TIDMFOX
RNS Number : 9543A
Fox Marble Holdings PLC
07 June 2021
7 June 2021
Fox Marble Holdings plc
("Fox Marble" or the "Company")
Final Results for the year ended 31 December 2020 and Notice of
General Meeting
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 2020.
Highlights for the year ended 2020
-- During the year the Group signed a number of significant new
contracts to supply marble to large scale municipal and private
projects in Kosovo. These included projects to supply stone to
Suhareka and Podujeva town centres, as well as contracts to provide
stone to large scale building projects such as C&C apartments.
These projects are expected to be completed over 2021 and 2022.
-- Significant increase in factory processing rates with 29,737
square metres of slabs processed (2019 - 10,349 square metres) and
over 24,000 square metres of tile and cut to size material
processed (2019 - 8,882 square metres).
-- Total production of 6,060 tonnes of marble at the Prilep
Alpha and Cervenillë quarries (2019 - 14,370 tonnes) following
stoppages due to COVID-19. Production was restarted in September
2020 in Cervenillë quarry due to demand for Grigio Argento material
for the processed marble contracts.
-- Revenue for the year of EUR0.7 million (2019 - EUR1.4
million). Revenue from the sale of processed marble increased 224%
to EUR0.6 million (2019 EUR0.1 million) driven by a number of
large-scale contracts signed for projects in Kosovo. Revenue from
the sale of block marble fell 87% to EUR0.1 million from EUR1.2
million as a result of the impact of the COVID-19 pandemic on the
marble market.
-- Operating loss for the year of EUR2.6 million (2019 - loss of
EUR2.3 million). Loss for the year of EUR2.8 million (2019 - loss
of EUR2.5 million). Adjusted LBITDA of EUR1.4 million (2019 -
LBITDA of EUR1.6 million).
-- In June 2020, the Company completed a placing raising GBP0.8m
before expenses to provide working capital in the face of the
unfolding COVID-19 pandemic. Furthermore, in June 2020 the Company
reached agreement with the holders of GBP2.1 million of its CULNs.
Under this agreement the Company has replaced the eight existing
series of CULNs with a new single class of cumulative unsecured
loan notes ("CULN") which have a maturity date of 1 December 2026
and are convertible at any date from 1 June 2020 at a conversion
price of 5 pence per share. The interest rate of the new CULN is 2%
per annum payable half yearly on 1 June and 1 December. The Company
continues to carefully manage its working capital.
Highlights year to date 2021
-- Contract signed for the next stage of the Podujeva project,
and a new project in Kamenice and Mitrovice. The Company now has
contracts in place to supply EUR1.6 million of processed material
within Kosovo during 2021 and 2022.
-- Appointment of Dentons Europe CS LLP and Samuel Wordsworth QC
and funding secured to bring the EUR195 million arbitration case
against the Republic of Kosovo to its conclusion.
Chris Gilbert, CEO, commented "As we emerge into a post-Covid
world we face the future with optimism. We enjoy a strategic market
position in a $20 billion global industry. The Company has an
impressive marble quarrying and processing business with long term
mineral rights to a number of quarries with significant reserves of
desirable and attractive marble. We are vertically integrated,
which is very unusual in the global marble market, meaning we can
deliver block marble as well as higher margin processed marble.
Along with low labour costs this makes us extremely competitive. We
face the future with renewed confidence."
The Annual Report and Accounts for the year ended 31 December
2020 together with the Notice of Annual General Meeting ("AGM") and
the associated form of proxy have been posted to shareholders.
The Annual Report, the Notice of AGM 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 2.00 p.m. on
30 June 2021 at 160 Camden High Street, London NW1 0NE.
In light of the rapidly evolving situation and recent government
guidance regarding the outbreak of Covid-19 (Coronavirus), the
Company has taken the decision to alter the format of the Company's
AGM to be held at 2.00 p.m. on 30 June 2021 at the registered
offices of the Company. The safety and security of the Company's
officers, shareholders, guests and service providers is of
paramount importance. The formalities of the meeting shall
continue, as required by the Companies Act 2006 and the Company's
Articles of Association, but all shareholders are encouraged to
vote by proxy, and, given the government guidance, not to attend
the meeting in person. In the event that shareholders have a
question for the Company, please contact the Company Secretary by
email (please see the notes) or telephone, and we will arrange for
a response to be provided to you.
