TIDMFOX
RNS Number : 1396B
Fox Marble Holdings PLC
05 June 2019
5 June 2019
Fox Marble Holdings plc
("Fox Marble" or the "Company")
Final Results for the year ended 31 December 2018
Fox Marble, the AIM listed company focused on marble quarrying
and finishing in Kosovo and the Balkans region is pleased to
announce its final results for the year ended 31 December 2018.
Highlights for the year ended 2018
-- Total production of 13,094 tonnes of marble at the Prilep
Alpha and Maleshevë quarries (2017 - 8,811 tonnes).
-- Revenue for the year of EUR1.4 million (2017 - EUR1.2
million) with further advances of EUR0.3 million for future sales.
5,059 tonnes of block material sold in 2018 (2017 - 4,641 tonnes),
together and over 7,000 sqm of processed material sold (2017 -
5,000 sqm).
-- Operating loss for the year of EUR2.5 million (2017 - EUR2.9
million). Loss for the year of EUR2.3 million (2017 - EUR3.4
million).
-- Acquisition of Gulf Marble Investments Limited for EUR1.8
million funded by the issuance of a convertible loan note. Through
the acquisition Fox Marble has effectively obtained direct control
over the quarry licence, acquired previously leased quarry
equipment, and eliminated the royalty of 40% of gross revenue over
the Prilep Alpha quarry payable to Gulf Marble Investments Limited
under the original operating agreement.
Highlights year to date 2019
-- Sales to 30 April 2019 of EUR515k (30 April 2018 - EUR76k)
reflect a strong start to the year, given the winter shutdown of
the quarries which generally results in very slow sales in the
first few months of the year.
-- Production in the four months to 30 April 2019 of 5,940
tonnes (2018 2,147 tonnes). This significant increase in production
over this period is a reflection of capital investment made in the
quarries to date.
-- The Company has entered into an important new contract to
provide the stone to construct a temple in the United Arab
Emirates. Fox Marble will provide most of the stone for the
interior of the building. An initial deposit of $100k has been
paid, and the total value of the contract over the next two years
is expected to be in the region of $2.4 million.
-- Capital investment of EUR550k has been made in the Prilep
Alpha quarry, to drive increased levels of production and to
support the delivery of material under the new temple contract.
-- On 4 April 2019, the Company announced the conditional
acquisition of Green Power Sh.p.k and Scope Sh.p.k for a total
consideration of 16,000,000 shares in the Company. These
acquisitions will give Fox Marble the direct rights to the
Maleshevë quarry in their entirety, eliminate the annual royalty
which would have been due under the operating agreement, and reduce
monthly outgoings for equipment and maintenance at the factory.
The Annual Report and Accounts for the year ended 31 December
2018 together with the Notice of Annual General Meeting and the
associated form of proxy was posted to shareholders on the 4 June
2019.
The Annual Report, the Notice and related documents are
available on Fox Marble's website and can be downloaded from:
www.foxmarble.net/investors.
The AGM will be held at 11.00am on 26 June 2019 at CMS Cameron
McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street,
London, EC4N 6AF.
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For further information please visit www.foxmarble.net.
Fox Marble Holdings plc
Chris Gilbert, Chief Executive Tel: +44 (0) 20 7380 0999
Officer
Cairn Financial Advisers LLP
(Nomad) Tel: +44 (0) 20 7213 0880
Liam Murray
Sandy Jamieson
Brandon Hill Capital (Broker)
Oliver Stansfield Tel: +44 (0) 20 3463 5000
Notes to Editors
Fox Marble (AIM: FOX), is a marble production, processing and
distribution company in Kosovo and the Balkans region.
Its marble products, which includes Illirico Bianco, Illirico
Selene, Grigio Argento and are gaining traction globally both to
international wholesale companies as well as being supplied
directly into luxury residential properties. In the UK these
include among others St George's Homes and Capital and Counties
Plc's Lillie Square development. In Sydney, Australia Rosso Cait,
Alexandrian White and Breccia Paradisea marble have been used in
what is expected to be Australia's most expensive private
residence. These sales serve to demonstrate the desirability of
Fox's premium marble products as the stone of choice in some of the
most prestigious and expensive residential developments around the
world.
Fox Marble holds 40 year mining licences for six separate marble
quarries with a maiden JORC resource indicating an in-situ
valuation of approximately Euro 16.5 billion. Fox has taken three
of the six sites into production (the Drini and Maleshevë quarries,
both in Kosovo and from the Prilep Quarry in Macedonia) and
continues to increase production. Notably, Fox has access to over
300 million cubic metres (over 1bn tons) of premium quality
marble.
Marble demand continues to grow with stable pricing,
predominantly driven by the construction and real-estate
industries, on which Fox is looking to capitalise.
Chairman's statement
In my report last year I said that our objectives for 2018 were
to achieve notably higher sales and to significantly reduce
operating losses. We have increased sales and reduced operating
losses but not to the extent we had planned, which is
disappointing. Notwithstanding this we have made progress with
further investment in the development of our quarries, sales
momentum continuing to build, further investment in our marble
processing factory, and by strengthening our financial position and
organisation.
Our long term goal is to expand our capacity, and to create a
premium marble brand, through which Kosovo and the region is
established as a major centre of marble production in the world.
Our focus during 2019 will be to continue to develop our quarries
and expand yields, to increase the output of processed material
from our factory, to supply quality stone on time to our existing
customers, to widen our customer base and identify new markets. We
will continue to invest in systems and processes as our business
grows and to ensure we maintain high standards of corporate
governance and look after our workforce through effective training
and disciplined health and safety practices.
Our sales in 2018 were lower than planned largely as a result of
the slower than required growth in production. Accordingly, since
the Company's financial year end, we have invested a further
EUR550,000 in equipment for our Prilep Alpha quarry and have
introduced a new quarry team and practices to substantially
increase production levels. At Maleshevë we have continued to
invest significant resources and effort to accelerate the
development of this quarry to produce multiple open high volume
benches capable of producing blocks in the quantities required to
meet demand. We are beginning to see the benefits of this
investment with a step up in production in the first four months of
2019.
We are encouraged by the signs of momentum building in the
development of our customer base. We have a core of recurring block
sale customers with orders from a number of countries including
India, China, Turkey and the United Arab Emirates; the latter
including an important contract to provide marble for a new
temple.
The demand for our Illirico Selene marble from Maleshevë is
currently outpacing production and Alexandrian White, and more
recently Alexandrian Blue, from our Prilep Alpha quarry are in
strong demand.
2018 was a significant year for our marble processing factory at
Lipjan, Kosovo. The factory is now fully operational, has a very
wide range of processing capability and has been well received
locally with visits by the Prime Minister of Kosovo and other
important dignitaries. A key objective during 2019 is to drive a
material increase in the sale of processed marble from our factory
to the local Kosovan and Balkan markets and overseas.
We have also made a number of important moves to strengthen the
Group's organisation and financial position. We acquired Gulf
Marble Investments Limited for EUR1.8 million in October 2018, thus
effectively eliminating the royalty payable to Gulf Marble
Investments Limited of 40% of gross revenue from the Prilep Alpha
quarry. In April 2019 we announced the acquisition of Green Power
Sh.p.k and Scope Sh.p.k for consideration of GBP1 million and
GBP300k respectively, to be satisfied by the issue of 16 million
shares in Fox Marble. These acquisitions give Fox Marble direct
rights to the Maleshevë quarry, eliminate the annual royalty
payable under the operating agreement and acquire outright assets
previously operated under a hire purchase arrangement.
During the year we have continued to develop our planning on
Stone Alliance and have commenced fund raising to get this project
moving forward to the next stage. Stone Alliance has licences over
40 quarries so the opportunity is significant.
The results for the year reflect on-going costs incurred in
developing our quarries, quarry operating expenses, overhead
expenditure and financing costs. The loss for the year of EUR2.3
million is less than in 2017 (EUR3.4 million). Net cash at 31
December 2018 was EUR0.4 million and at 30 April 2019 was EUR0.96
million. Costs and cash remain under very tight control.
I would like to thank all our employees who are very committed
and work very hard, and, importantly have embraced our vision to
establish Kosovo and the Balkans as a major supplier of high
quality marble worldwide.
We have made an encouraging start to 2019. Production for the
period to 30 April 2019 was 5,940 tonnes compared to 2,147 tonnes
last year and sales were EUR515k compared to EUR76k. As last year,
our objectives for the year are to achieve a material increase in
production and sales, to significantly reduce operating losses. Our
target for the year is to achieve a close to cash break-even
position for the year as a whole. This will be critically dependent
on our ability to produce marble to the required quality and on
time to meet orders and to significantly grow sales of processed
marble.
