round
“API” Oil Gravity in America Petroleum Institute (API) units
“Atlantic” Atlantic Petroleum (Ireland) Limited
“AVO” Amplitude versus Offset
“B” Barrels of oil, 1 barrel = 42 U.S. gallons = 0.159 m3
“BB” Billion barrels
“BBL” Billion barrels of petroleum liquids; includes crude oil,
condensate, and natural gas liquids
“BBO” Billion barrels of crude oil
“BBOE” Billion barrels of oil equivalent
“BCF” Billion cubic feet of gas
“BML” Below mud line
“BO” Barrels of crude oil
“Board” The Board of Directors of Providence Resources P.l.c.
“BOE” Barrels of oil equivalent (6,000 cubic feet of gas equals 1
barrel of oil equivalent)
“BOEPD” Barrels of oil equivalent per day
“BOPD” Barrels of oil per day
“Brent” The name attributed to the benchmark crude oil from the
Brent Field in the UK North Sea
“BSCF” Billion of standard cubic feet of gas
“Cairn” Capricorn Energy Limited which is a wholly owned
subsidiary of Cairn Energy PLC
“Company” Providence Resources P.l.c.
“Contingent Resources” Resources that are potentially
recoverable but not yet considered mature enough for commercial
development due to technological or business hurdles
“CPR” Competent Person’s Report
“Cretaceous” Period in Mesozoic era, 154 – 66 million years ago
“CRU” The Commission for Regulation of Utilities, formerly the
Commission for Energy Regulation
“DAC” Designated Activity Company
“DCCAE” Department of Communications, Climate Action and
Environment
“Discovery” An accumulation of hydrocarbons which has been
proven to exist by physical penetration through the horizon
containing such hydrocarbons
“E&E” Exploration and Evaluation “E&P” Exploration and
Production
“EIA” Environmental Impact Assessment or Energy Information
Administration in the U.S.
“EPA” Environmental Protection Agency
“EPS” Earnings per share
“EU IFRS” International Financial Reporting Standards as
adopted by the EU
“Euronext Dublin” part of Euronext, the pan-European exchange
operator
“Euronext Growth” pan-European market for small- and mid-
sized companies (SMEs) operated by the Euronext
“Exola DAC” or “Exola” A wholly owned subsidiary of the
Company
“Facility” Shall have the meaning ascribed thereto in the
Chairman and Chief Executive’s Statement in this document
“Farm-out” Means the sale of an interest from the owner
(“farminor”) to a party (“the farminee”) in return for a consideration,
which includes the assumption by the farminee of a proportion of
the benefits, liabilities and obligations of that licence. Industry
practice allows the consideration to take many forms, some of the
most common being cash or the payment of some or all of the
farminor’s share of future costs on the licence, or the granting of
an overriding royalty interest
“FCTR” Foreign currency translation reserve
“FEL” A petroleum exploration licence vests in the holder the
exclusive right of carrying out exploration for petroleum in a
specific licensed offshore area. A Frontier Exploration Licence is
issued in respect of an area with special difficulties related to
physical environment, geology or technology – where such an area
is specified and announced by the Minister for DCCAE as a
‘Frontier Area’. This licence type is valid for a period of not less
than 12 years and comprises a maximum of 4 phases.
“CAPEX” Capital expenditure
“FID” Final Investment Decision
52 Providence Resources P.l.c. | Annual Report | 2020
(cid:1) Investor Information
“Operator” The company which under a Petroleum Lease, licence
or any successor authorisation has responsibility for the operation
of the licence
“OPEX” Operating expenditure
“Order” Shall have the meaning ascribed thereto in the Chairman
and Chief Executive’s Statement in this document
“P.l.c.” A public limited company
“PAD” Petroleum Affairs Division
“Palaeocene” Epoch in Paleogene period, 66 – 56 million years
ago
“PIPCO RSG CLG” Petroleum Infrastructure Program, Rockall
Study Group, Company Limited by Guarantee
“PL” A Petroleum Lease vests in the Lessee the exclusive right to
produce petroleum from the leased areas.
“Pmean” The Pmean value is the average of the numbers
“Prospective Resources” Quantities of petroleum which are
estimated to be potentially recoverable from oil and gas deposits
identified on the basis of indirect evidence but which have not yet
been drilled
“PSDM” Pre-Stack Depth Migration
“Purbeck” The Purbeck Group is a Late Upper Jurassic to Early
Lower Cretaceous lithostratigraphic group (a sequence of rock
strata)
“REC” Recoverable
“Schlumberger” Schlumberger Limited
“Seismic” A geophysical survey based on the reflection of sound
signals. A sound signal from a source transmitted through the
earth and reflected from the layers of sedimentary rocks is
recorded. The results enable detailed maps of the subsurface
layers to be made
“SEL” A petroleum exploration licence vests in the holder the
exclusive right of carrying out exploration for petroleum in a
specific licensed offshore area. A Standard Exploration Licence is
issued for a period of 6 years in respect of an area with water
depths of up to 200 metres.