The information communicated in this announcement is inside
information for the purposes of Regulation 11 of the Market Abuse
(amendment) (EU exit) Regulations 2019/310.
For further information please visit www.foxmarble.net .
Fox Marble Holdings plc
Chris Gilbert, Chief Executive Officer Tel: +44 (0) 20 7380
0999
Fiona Hadfield, Finance Director Tel: +44 (0) 20 7380
0999
Allenby Capital (Joint Broker)
Nick Naylor/Nick Athanas/Liz Kirchner Tel: +44 (0) 20 3394
(Corporate Finance) 2973
Amrit Nahal (Sales and Corporate Broking)
Brandon Hill Capital (Joint Broker)
Oliver Stansfield Tel: +44 (0) 20 3463
5000
Cairn Financial Advisers LLP (Nomad)
Liam Murray/Sandy Jamieson Tel: +44 (0) 20 7213
0880
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 Alexandrian Blue,
Alexandrian White, Breccia Paradisea, Etruscan gold and Grigio
Argento and are gaining sales 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 residential property. 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.
Chairman's statement
It has been a very challenging year in exceptional
circumstances, but I believe Fox Marble has demonstrated its
resilience and agility, in protecting our employees and sustaining
our operations. The marble industry, like many industries has been
hit hard by the COVID-19 pandemic. The international block market
which requires travel to physically inspect blocks, which formed
the majority of our trade in 2019, suffered significant setbacks.
In the face of these challenges Fox Marble has focused on securing
working capital, restructuring its debt obligations, and growing
its processed marble trade within Kosovo.
Our primary focus during this period has been ensuring the
health and wellbeing of our employees, customers and suppliers
through observing strict Covid 19 protocols, including social
distancing, hygiene measures and closure of limited working of
operations during peak periods of infections.
The factory capacity and sale of processed marble has been a
significant highlight of this year. The Group has secured several
large-scale municipal and non-municipal contracts within Kosovo. It
has used targeted capital spending to increase rates of tile
processing in the factory. Together, these have increased sales of
processed marble by over 200%. Since year end, the Group has
continued to win new contracts in the region and now has a solid
order book for the factory expected to be realised through 2021 and
2022.
The sale of block marble has been significantly impeded by the
COVID-19 pandemic and there continues to be significant downward
pressure on pricing, as the industry deals with ongoing
repercussions. Whilst we expect block sales to see some recovery in
2021 as travel opens up, we do not expect a return to pre-pandemic
levels for some time. Lockdowns and travel restrictions put
additional pressure on our operations as they went through the
phases of temporary shutdowns and the subsequent re-opening and
ramp-up of operations.
Operating losses for the year increased to EUR2.6 million (2019
- EUR2.3 million), driven by lower sales and a higher than usual
stock provision recognised of EUR0.9 million (2019 - EUR0.3
million), driven by pressure on pricing.
Fox Marble continues to examine opportunities to grow its marble
reserve base and is currently examining potential sites in Kosovo.
COVID-19 restrictions as well as elections in Kosovo have slowed
progress in assessing these sites, however the Group continues to
keep an eye on its long-term development.
Our Arbitration case brought against the government of Kosovo
has progressed since December 2020 with the appointment of Dentons
CS LLP as solicitors and Sam Wordsworth as QC. We expect to
announce the appointment of our Arbitrator within the next few
months, which will be a significant step in proceedings.
The Stone Alliance project remains part of the Group's long term
plan, but progress on this matter is currently dependent on the
outcome of the arbitration proceedings.
Sales at the start of 2021 have continued to be affected by
Covid-19 as well as recent elections in Kosovo that have delayed
approval of municipal funds to projects, and have been lower than
initial expectations. However, work on the municipal contracts
announced so far began in earnest in May 2021 and we expect to see
significant growth through the second half of the year. We have
contracts for the supply of processed marble of EUR1.6 million in
Kosovo alone, together with a strong pipeline of future
opportunities. The Company will be carefully considering how
capacity can be grown at the processing factory to allow us to take
full advantage of these opportunities.