Strategic Report
Sales and marketing
Sales for the year ended 2018 were EUR1.4 million, with a
further EUR0.3 million in advances received from customers. Whilst
sales growth has not been as strong as expected, this has been
driven by lower than expected quarry production volumes in
Maleshevë. The demand for our Illirico Selene marble is currently
outpacing production. We have seen encouraging signs in the
development of our customer base, with a core of recurring block
sale customers, with steady and regular demand for our material. We
expect these customers to form the backbone of expected revenues in
2019.
-- In 2018, the Company has seen its first significant orders
from China. A Chinese customer has purchased and paid for 894
tonnes of Illirico Selene in three separate shipments. This
customer has confirmed it wishes to purchase 300 tonnes of this
material each month during 2019. We have completed shipment of over
300 tonnes of material to the customer since the M3 quarry reopened
in late March 2019 and expect further orders over the remainder of
the year.
-- Turkey continues to be a consistent market for the Company,
with over 1,200 tonnes of material sold in 2018. The customer has
confirmed it expects demand for the material to continue in
2019.
-- In January 2018, the Company started production of a new
material at the Prilep Alpha quarry called Alexandrian Blue. The
new material has dense blue grey banding with smaller bands of
white which produce a marked blue tone and is akin to the highly
desirable Zebrino marble from Northern Italy. This new material
will be quarried alongside Alexandrian White which is already in
commercial production at the quarry. Fox Marble sold, and received
payment for, 441 tonnes of Alexandrian Blue extracted in December
2018 to a single customer. Following this order, the Company
entered into a sales agreement with this customer to purchase
Alexandrian Blue with an expected value in excess of EUR1 million.
The same customer has confirmed their intention to also purchase
3,500 tonnes of Illirico Selene. Since the start of 2019 the client
has purchased a further 475 tonnes of material.
-- In 2018, the Company established an office in Dubai to
service the Gulf Cooperation Council region and entered into a
purchase agreement for processed marble. The Company completed two
large cut-to-size orders to a client in the UAE at the end of 2018,
including the production of 50,000 10 cm x 10 cm tiles, which were
secured via our new Dubai office.
-- In 2019, the Company has entered into a significant new
contract to provide the stone to construct a stone temple in the
United Arab Emirates. Fox Marble will provide the majority of the
stone for the interior of the building. An initial deposit of $100k
has been paid, and the total value of the contract over the next
two years is expected to be in the region of $2.4 million. Capital
investment in quarry equipment of EUR550k has been made in the
Prilep Alpha quarry, to drive the increased levels of production
and to support the delivery of material, under this contract.
Sales to 30 April 2019 of EUR515k (30 April 2018 - EUR74k)
reflect a strong start to the year, given the winter shutdown of
the quarries which generally results in very slow sales in the
first quarter of the year.
Factory
A 5,400 square metre double skinned steel factory for the
cutting and processing of blocks into polished slabs and tiles has
been erected on a 10-hectare site that the Company acquired in
Lipjan in 2013, close to Pristina airport in Kosovo.
2018 was a transformative year for our factory. With full slab
production operational from the last quarter of 2017, 2018 was
focused on meeting growing demand for cut to size stone in addition
to finished slabs. The Italian Gravellona Machine Marmo Computer
Numerical Control ("CNC") machine was installed in March 2018 and
was very quickly producing its first tiles for export. Since then,
cut to size capacity has been increased with the purchase of four
bridge saws, two edge polishers, a cylinder (column) milling
machine and a dedicated tile polishing line which became
operational in the first quarter of 2019. Operating processes have
been consistently refined and the factory is now operating two full
shifts per day all year round.
The factory has been showcased as a key example of the benefits
of investment in Kosovo and visited by various dignitaries
including the Prime Minister of Kosovo, the British Ambassador, and
the Chairman of the Kosovo All Parties Parliamentary Group from
Westminster.
Production at our own factory in Kosovo provides several key
benefits to the Company:
-- Reduction in the cost of processing, increasing the margins
on the sale of processed slabs and tiles. Previously, the Company
has relied on processing facilities provided by third parties in
Italy and Albania. This involved additional costs for both
processing, transport and storage.
-- Access to the local Balkans market where we are the only
domestic supplier of slabs and tiles.
-- Entry into the international tile market helped by the lower
cost base that the factory will provide.
-- Improvement in quarry yields as we can process more marginal
blocks that would not be attractive to our international block
customers due to shipping and tariff costs.
-- Greater flexibility in responding to our customers' needs as
we will no longer have to rely on third party processing.
In 2018 and 2019, Fox Marble entered into certain hire purchase
arrangements with Scope Sh.p.k ("Scope"), a company incorporated in
Kosovo, to acquire and install in the factory plant and machinery
including the new CNC machine which was announced on 16 April
2018.
On 4 April 2019 the Company announced it had conditionally
agreed to acquire the entire issued share capital of Scope for a
consideration of GBP300,000 to be satisfied by the issue of
3,000,000 new ordinary shares in the Company at a price that
equates to 10 pence per share. The consideration paid for Scope is
less than the value of the future payments due under the hire
purchase agreements being acquired as part of its acquisition and
will reduce future cash outflows at the factory.
Quarry Operations
Maleshevë
In July 2013, the Company acquired the rights to the Maleshevë
quarry in Kosovo from a local company. The licence to the quarry is
for 20 years with an irrevocable option to extend the period by a
further 20 years thereafter. The Company incurs a royalty of 20% on
net profit generated from the sale of block marble to the previous
licence holder of the quarry.
In October 2015, the Company acquired the rights to a further
300-hectare site close to the Company's existing licence resource
in Maleshevë from a local company. By November 2015, this quarry
had been opened and the first blocks extracted and sent for
testing. The quarry was operated subject to an agreement with the
licence holder, Green Power Sh.p.k ("Green Power"), a company
incorporated in Kosovo, which granted Fox Marble's Kosovan
subsidiary the rights to develop and operate the quarry, in return
for a royalty arrangement.
These quarries contain a mixture of Illirico Bianco, Illirico
Superiore and the silver-grey marble Illirico Selene. The initial
market response to both the Illirico Selene and Illirico Bianco was
significant and to address this anticipated demand the Company has
invested significant resources and effort since 2016 to accelerate
the development of these quarries to produce multiple open high
volume benches capable of producing blocks in the quantities to
meet demand. The Company quarried 7,278 tonnes during 2018 (2016 -
6,526 tonnes).
On 4 April 2019, Fox Marble announced it had conditionally
acquired the entire share capital of Green Power, for a
consideration of GBP1,000,000 to be satisfied by the issue of
13,000,000 new ordinary shares in the Company at a price that
equates to 7.69 pence per share.
Since entering into the initial agreement with Green Power no
royalty had been paid, due to the costs associated with development
of the quarry. With increasing production and expected sales of the
materials the Board determined that it was in the best interest of
the Company to control the asset, given the anticipated royalties
that were due to be paid, and approved the acquisition.
Prilep
The Company entered into an agreement to operate a quarry in
Prilep, North Macedonia in 2013. The agreement was for a period of
20 years with an irrevocable option to extend the period for a
further 20 years thereafter. The Prilep quarry contains a highly
desirable white marble. This is one of a small cluster of quarries,
in the Stara river valley, overlooked by the Sivec pass.
The Prilep Alpha quarry is controlled by a local partner who has
appointed Fox Marble to operate the quarry on its behalf.
The introduction of a new quarry team at the site in November
2018 increased the total production for the quarry to 5,816 tonnes
(2017 - 2,285 tonnes). This 130% increase in production was
achieved primarily in the last six weeks of the year and provides
an encouraging outlook for 2019 production at this quarry. The
Company has invested in further capital equipment in this quarry in
early 2019. Since the start of the year 4,407 tonnes has been
quarried from the site.
Acquisition of Gulf Marble
On 8 October 2018, Fox Marble acquired Gulf Marble Investments
Limited (Dubai) its investment partner in the Prilep Alpha quarry
in North Macedonia, including all the rights attached to that
Company. Under the terms of the original agreement to acquire the
Prilep Alpha quarry in North Macedonia in 2013, Gulf Marble
Investments Limited provided the funds to acquire the licence to
the site and capital investment amounting to EUR1.7 million, and
then entered into an operating agreement with Fox Marble to operate
the quarry. In compensation Gulf Marble Investments Limited was
provided with a royalty amounting to 40% of the gross revenues
received from the sale of its block marble from the quarry.