“Sosina” Sosina Exploration Limited
“SPE” Society of Petroleum Engineers
“FOA” Farm-out Agreement
“ft” Foot or feet
“GIIP” gas initially in place
“GIS” Geographic information system
“Group” The Company and its subsidiaries
“IAS” International Accounting Standards
“IOOA” Irish Offshore Operators’ Association is the representative
organisation for the Irish offshore oil and gas industry
“JOA” Joint operating agreement which governs the relationship
between participants in a Petroleum Lease or Licence and sets
out the terms and conditions under which these participants shall
operate
“Jurassic” Period in Mesozoic era, 201 – 145 million years ago
“JV” Joint Venture
“KEL” PSE Kinsale Energy Limited
“km” Kilometre or kilometres
“Lansdowne” Lansdowne Celtic Sea Limited
“lb” Pound or pounds
“LIBOR” The London Inter-bank Offered Rate – The rate at which
an individual Contributor Panel bank could borrow funds, were it
to do so by asking for and then accepting inter-bank offers in
reasonable market size, just prior to 11.00 London time.
“LO” A Licensing Option gives the Holder the first right to an
Exploration Licence over all or part of the area covered by the
Option. It gives the holder an exclusive right to apply for an
in return for
exploration licence (a)
undertaking an agreed work programme
for defined period;
(b)
“LSE” London Stock Exchange plc
“LTIP” Long-term incentive plan
“LU” A Lease Undertaking gives the Holder the right to a
Petroleum Lease over that part of the area covered by the
Undertaking
“m” Meter or meters
“M&A” Merger and Acquisition
“MDBRT” Measure depth below rotary table
“Mesozoic” Era in Phanerozoic eon, 252 – 66 million years ago
“spud” Initial penetration at commencement of drilling operations
“MFDevCo” Marginal Field Development Company
“sq.” Square
“MM” Million
“MMB” Million barrels
“STOIIP” Stock tank oil initially in place
“TCF” Trillion cubic feet
“MMBC” Million barrels of condensate
“Triassic” Period in Mesozoic era, 252 – 201 million years ago
“MMBL” Million barrels of petroleum liquids; includes crude oil,
condensate, and natural gas liquids
“Wealden” The Wealden Group is a Lower Cretaceous
lithostratigraphic group (a sequence of rock strata)
“MMBO” Million barrels of crude oil
“MMBOE” Million barrels of oil equivalent
“MMCF” Million cubic feet
“No.” Number
“Working Interest” or “WI” The interest in oil and gas production
that bears its share of the costs of exploration, development and
operation of the property and of a proportionate share of royalties
and any other similar burdens
Providence Resources P.l.c. | Annual Report | 2020 53
Irish Stockbrokers
J&E Davy
Davy House
48/49 Dawson Street
Dublin
D02 PY05
Ireland
Principal Bankers
Allied Irish Banks PLC
Auditors
KPMG
Chartered Accountants and Registered Auditors
1 Stokes Place
St. Stephen’s Green
Dublin
D02 DE03
Ireland
Financial PR
Murray Consultants Dublin
40 Lower Baggot Street
Dublin
D02 Y793
Ireland
CORPORATE INFORMATION
Board of Directors
Pat Plunkett
(Non-Executive Chairman), appointed 20161,2,3,4
Alan Linn
(Chief Executive), appointed 2020
Andrew Mackay
(Non-Executive Director), appointed 20201,2,3,4
James Menton
(Senior Independent Non-Executive Director),
appointed 20211,2,3,4
1 Non-Executive
2 Member Audit Committee
3 Member Remuneration Committee
4 Member Nomination Committee
Secretary and Registered Office
Simon Brett
Providence Resources P.l.c.
Paramount Court
Corrig Road
Sandyford Business Park
Dublin 18
D18 R9C7
www.providenceresources.com
T: +353 1 219 4074
F: +353 1 219 4006
Registrar
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Ireland
Nominated Adviser
J&E Davy
Davy House
48/49 Dawson Street Dublin
D02 PY05
Ireland
54 Providence Resources P.l.c. | Annual Report | 2020
Providence Resources P.l.c.
Providence Resources P.l.c.
Paramount Court
Corrig Road
Sandyford Business Park
Dublin
D18 R9C7
Ireland
T: +353 1 2194074
F: +353 1 2194006
investors@providenceresources.com
www.providenceresources.com