Through the acquisition of 100% of the share capital of Gulf
Marble Investments Limited, Fox Marble has effectively acquired the
licence to the site eliminating the royalty of 40% of gross revenue
that was payable to Gulf Marble Investments Limited under the
original agreement, as well as acquiring the capital equipment held
by Gulf Marble. Consideration for the acquisition was the issue of
a convertible loan note with a carrying value of EUR1.785 million.
Following the completion of this transaction Fox Marble will be
eligible to retain 65% of the gross revenue from the sale of block
marble from the quarry. A Royalty of 35 % of gross revenue will
remain payable to the original licence holder of the quarry.
The Company also has the rights to an additional quarry nearby,
Prilep Omega, which it acquired in 2014.
Following a copyright dispute over the rights to use the name
"Sivec" for the Company's white dolomitic marble quarried in North
Macedonia, Fox Marble has relaunched its white marble under the
trade name Alexandrian White.
Cervenillë
This site was the first of our quarries to be opened in November
2012. It is being exploited across three separate locations
(Cervenillë A, B & C) from which red (Rosso Cait), red tinged
grey (Flora) light and darker grey (Grigio Argento) marble is being
produced in significant quantities. The polished slabs from this
quarry have sold well. The most noteworthy sales included those to
St George PLC (Berkeley Homes) for the prestigious Thames riverside
Chelsea Creek development.
In 2016, the decision was made to focus quarry resources at the
nearby Maleshevë quarry in order to accelerate development to
address expected demand. Quarry staff and equipment were therefore
re allocated from this quarry. The quarry remains open on a
maintenance basis and quarrying can be restarted at all three sites
at less than three weeks' notice.
Syriganë
The quarry at Syriganë is open across four benches. The site
contains a variety of the multi-tonal breccia and Calacatta-type
marble and produces significant volumes of breccia marble in large
compact blocks. Output is marketed as Breccia Paradisea
(predominantly grey and pink) and Etrusco Dorato (predominantly
gold and grey).
Financing
On 19 January 2018, the Company issued 26,283,331 new Ordinary
Shares with a nominal value of GBP262,833 at a price of 10.5 pence
per share to raise GBP2,759,750. Proceeds from the placing and
subscription were used to fund the expansion of production
capabilities at Fox Marble's quarries and factory, to repay
existing debt obligations and to provide the Company with
additional working capital as demand increases as it continues to
develop sales channels.
In addition, the Company discharged GBP783,000 of its
outstanding loans and other liabilities by the issue of a further
7,457,140 new Ordinary Shares to certain Directors and to Brandon
Hill Capital Limited at a price of 10.5 pence per share.
On 30 January 2018, the Company settled outstanding liabilities
in relation to the Series 1 Loan Note due to Amati Global Investors
Limited and all liabilities in relation to the short term
borrowings due to Peers Hardy (UK) Limited.
On 30 July 2018 the holders of the series 3 and 5 Loan notes
have subscribed for an additional GBP300,000 of Loan notes on the
same terms as the existing loan notes.
On 30 September 2018 the Company issued a convertible loan note
with a value of GBP300,000 on the same terms as existing loan
notes. As consideration for the acquisition of Gulf Marble
Investments Limited, Fox Marble has issued an Unsecured Convertible
Loan Note ("Loan Note") in the amount of EUR1,785 million. Under
the terms of the Loan Note, the holder may elect to convert at a
conversion price of 130% of the 3 month volume weighted average
share price. The Loan Note is repayable from the 1 October 2020.
The Loan Note carries an interest rate of Libor plus 1.5% payable
annually in arrears.
Fox Marble issued 13,263,161 new ordinary shares in the Company
at 9.5p per share on 4 February 2019. Gross proceeds of this issue
of equity amounted to GBP1,260,000. The New Ordinary Shares rank
pari passu with the existing ordinary shares.
Fox Marble issued a further GBP700,000 in Convertible Loan Notes
under the same terms as existing Loan Notes issued by the Company.
The Convertible Loan Notes will carry an interest rate of 8%, per
annum. The Convertible Loan Notes are due for conversion or
repayment on 18 February 2022 with a conversion price set at
10.5p.
Proceeds from the issue of shares have been used to fund capital
equipment at Fox Marble's quarry sites, to expand production
capabilities and to supply increased demand for material in
2019.
Please refer to the Report of the Directors for the going
concern assessment by the Directors.
Results and Dividends
Key Performance Indicators 2018 2017
-------------------------------- --------------- ---------------
Number of operational quarries 4 4
Quarry production (tonnes) 13,094 8,811
Revenue EUR1,409,730 EUR1,203,270
Average recorded selling price
(blocks per tonne) EUR210 EUR170
Average recorded selling price
(processed per sqm) EUR56 EUR72
EBITDA (EUR2,324,762) (EUR2,802,437)
Operating loss for the year (EUR2,458,426) (EUR2,933,443)
Loss for the year (EUR2,296,379) (EUR3,437,389)
Expenditure on property, plant
and equipment EUR713,315 EUR496,366
The Group recorded revenues of EUR1,409,730 in the year ended 31
December 2018 (2017 - EUR1,203,270). The Group incurred an
operating loss of EUR2,458,426 for the year ended 31 December 2018
(2017 - EUR2,933,443). The operating loss reflects the costs
incurred to bring the quarries to a stage required for production
of more consistent and larger block sizes. Additionally, the Group
has invested in targeted marketing activity to increase its
worldwide presence through attendance at industry fairs and key
events. The Group incurred a loss after tax for the year ended 31
December 2018 of EUR2,296,379 (2017 - EUR3,437,389).
Reconciliation of EBITDA to Loss Year to 31 Year to 31
for the year December December 2017
2018 EUR
EUR
---------------------------------- ------------ ---------------
Loss for the year (2,296,379) (3,437,389)
Plus/(less):
Net finance costs/(income) (162,047) 503,946
Depreciation 90,365 99,194
Amortisation 43,299 31,812
EBITDA (2,324,762) (2,802,437)
The Company does not anticipate payment of dividends until its
operations become significantly cash generative.
Sustainable development
Fox Marble aims to build and maintain relationships based on
trust and mutual benefit with its stakeholders. Preventing and
managing social and environmental risks, while seeking
opportunities for improvement, are critical to maintaining the
Group's competitiveness and capacity to grow.
Risk
Fox Marble recognises that risk is inherent in all of its
business activities. Its risks can have a financial, operational or
reputational impact. The Company's system of risk identification,
supported by established governance controls, ensures that it
effectively responds to such risks, whilst acting ethically and
with integrity for the benefit of all of our stakeholders.
Once identified, risks are evaluated to establish root causes,
financial and non-financial impacts, and likelihood of occurrence.
Consideration of risk impact and likelihood is taken into account
to create a prioritised risk register and to determine which of the
risks should be considered as a principal risk. The effectiveness
and adequacy of mitigating controls are assessed. If additional
controls are required, these will be identified and
responsibilities assigned.
The Company's management is responsible for monitoring the
progress of actions to mitigate key risks. The risk management
process is continuous; key risks are reported to the Audit
Committee and at least once a year to the full Board.
Going Concern
The Directors have reviewed detailed projected cash flow
forecasts and are of the opinion that it is appropriate to prepare
this report on a going concern basis. In making this assessment
they have considered:
(a) the current working capital position and operational requirements;
(b) the timing of expected sales receipts and completion of existing orders;
(c) the sensitivities of forecast sales figures over the next two years;
(d) the timing and magnitude of planned capital expenditure; and
(e) the level of indebtedness of the company and timing of when
such liabilities may fall due, and accordingly the working capital
position over the next 18 months.
The forecasts assume a significant increase of production
compared to 2018 at the Prilep Alpha and Maleshevë quarries to
complete existing and anticipated orders. Further the Company is
anticipating significant growth in revenue through the realisation
of existing sale contracts and offtake agreements as well as from
newly generated sales.
There are several key risks and uncertainties that could impact
the financial performance of the company. These include the fact
that levels of production at Maleshevë and Prilep can be impacted
by unforeseen delays due to inclement weather or equipment failure;
lower than expected quality of material being produced by the
quarries; and delays in the fulfilment of the Company's order
book.
As at 30 April 2019 the Company has EUR0.96 million in cash and
EUR4 million in convertible loan notes falling due between December
2019 and October 2021. On 2 June 2017, the Company entered into a
facility arrangement of GBP1,000,000 at an interest rate of 9% per
annum arranged by Brandon Hill Capital Limited, which may be drawn
down at the Company's request. This facility expires on 30 June
2020, and is undrawn at 4 June 2019.
If the cash receipts from sales are lower than anticipated the
Company has identified that it has available to it a number of
other contingent actions, in addition to those noted above, that it
can take to mitigate the impact of potential downside scenarios.
These include seeking additional financing, leveraging existing
sale agreements, reviewing planned capital expenditure, reducing
overheads and further renegotiation of the terms on its existing
debt obligations.
In conclusion having regard to the existing and future working
capital position and projected sales, the Directors are of the
opinion that the Group has adequate resources to enable it to
undertake its planned activities for the next twelve months.
Finally, I would like to thank all our staff and our Board
colleagues for their unstinting efforts on behalf of Fox
Marble.
On behalf of the board
Chris Gilbert
Chief Executive Officer
04 June 2019
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
Note 2018 2017
EUR EUR
------------------------------------ ----- ------------ ------------
Revenue 5 1,409,730 1,203,270
Cost of sales 6 (887,356) (795,895)
------------ ------------
Gross profit 522,374 407,375
============ ============
Administrative and other operating
expenses 6 (2,980,800) (3,340,818)
Operating loss 6 (2,458,426) (2,933,443)
============ ============
Finance costs 7 (119,507) (604,253)
Finance income 8 281,554 100,307
Loss before taxation (2,296,379) (3,437,389)
============ ============
Taxation - -
Loss for the year (2,296,379) (3,437,389)
============ ============
Other comprehensive income - -
============ ============
Total comprehensive loss for
the year attributable to owners
of the parent company (2,296,379) (3,437,389)
============ ============
Loss per share
Basic loss per share 9 (0.01) (0.02)
Diluted loss per share 9 (0.01) (0.02)
Consolidated Statement of Financial Position
As at 31 December 2018
Note 2018 2017
EUR EUR
------------------------------- ----- ------------------------- -------------
Assets
Non-current assets
Intangible assets 10 2,672,658 1,161,989
Property, plant and equipment 11 4,844,752 4,754,087
Trade and other receivables - 56,307
------------------------- -------------
Total non-current assets 7,517,410 5,972,383
========================= =============
Current assets
Trade and other receivables 889,299 985,647
Inventories 3,807,140 3,319,467
Cash and cash equivalents 438,270 542,287
Total current assets 5,134,709 4,847,401
========================= =============
Total assets 12,652,119 10,819,784
========================= =============
Current liabilities
Trade and other payables 1,184,855 1,373,096
Borrowings 12 88,970 1,739,025
Total current liabilities 1,273,825 3,112,121
========================= =============
Non-current liabilities
Deferred tax liability 84,504
Borrowings 12 3,683,990 1,702,453
Total non-current liabilities 3,768,494 1,702,453
========================= =============
Total liabilities 5,042,319 4,814,574
========================= =============
Net assets 7,609,800 6,005,210
Equity
Called up share capital 13 2,700,688 2,284,476
Share premium 13 29,941,977 26,424,202
Accumulated losses 14 (25,153,655) (22,823,182)
Share based payment reserve 85,247 84,171
Other reserve 35,543 35,543
Total equity 7,609,800 6,005,210
========================= =============
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Note 2018 2017
EUR EUR
----------------------------------------------- ----- -------------------------- ------------
Cash flows from operating activities
Loss before taxation (2,296,379) (3,437,389)
Adjustment for:
Finance costs 7 119,507 (604,253)
Finance income 8 (281,554) 100,307
Operating loss for the year (2,458,426) (2,933,443)
========================== ============
Adjustment for:
Amortisation 10 43,299 31,812
Depreciation 11 90,365 404,848
Foreign exchange losses on operating
activities 6,522 30,921
Equity settled transactions 1,076 960
Provision for bad debts 124,643 92,368
Provision for inventory 251,552 492,723
Changes in working capital:
Decrease in trade and other receivables (6,081) 503,685
Increase in inventories (206,942) (580,274)
Increase in accruals (31,266) 120,919
Increase in trade and other payables (156,975) 361,834
Net cash used in operating activities (2,342,233) (1,473,647)
========================== ============
Cash flow from investing activities(1)
Expenditure on property, plant
& equipment 11 (499,847) (496,366)
Deposits paid on property, plant
& equipment 11 - (70,000)
Interest on bank deposits 838 461
Net cash used in investing activities (499,009) (565,905)
========================== ============
Cash flows from financing activities
Proceeds from issue of shares (net
of issue costs) 13 3,137,538 28,177
Proceeds from the issue of long-term
debt (net of issue costs) 12 1,314,030 2,061,548
Repayment of debt (2) 12 (1,604,278) (171,194)
Interest paid on loan note instrument 12 (102,705) (243,283)
Net cash inflow from financing
activities 2,744,585 1,675,248
========================== ============
Net decrease in cash and cash equivalents (96,657) (364,304)
Cash and cash equivalents at beginning
of year 542,287 937,512
Exchange losses on cash and cash
equivalents (7,360) (30,921)
Cash and cash equivalents at end
of year 438,270 542,287
(1) In the year ended 31 December 2018 the Group acquired Gulf
Marble Limited Investments for non-cash consideration consisting of
the issue of loan note with a nominal value of EUR1,785,000.
Further details can be found in note 15.
(2) In the year ended 31 December 2018 EUR796,450 of debt was
settled through the issue of equity. Further details can be found
in note 12.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Share based Accumulated
Share Capital Share Premium payment reserve Other Reserve losses Total equity
Note 13
EUR EUR EUR EUR EUR EUR
----------------- -------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 1
January 2017 2,281,345 26,399,156 83,211 35,543 (19,385,793) 9,413,462
Loss and total
comprehensive
loss for the
year - - - - (3,437,389) (3,437,389)
Transactions
with owners
Share options
charge - - 960 - - 960
Share capital
issued 3,131 25,046 - - - 28,177
-------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 31
December 2017
and at 1
January 2018 2,284,476 26,424,202 84,171 35,543 (22,823,182) 6,005,210
-------------- -------------- ----------------- -------------- ----------------- -------------
Adjustment on
adoption of
IFRS 9 - - - - (34,094) (34,094)
-------------- -------------- ----------------- -------------- ----------------- -------------
Adjusted at 1
January 2018 2,284,476 26,424,202 84,171 35,543 (22,857,276) 5,971,116
-------------- -------------- ----------------- -------------- ----------------- -------------
Loss and total
comprehensive
loss for the
year - - - - (2,296,379) (2,296,379)
Transactions
with owners
Share options
charge - - 1,076 - - 1,076
Share capital
issued 416,212 3,517,775 - - - 3,933,987
-------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 31
December 2018 2,700,688 29,941,977 85,247 35,543 (25,153,655) 7,609,800
-------------- -------------- ----------------- -------------- ----------------- -------------
Notes to the Consolidated Financial Statements
1. General information
The principal activity of Fox Marble Holdings plc and its
subsidiary and associate companies Fox Marble Limited, H&P
Sh.p.k, Granit Shala Sh.p.k, Rex Marble Sh.p.k, Stone Alliance LLC
and Fox Marble Asia Limited and Fox Marble Kosova Sh.p.k, Gulf
Marble Investments LImited UAE (collectively "Fox Marble Group" or
"Group") is the exploitation of quarry reserves in the Republic of
Kosovo and Republic of Macedonia.
Fox Marble Holdings plc is the Group's ultimate Parent Company
("the Parent Company"). It is incorporated in England and Wales and
domiciled in England. The address of its registered office is 15
Kings Terrace, London, NW1 0JP. Fox Marble Holdings plc shares are
admitted to trading on the London Stock Exchange's AIM market.
2. Basis of Preparation
The financial information set out herein does not constitute the
Group's statutory financial statements for the year ended 31
December 2018, but is derived from the Group's audited full
financial statements. The auditors have reported on the 2018
financial statements and their report was unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006. The
2018 Annual Report was approved by the Board of Directors on 4 June
2019, and was mailed to shareholders on 4 June 2019. The financial
information in this statement is audited but does not have the
status of statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The Group's consolidated financial statements, which form part
of the 2018 Annual Report, have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and the requirements of the Companies Act
applicable to companies reporting under IFRS. IFRS includes
Interpretations issued by the IFRS Interpretations Committee
(formerly - IFRIC).
The consolidated financial statements have been prepared under
the historical cost convention, apart from financial assets and
financial liabilities (including derivative instruments) which are
recorded at fair value through the profit and loss. The preparation
of consolidated financial statements under IFRS requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group's
accounting policies.
3. Critical accounting estimates and areas of judgement
Impairment assessment
The Group assesses at each reporting date whether there are any
indicators that its assets and cash generating units (CGUs) may be
impaired. Operating and economic assumptions, which could affect
the valuation of assets using discounted cash flows, are updated
regularly as part of the Group's planning and forecasting
processes. Judgement is therefore required to determine whether the
updates represent significant changes in the service potential of
an asset or CGU and are therefore indicators of impairment or
impairment reversal.
In performing the impairment reviews, the Group assesses the
recoverable amount of its operating assets principally with
reference to fair value less costs of disposal, assessed using
discounted cash flow models. These models are subject to estimation
uncertainty and there is judgement in determining the assumptions
that are considered to be reasonable and consistent with those that
would be applied by market participants as outlined below.
Going concern
The Group assesses at each reporting date whether it is a going
concern for the foreseeable future. In making this assessment
management considers:
(a) the current working capital position and operational requirements;
(b) the timing of expected sales receipts and completion of existing orders;
(c) the sensitivities of forecast sales figures over the next two years;
(d) the timing and magnitude of planned capital expenditure; and
(e) the level of indebtedness of the company and timing of when
such liabilities may fall due, and accordingly the working capital
position over the next 18 months.
Management considers in detail the going concern assessment,
including the underlying assumptions, risks and mitigating actions
to support the assessment. The assessment is subject to estimation
uncertainty and there is judgement in determining underlying
assumptions.
Quarry reserves
Engineering estimates of the Group's quarry reserves are
inherently imprecise and represent only approximate amounts because
of the significant judgments involved in developing such
information. There are authoritative guidelines regarding the
engineering criteria that must be met before estimated quarry
reserves can be designated as "proved" and "probable". Proved and
probable quarry reserve estimates are updated at regular intervals
considering recent production and technical information about each
quarry. In addition, as prices and cost levels change from year to
year, the value of proved and probable quarry reserves also
changes. This change is considered a change in estimate for
accounting purposes and is reflected on a prospective basis in
depreciation and amortisation rates calculated on units of
production ("UOP") basis.
Changes in the estimate of quarry reserves are also considered
in impairment assessments of non-current assets.
Treatment of convertible loan notes
The convertible loan notes have been accounted for as a
liability held at amortised cost. At the date of issue, the fair
value of the liability component was estimated using the prevailing
market interest rate for similar non-convertible debt.
The conversion option results in the Company repaying a GBP
denominated liability in return for issuing a fixed number of
shares and as such has been classified as a derivative liability.
The liability is held at fair value and any changes in fair value
over the period are recognised in profit or loss.
The Company has fair valued the identified embedded derivatives
included within the contract using a Black Scholes methodology,
which has resulted in the recording of a liability of EUR262,459 at
31 December 2018 (2017 - EUR303,368). The main assumptions used in
the valuation of the derivative conversion option as at 31 December
2018 were: underlying share price of GBP0.0738 (31 December 2017:
GBP0.1175), EUR/GBP spot rate of 1.10 (31 December 2017: 1.13),
historic volatility of 44% (31 December 2017: 51%) and risk free
rate of 0.68% (31 December 2017: 0.5%)
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined based on weighted average costs and
comprises direct materials and direct labour costs and those
overheads that have been incurred in bringing the inventories to
their present location and condition. Net realisable value is based
on estimated selling prices less any estimated costs to be incurred
to completion and disposal.
In calculating the net realisable value of the inventory
management has to make a judgment about expected sales price of the
material. Management makes this judgment based on its historical
experience of the sale of similar material and taking into account
the quality or age of the inventory concerned.
4. Going concern
The Directors have reviewed detailed projected cash flow
forecasts and are of the opinion that it is appropriate to prepare
this report on a going concern basis. In making this assessment
they have considered:
(a) the current working capital position and operational requirements;
(b) the timing of expected sales receipts and completion of existing orders;
(c) the sensitivities of forecast sales figures over the next two years;
(d) the timing and magnitude of planned capital expenditure; and
(e) the level of indebtedness of the company and timing of when
such liabilities may fall due, and accordingly the working capital
position over the period to 31 December 2020.
If the cash receipts from sales are lower than anticipated the
Company has identified that it has available to it a number of
other contingent actions, in addition to those noted above, that it
can take to mitigate the impact of potential downside scenarios.
These include seeking additional financing, leveraging existing
sale agreements, reviewing planned capital expenditure, reducing
overheads and further renegotiation of the terms on its existing
debt obligations.
In conclusion having regard to the existing and future working
capital position and projected sales, the Directors are of the
opinion that the Group has adequate resources to enable it to
undertake its planned activities for the next twelve months.
5. Segmental information
The chief operating decision maker is the Board of Directors.
The Board of Directors reviews management accounts prepared for the
Group as a whole when assessing performance.
All the operations of Fox Marble Holdings plc are in the
Republic of Kosovo and the Republic of North Macedonia. All sales
of the Group are as a result of the extraction and processing of
marble. It is the opinion of the directors that the operations of
the Company represent one segment and are treated as such when
evaluating its performance.
All intangible assets held by the Group relate to intangible
assets acquired in relation to mining rights and licences in North
Macedonia of EUR2,508,224 (2017 - EUR1,079,699) and exploration and
evaluation expenditure incurred in Kosovo of EUR79,930 (2017 -
EUR82,290). Of the non-current assets held by the Group of
EUR7,517,410 (2017 - EUR5,972,383), EUR4,481,511 (2017 -
EUR4,481,909) relates to Property, Plant and Machinery acquired for
the exploitation of assets in Kosovo and EUR362,612 (2017 -
EUR268,848) relates to Property, Plant and Machinery acquired for
the exploitation of assets in North Macedonia.
The Group incurs certain costs in the United Kingdom in relation
to head office expenses. In the year under review included in the
operating costs for the year of EUR2,980,800 (2017 - EUR3,340,818)
were costs incurred in the United Kingdom of EUR1,314,226 (2017 -
EUR1,411,130). Net interest income of the Group of EUR162,047 (2017
- expense of EUR503,946) is incurred in the United Kingdom.
The Group has a branch operation situated in Carrara, Italy.
All revenue, which represents turnover, arises solely within
Kosovo and North Macedonia and relates to external parties.
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
------------------------------- ------------------ ------------------
Revenue by territory
Europe 845,877 653,937
Middle East 260,783 -
China 209,616 22,430
India 93,454 495,282
United States of America - 31,621
Total revenue 1,409,730 1,203,270
Revenues from contracts with customers
The Group generates revenue through the sale of quarried marble
as well as the processing of marble into slabs, tiles and bespoke
cut to size items.
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
--------------------------------------- ------------------ ------------------
Revenue by product
Sale of block marble 1,043,313 793,357
Sale of processed marble 353,265 408,693
Provision of processing services 13,152 1,220
Total revenue 1,409,730 1,203,270
Revenue is recognised in a manner that depicts the pattern of
the transfer of goods and services to customers. The amount
recognised reflects the amount to which the Group expects to be
entitled in exchange for those goods and services. Sales contracts
are evaluated to determine the performance obligations, the
transaction price and the point at which there is transfer of
control. The transactional price is the amount of consideration due
in exchange for transferring the promised goods or services to the
customer, and is allocated against the performance obligations and
recognised in accordance with whether control is recognised over a
defined period or at a specific point in time.
Block marble may be sold under a sales agreement with a customer
or on a non contractual basis. Sales agreements for block marble
generally contain agreed pricing and minimum volume, through which
customers can gain exclusivity within a given region. Block marble
may be sold on an ex-quarry basis or free on board (FOB) basis.
Revenue is recognised on the sale of block marble when control of
the block marble is transferred to the buyer as the transfer of
legal title, customer acceptance and an unconditional requirement
to pay. The group derives revenue from the sale of blocks at a
point in time.
Processed marble may be sold on an as seen basis or may be cut
to order. The Company may enter into contracts to supply a given
volume of processed marble as specified by the client. Processed
marble may be sold on ex-factory basis or may include transport to
customers. Revenue in relation to larger projects may involve
separately identifiable performance obligations. Such performance
obligations may include the separate delivery of instalments of
product in accordance with the contractual schedule. Where marble
is cut to order the Group does not consider the provision of marble
and the processing of marble as separate obligations, unless the
client selects and takes title to specific block marble.
The group does not expect to have any contracts where the period
between the transfer of the promised goods or services to the
customer and payment by the customer exceeds one year.
Consequently, the Group does not adjust any of the transaction
prices for the time value of money.
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
---------------------------- ------------------ ------------------
Contractual basis 941,349 663,627
Non-contractual basis 468,381 539,643
Total revenue 1,409,730 1,203,270
The following table sets out financial assets and liabilities
that relate to sales contracts the Group has entered into
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
------------------------------------- ------------------ ------------------
Trade receivables 276,073 191,282
Contract Liabilities (Advances
received from customers) 307,743 380,843
6. Expenses by nature
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
----------------------------------------- ------------- -------------
Operating loss is stated after
charging/(crediting):
Cost of materials sold 887,356 795,895
Inventory provision 251,552 492,723
Fees payable to the Company's auditors 104,860 108,110
Legal & professional fees 191,796 348,754
Consultancy fees and commissions 470,998 401,939
Staff costs 803,340 748,034
Operating lease rental 47,679 67,158
Other head office costs 166,031 195,648
Travelling, entertainment & subsistence
costs 136,292 102,486
Depreciation 90,365 99,194
Amortisation 43,299 31,812
Quarry operating costs 170,285 247,751
Foreign exchange gain 25,492 2,277
Share based payment charge 1,076 960
Marketing & PR 48,614 92,348
Testing, storage, sampling and
transportation of materials 265,805 255,922
Provision for bad debts 124,643 92,368
Sundry expenses 38,673 53,334
Cost of sales, administrative and
other operational expenses 3,868,156 4,136,713
The analysis of auditors' remunerations is as follows:
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
Fees payable to the Company's auditors and its associates
for services to the group
Audit of UK parent company 23,041 30,510
Audit of consolidated financial
statements 61,819 56,500
Audit of overseas subsidiaries 20,000 15,450
Audit of UK subsidiaries - 5,650
Total audit services 104,860 108,110
7. Net finance costs
2018 2017
EUR EUR
------------------------------------------ -------- --------
Finance costs
Interest expense on borrowings 119,507 300,884
Movement in the fair value of derivative
(note 12) - 303,369
119,507 604,253
8. Net finance income
2018 2017
EUR EUR
------------------------------------------ -------- --------
Finance income
Movement in the fair value of derivative
(note 12) 277,962 99,846
Net foreign exchange gain on loan 2,754 -
note instrument
Interest income on bank deposits 838 461
281,554 100,307
9. Loss per share
2018 2017
EUR EUR
-------------------------------------------- ------------- ------------
Loss for the year used for the calculation
of basic LPS (2,296,379) (3,437,388)
Number of shares
Weighted average number of ordinary shares
for the purpose of basic LPS 214,022,550 181,198,281
Effect of potentially dilutive ordinary - -
shares
Weighted average number of ordinary shares
for the purpose of diluted LPS 214,022,550 181,198,281
Loss per share:
Basic (0.01) (0.02)
Diluted (0.01) (0.02)
Basic loss per share is calculated by dividing the loss
attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the year.
Diluted loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of the Ordinary Shares which would be in issue if
all the options granted other than those which are anti-dilutive,
were exercised.
The following potentially dilutive instruments have been
excluded from the calculation of weighted average number of
ordinary shares for the year ended 31 December 2018 for the purpose
of calculating diluted loss per share on the basis that the
instruments would be anti-dilutive.
-- A grant of 120,000 options granted under the DSOP.
-- Shares issuable under unsecured convertible loan notes issued by the Company.
-- 175,000 performance warrants granted to Beaufort Securities Limited.
10. Intangible assets
Capitalised
exploration
Mining rights and evaluation
Goodwill and licences expenditure Total
EUR EUR EUR EUR
--------------------------- ----------- ---------------- ---------------- ----------
Cost
As at 1 January 2017 - 1,256,376 92,866 1,349,242
As at 31 December 2017
and 1 January 2018 - 1,256,376 92,866 1,349,242
Additions 84,504 1,469,464 - 1,553,968
As at 31 December 2018 84,504 2,725,840 92,866 2,903,210
Accumulated amortisation
As at 1 January 2017 - 147,222 8,219 155,441
Amortisation charge - 29,455 2,357 31,812
As at 31 December 2017
and as at 1 January 2018 - 176,677 10,576 187,253
Charge for the year - 40,939 2,360 43,299
As at 31 December 2018 - 217,616 12,936 230,552
Net Book Value
As at 1 January 2017 - 1,109,154 84,647 1,193,801
As at 31 December 2017 - 1,079,699 82,290 1,161,989
As at 31 December 2018 84,504 2,508,224 79,930 2,672,658
Capitalised exploration and evaluation expenditure represent
rights to the mining of decorative stone reserves in the Pejë,
Syriganë and Rahovec quarries in Kosovo. The Group was granted in
2011 rights of use by the local municipality for twenty years over
land in the Syriganë and Rahovec region through acquisition of the
issued share capital of Rex Marble SH.P.K and H&P SH.P.K.
On the 16 August 2014 the Company entered into a sub-lease
arrangement with New World Holdings (Malta) Limited in relation to
the Omega Alexandrian White marble quarry at Prilep in Macedonia.
This new quarry site is adjacent to the Company's existing
operations in Prilep. The consideration for the sub-lease was
EUR1,256,376 (GBP1,000,000) and a subsequent 40% gross revenue
royalty obligation. The sub-lease has an initial term of 20 years,
which is extendable by the Company for a further twenty years. The
sub-lease grants the Company the exclusive right to quarry,
process, remove and sell marble from the quarry. The Company will
pay for and provide all the equipment and staff required to operate
this quarry. The quarry is not yet operational.
On the 8 October 2018 the Company acquired Gulf Marble
Investments Limited (UAE). As part of this acquisition the Group
re-acquired a 40% gross revenue royalty over the revenues of the
Prilep Alpha quarry. The value of this intangible has been
recognised as intangible asset with a value of EUR1,469,464 which
will be amortised over the remaining period of the licence. Further
detail on this acquisition can be found in note 15. The acquisition
gave rise to a deferred tax liability and a corresponding entry to
goodwill of EUR84,504.
Intangible assets relating to quarries not yet in operation are
treated as exploration and evaluation assets and assessed for
impairment in accordance with IFRS 6 Exploration and evaluation of
mineral resources. The Group has assessed intangible assets for
indicators of impairment and concluded there are no indicators of
impairment arising in the current year.
Other intangible relating to quarries in operation include
amounts spent by the Group acquiring licences. Where intangible
assets are acquired through business combinations and no active
market for the assets exists, the fair value of these assets is
determined by discounting estimated future net cash flows generated
by the asset. Intangible assets relating to quarries in operation
are assessed annually for indicators of impairment in accordance
with in accordance IAS 36.
11. Property, plant and equipment
Construction Quarry Factory Land Office Equipment Total
in Progress Plant Plant and
& Machinery & Machinery Leasehold
improvements
EUR
EUR EUR EUR EUR EUR
-------------------------- ------------- -------------- ------------- -------- ----------------- ----------
Cost
As at 1 January
2017 2,786,775 2,746,736 - 160,000 30,101 5,723,612
Additions 253,815 242,164 - - 387 496,366
Transfers (3,040,590) - 3,040,590 - - -
As at 31 December
2017 and as at
1 January 2018 - 2,988,900 3,040,590 160,000 30,488 6,219,978
Additions (1) - 322,593 390,722 - - 713,315
As at 31 December
2018 - 3,311,493 3,431,312 160,000 30,488 6,933,293
Accumulated depreciation
As at 1 January
2017 - 1,038,199 - 22,843 1,061,042
Depreciation
charge - 355,585 44,949 - 4,315 404,848
As at 31 December
2017 and as at
1 January 2018 - 1,393,784 44,949 - 27,158 1,465,891
Depreciation
charge (2) - 526,490 93,459 - 2,701 622,650
As at 31 December
2018 1,920,274 138,408 - 29,859 2,088,541
Net Book Value
As at 1 January
2017 2,786,775 1,708,537 - 160,000 7,258 4,662,570
As at 31 December
2017 - 1,595,116 2,995,641 160,000 3,330 4,754,087
As at 31 December
2018 - 1,391,219 3,292,904 160,000 629 4,844,752
(1) Included in additions of EUR713,315 in the year ended 31
December 2018 are EUR213,469 of assets acquired as result of the
acquisition of Gulf Marble Investments Limited. See note 15 for
further details.
(2) Depreciation on plant and machinery is included in in the
cost of inventory to the extent it is directly related to
production of that inventory. In the year ended 31 December 2018
EUR532,284 of depreciation was included in the cost of inventory
produced (2017 - EUR305,654).
The Company has assessed property, plant and equipment for
indicators of impairment and concluded there are no indicators of
impairment arising in the current year. During the year ended 31
December 2017 the Company completed work on its marble processing
factory and therefore transferred EUR3,040,590 of assets from
construction in progress to Factory Plant & Machinery.
12. Borrowings
2018 2017
EUR EUR
------------------------------------------ ---------- ----------
Current borrowings
Convertible loan notes held at amortised
cost 85,259 1,026,120
Other borrowings held at amortised
cost - 572,794
Derivative over own equity at fair
value 3,711 140,111
88,970 1,739,025
Non-current borrowings
Convertible loan notes held at amortised
cost 2,871,292 670,294
Other borrowings held at amortised
cost 553,950 798,370
Derivative over own equity at fair
value 258,748 233,788
3,683,990 1,702,453
a) Series 1 Loan Note
On 31 August 2012, the Company issued a EUR1,295,278
(GBP1,060,000) fixed rate convertible unsecured loan note 2017
under the terms of the agreement signed 24 August 2012 with Amati
Global Investors Limited ("Series 1 Loan Note").
As at 31 December 2017, the Series 1 Loan Note held at amortised
cost had a balance of EUR1,026,120 (2016 - EUR1,219,471). The
Stockholders' option to convert the loan has been treated as an
embedded derivative and measured at fair value. As at 31 December
2017 the derivative had a value of EUR140,111 (2016 - EUR70,531).
The fair value has been assessed using a Black Scholes methodology.
The derivative is classified as a level 3 derivative on the basis
that the valuation includes one or more significant inputs not
based on observable market data.
On 30 January 2018, the facility and any outstanding accrued
interest of the Series 1 Loan Note was repaid in full. The
derivative had a carrying value of EUR140,111 at redemption.
b) Series 3 Loan Note
On 28 June 2017, the Company issued a convertible loan note with
a value of GBP440,000 ("Series 3 Loan Note") to a non related
party. This new Series 3 Loan Note has an interest rate of 8% per
annum, in line with the Series 1 Loan Note issued to Amati Global
Investors Limited. The Loan Note is due for conversion or repayment
on 31 August 2020 with a conversion price set at 10p.
As at 31 December 2018, the Series 3 Loan Note held at amortised
cost had a balance of EUR489,235 (31 December 2017 - EUR495,616).
The Stockholders' option to convert the loan has been treated as an
embedded derivative and measured at fair value. As at 31 December
2018 the derivative had a value of EUR16,818 (31 December 2017 -
EUR171,891). The fair value has been assessed using a Black Scholes
methodology. The derivative is classified as a level 3 derivative
on the basis that the valuation includes one or more significant
inputs not based on observable market data.
c) Series 4 Loan Note
On 28 December 2017, the Company issued a convertible loan note
with a value of GBP160,000 ("Series 4 Loan Note") to a non related
party. This new Series 4 Loan Note has an interest rate of 8% per
annum, in line with the Series 1 Loan Note issued to Amati Global
Investors Limited. The Loan Note is due for conversion or repayment
on 31 August 2020 with a conversion price set at 10.5p.
As at 31 December 2018, the Series 4 Loan Note held at amortised
cost had a balance of EUR174,202 (31 December 2017 - EUR174,678).
The Stockholders' option to convert the loan has been treated as an
embedded derivative and measured at fair value. As at 31 December
2018 the derivative had a value of EUR7,918 (31 December 2017 -
EUR61,897). The fair value has been assessed using a Black Scholes
methodology. The derivative is classified as a level 3 derivative
on the basis that the valuation includes one or more significant
inputs not based on observable market data.
d) Series 5 Loan Note
On 3 January 2018, the Company issued a convertible loan note
with a value of GBP75,000 ("Series 5 Loan Note") to a non related
party. This new Series 5 Loan Note has an interest rate of 8% per
annum. The Loan Note is due for conversion or repayment on 31
December 2019 with a conversion price set at 10.5p.
As at 31 December 2018, the Series 5 Loan Note held at amortised
cost had a balance of EUR85,259. The Stockholders' option to
convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2018, the derivative had
a value of EUR3,711. The fair value has been assessed using a Black
Scholes methodology. The derivative is classified as a level 3
derivative on the basis that the valuation includes one or more
significant inputs not based on observable market data.
e) Series 6 Loan Note
On 30 July 2018, the Company issued a convertible loan note with
a value of GBP300,000 ("Series 6 Loan Note") to a non related
party. This new Series 6 Loan Note has an interest rate of 8% per
annum. The Loan Note is due for conversion or repayment on 30 July
2020 with a conversion price set at 10.5p.
As at 31 December 2018, the Series 6 Loan Note held at amortised
cost had a balance of EUR331,310. The Stockholders' option to
convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2018, the derivative had
a value of EUR24,121. The fair value has been assessed using a
Black Scholes methodology. The derivative is classified as a level
3 derivative on the basis that the valuation includes one or more
significant inputs not based on observable market data.
f) Series 7 Loan Note
On 30 September 2018, the Company issued a convertible loan note
with a value of GBP300,000 ("Series 7 Loan Note") to a non related
party. This new Series 6 Loan Note has an interest rate of 8% per
annum. The Loan Note is due for conversion or repayment on 30
September 2020 with a conversion price set at 10.5p.
As at 31 December 2018, the Series 7 Loan Note held at amortised
cost had a balance of EUR335,043. The Stockholders' option to
convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2018, the derivative had
a value of EUR27,222. The fair value has been assessed using a
Black Scholes methodology.
g) Convertible Loan Notes 2020
As consideration for the acquisition of Gulf Marble Investments
limited has issued an Unsecured Convertible Loan Note ("Gulf Loan
Note") in the amount of EUR1.785 million. Under the terms of the
Loan Note, the holder may elect to convert at a conversion price of
130% of the 3 month volume weighted average share price. The Loan
Note is repayable from the 1 October 2020. The Loan Note carries an
interest rate of Libor plus 1.5% payable annually in arrears.
As at 31 December 2018, the Gulf Loan Note held at amortised
cost had a balance of EUR1,541,502. The Stockholders' option to
convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2018, the derivative had
a value of EUR182,669. The fair value has been assessed using a
Black Scholes methodology. The derivative is classified as a level
3 derivative on the basis that the valuation includes one or more
significant inputs not based on observable market data.
h) Other Borrowings
On 10 February 2017, the Company entered into a short term
finance arrangement with Peers Hardy (UK) Limited for GBP500,000
repayable on the 10 August 2017 at an interest rate of 15%. The
term of the facility was increased at the Company's request to 31
October 2018. As at 31 December 2017 the loan note held at
amortised cost had a
balance of EUR572,794. The facility was fully repaid on the 30 January 2018.
On 2 June 2017, the Company entered into a GBP1,000,000 facility
arrangement with Brandon Hill Capital Limited, which may be drawn
down at the Company's request. As at 31 December 2017 GBP200,000
had been drawn down under this facility. As at 31 December 2017 the
loan note held at amortised cost had a balance of EUR233,213.
Brandon Hill Capital Limited agreed to convert their outstanding
loan into new Ordinary Shares at 10.5p per share as part of the
Placing announced by the Company on 3 January 2018. On 22 January
2018 1,904,761 Ordinary Shares were issued in full settlement of
the outstanding liability. The facility remains in place till 30
June 2020.
On 7 December 2017, the Company announced that it had received
an unsecured loan of GBP500,000 from Roy Harrison OBE, a
non-executive director of the Company. As at 31 December 2017, the
loan note held at amortised cost had a balance of EUR565,158. Roy
Harrison agreed to convert his outstanding loan into new Ordinary
Shares at the 10.5 pence per share as part of the Placing announced
by the Company on 3 January 2018. On 22 January 2018 4,761,904
Ordinary Shares were issued in full settlement of the outstanding
liability.
At 31 December 2018 the Company held GBP500,000 of other
borrowings. These were funds received in advance of a loan note
issued in 2019, further details of which can be found in note
16.
The directors consider that the carrying amount of borrowings
approximates their fair value at 31 December 2018.
13. Share capital
2018 2017 Share Share Share premium Share
Number Number capital capital 2018 premium
2018 2017 EUR 2017
EUR EUR EUR
---------------- ------------ ------------ ---------- ---------- -------------- -----------
Issued, called up and fully paid
Ordinary shares of GBP0.01 each
At 1 January 181,344,851 181,067,074 2,284,476 2,281,345 26,424,202 26,399,156
Issued in the
year 36,540,471 277,777 416,212 3,131 3,517,775 25,046
At 31 December 217,885,322 181,344,851 2,700,688 2,284,476 29,941,977 26,424,202
The Company has one class of ordinary share capital.
a. On a resolution at a general meeting, every member (whether
present in person, by proxy or authorised representative) has one
vote in respect of each ordinary share held by him.
b. All ordinary shares rank equally in the right to participate
in any approved dividend distribution applicable to this class of
share.
c. Except as otherwise provided below, all dividends must be
i. Declared and paid according to the amounts paid up on the
shares on which the dividend is paid; and
ii. Apportioned and paid proportionately to the amounts paid up
on the shares during any portion of the period in respect of which
the dividend is paid.
d. If any share is issued in terms of providing that it ranks
for dividend as from a particular date that share ranks for
dividend accordingly.
e. In the event of any winding up all shares will rank equally
in relation to distribution of capital.
f. All shares are non-redeemable.
On 19 January 2018, following the passing of all authorities at
a General Meeting held on that day, the Company issued 14,692,852
ordinary shares at 10.5p per share. On 29 January 2018 the Company
issued 19,047,619 ordinary shares to Kesari Tours PVT Limited at a
price of 10.5p per share.
On 14 August 2018, the Company issued 2,800,000 ordinary shares
to consultants and employees in reflection of the work performed at
the Company.
The Company recognised GBP139,864 in transaction costs in
relation to the issue of share capital within share premium in the
year to 31 December 2018 (2017 - nil).
On 12 February 2019, the Company issued 13,263,161 ordinary
shares at 9.5p per share. Further details are included in note
16.
14. Accumulated losses
Year ended Year ended
31 December 31 December
2018 2017
EUR EUR
-------------------------------- -------------- --------------
At 1 January (22,823,182) (19,385,793)
Adjustment on adoption of IFRS (34,094) -
9
Restated opening balance (22,857,276) (19,385,793)
Loss for the year (2,296,379) (3,437,389)
At 31 December (25,153,655) (22,823,182)
Accumulated losses for the Group and Company include a charge of
EUR6,035,228 incurred in the year ended 31 December 2012.
Between 25 August 2011 and 29 September 2011 Fox Marble Limited
issued EUR1,508,807 (GBP1,195,000) of unsecured convertible loan
notes due 2016 ("Pre IPO loan note"). In the event of admission of
the Company and its parent to AIM these loan notes were to convert
to a variable number of ordinary shares of the Company to provide a
conversion value of 5:1. On the 24 August 2012, following the
acquisition of Fox Marble Limited by Fox Marble Holdings plc the
loan notes were novated from Fox Marble Limited to Fox Marble
Holdings plc.
Following the admission of the Company to AIM on the 31 August
2012 the loan notes with a carrying value of EUR1,508,807
(GBP1,195,000) were converted into 29,875,000 shares at an issue
price of 20p, with a total value of EUR7,544,035 (GBP5,975,000)
resulting in a non-cash accounting charge of EUR6,035,228 being
recognised in the statement
15. Business Combinations
On the 8 October 2018 the Company acquired 100% of the share
capital of Gulf Marble Investments Limited (Dubai) its joint
venture partner based in the Prilep Alpha Quarry in Macedonia,
including all the rights attached to that Company.
On the 4 July 2013 Fox Marble announced the acquisition of
quarry rights in Prilep Alpha in Macedonia. Under the terms of the
original agreement, Gulf Marble Investments Limited provided the
funds to acquire the license to the site and capital investment
amounting to EUR1.7 million, and then entered into an operating
agreement with Fox Marble to operate the quarry. In compensation
Gulf Marble Investments Limited was provided with a royalty
amounting to 40% of the gross revenues received from the sale of
its block marble from the quarry.
Through the acquisition of 100% of the share capital of Gulf
Marble Investments Limited, Fox Marble has effectively re-acquire
all the 40% gross revenue royalty, as well as all the assets and
capital equipment held by the entity.
As consideration for the acquisition Fox Marble has issued an
Unsecured Convertible Loan Note in the amount of EUR1.785 million.
Under the terms of the Loan Note, the holder may elect to convert
at a conversion price of 130% of the 3 month volume weighted
average share price. The Loan Note is repayable from the 1 October
2020. The Loan Note carries an interest rate of Libor plus 1.5%
payable annually in arrears. Further details are included in note
12. At inception the fair value of this loan was EUR1,682,933, and
EUR1,724,171 at 31 December 2018.
EUR
---------------------------------------------- ----------
Fair value of consideration issued
(note 12)
Loan note issued 1,516,410
Embedded derivative 166,523
1,682,933
The assets and liabilities recognised
as a result of the acquisition are
as follows:
Plant and equipment 213,469
Goodwill 84,504
Intangible asset - mining licence
(note 11) 1,469,464
Deferred tax liability (84,504)
Net assets acquired 1,682,933
As permitted by IFRS 3 Business Combinations, the business
combination is accounted for using provisional amounts. Any
adjustments to the provisional amounts will be made within the
measurement period to reflect new information obtained about fact
and circumstances that were in existence at the acquisition date.
The measurement period cannot exceed one year from the acquisition
date.
The intangible asset relates to the mining licence owned by Gulf
Marble Investments Limited (Dubai). To determine the fair value of
the mining licence management used as discounted cash flow model to
estimate the expected future cash flows of the quarry, based on the
estimates of future production and sales prices, operating costs
and forecast capital expenditures over the remaining period of the
licence. A post tax discount rate of 10% has been applied to
discount future cash flows.
The goodwill arising on the completion of the transaction,
amounting to EUR84,504 is equal to the technical deferred tax
liability which arises on the difference between the assigned fair
value of the acquired assets and liabilities on consolidation and
their fair value tax base in accordance with IFRS 3.
Acquisition-related costs of EUR13,489 are included in
administrative expenses in the income statement and in operating
cash flows in the statement of cash flows.
The acquired business contributed a net loss of EUR9,327 to the
group for the period from 8 October 2018 to 31 December 2018. If
the business had been acquired at 1 January 2018 the impact on
revenue would be nil and the net loss would have been
EUR37,308.
16. Events after the reporting period
Fox Marble issued 13,263,161 new ordinary shares in the Company
at 9.5p per share on the 7 February 2019. Gross proceeds of this
issue of equity amounts to GBP1,260,000. The New Ordinary Shares
rank pari passu with the existing ordinary shares.
Fox Marble issued a further GBP700,000 in Convertible Loan Notes
under the same terms as existing Loan Notes issued by the Company.
The Convertible Loan Notes will carry an interest rate of 8%, per
annum. The Convertible Loan Notes are due for conversion or
repayment on 4 February 2021 with a conversion price set at
10.5p.
Proceeds from the issue of shares have been used to fund capital
equipment at Fox Marble's quarry sites to expand production
capabilities to supply increased demand for material in 2019.
On 4 April 2019 Fox Marble, announced that it had conditionally
agreed to acquire Green Power Sh.p.k ("Green Power") the licence
holder of the Maleshevë quarry and Scope Sh.p.k. ("Scope"), a
company through which Fox Marble has entered into two hire purchase
agreements (the "Acquisitions" or "Transactions").
The acquisitions give Fox Marble the direct rights to the
Maleshevë quarry in their entirety, eliminate the annual royalty
which would have been due under the operating agreement, and reduce
monthly outgoings for equipment and maintenance at the factory.
Fox Marble has conditionally acquired the entire share capital
of Green Power, for a consideration of GBP1,000,000 to be satisfied
by the issue of 13,000,000 new ordinary shares in the Company at a
price that equates to 7.69 pence per share.
In the period since entering into the initial agreement with
Green Power for nil consideration no royalty payment has been paid,
due to the costs associated with development of the quarry. However
with increasing production and expected sales of the materials it
is anticipated that royalty payments over the remaining period of
the agreement are expected to be paid and as such the Board
believes that it is in the best interest of the Company to control
the asset.
In 2018 and 2019, Fox Marble entered into certain hire purchase
arrangements with Scope, a company incorporated in Kosovo, to
acquire and install in its factory certain equipment including a
new CNC machine which was announced on 16 April 2018. The
consideration paid for Scope is less than the value of the future
payments due under the hire purchase agreements being acquired as
part of its acquisition.
The Company h, as conditionally agreed to acquire the entire
issued share capital of Scope for a consideration of GBP300,000 to
be satisfied by the issue of 3,000,000 new ordinary shares in the
Company at a price that equates to 10 pence per share.
The acquisitions are conditional, inter alia, on shareholders
approving certain resolutions at the forthcoming Annual General
Meeting of the Company relating to authorities to issue new
ordinary shares in the Company.
All of the new ordinary shares being issued as part of the
acquisitions will be subject to lock-in provisions of 2 years with
a further twelve month period being subject to orderly market
agreement.
The operating results and assets and liabilities of the acquired
companies will be consolidated upon approval of the acquisition. At
the time the financial statements were authorised for issue, the
group had not yet completed the accounting for the acquisition of
Scope Sh.p.k and Green Power Sh.p.k. It is not yet possible to
provide detailed information about the fair values of assets and
liabilities being acquired and any contingent liabilities of the
acquired entity.
17. Information
Copies of the Annual Report and Financial Statements will be
posted to shareholders. Further copies will be available from Fox
Marble Holding plc's registered office at 15 Kings Terrace, London,
NW1 OJP or on the Company's website at www.foxmarble.net.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR CKQDNABKDDAK
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June 05, 2019 02:00 ET (06:00 GMT)
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