Our cash position as at the 30 May 2021 was EUR0.8 million,
including EUR0.4 million of litigation funding. Through what has
been a very tough year we continue to monitor and control working
capital. The Board has carefully considered its responsibilities
around assessment of going concern, and consider the going concern
assumption is appropriate. In doing so the Board has considered its
forecasts, the pipeline of sales and its ability to raise further
funds if necessary. We note that the Company has a loan note of
EUR1.8 million due by 8 August 2021 and to which the Company is
currently in the process of negotiatiing an extension. We are
confident that we can secure this concession, and that if such an
extension cannot be secured we have sufficient alternative options
available to us to ensure that our obligations are met. Further
details on the judgments involved can be found later in this
document.
I would like to thank all our employees who are very committed
and hardworking, and, importantly have embraced our vision to
establish Kosovo and the Balkans as a major supplier of
high-quality marble worldwide.
Andrew Allner
Non-Executive Chairman
Strategic Report
Processed marble sales
Sales of processed marble have increased to EUR0.6 million from
EUR0.2 million in 2019, of which EUR0.45 million occurred in H2
2020. A number of new contracts were signed for processing services
and processed marble which formed the backbone of sales through the
end of 2020 and are expected to continue into 2021.
-- The Suhareka square in Kosovo contract, announced on 14 April
2020, to supply up to 20,000 square metres of paving. Material
already specified and contracted under the first two stages of the
project has a total value in excess of EUR400,000, and once all
20,000 square metres have been supplied the project is expected to
be worth in excess of EUR750,000, as announced on 13 May 2020. Fox
Marble has supplied over 10,000 square metres of material since
June 2020. To date, the Company has supplied in excess of EUR0.3
million of material on this project.
-- A contract to supply 20,000 square metres of cut and finished
paving tiles for installation in the town square for the
Municipality of Podujeva in Kosovo, announced on 30 July 2020. Fox
Marble began supplying material for this project in August 2020 and
has supplied over 4,000 square metres of material to date. The
Company received confirmation of Phase II of the project in January
2021, and the total value of this contract is around EUR700,000
over 2020 and 2021, as announced on 30 July 2020 and a further
update announcement released by the Company on 4 February 2021.
-- A contract to supply 35,000 square metres of cut and polished
tiles to CC Apartments LLC was announced on 23 June 2020. CC
Apartments LLC is engaged in developing several prestigious
projects including apartments in Kosovo, as well as Albania and
surrounding countries. Fox Marble will be processing blocks of a
range of marble from its own quarries for this project and
supplying this material from its factory in Kosovo over the course
of 2021. The total value of the contract is in excess of
EUR700,000.
-- A contract to supply 6,500 square metres of cut and finished
paving tiles for installation in the town square for the
Municipality of Kamenica in Kosovo. Fox Marble will be processing
blocks of a range of marble from its own quarries for this project
and supplying this material from its factory in Kosovo over the
course of 2021. The total value of the contract is in excess of
EUR160,000.
Block sales
Sales of block marble have fallen significantly in 2020 from
EUR1.2 million in 2019 to EUR0.1 million in 2020 due to the impact
of COVID-19 on block marble sales.
The prominence of China in the block marble market meant that
sales of block marble showed a sharp drop from the start of 2020.
As international borders were closed and the outbreak spread
through Europe, the decision was made to temporarily close the
quarry at Prilep for the safety of staff and to preserve working
capital.
The Prilep quarry was reopened in August 2020 and the board will
continue to watch the progress on the block market closely.
As travel restrictions lift in 2021, the Group expects to see
growth in block sales. However, the impact of the COVID-19 pandemic
has caused significant pressure on pricing, as marble companies try
to offload excess stock and raise working capital. Furthermore, the
disruption to global shipping, which has significantly increased
the cost of shipping, has dampened the demand for marble blocks. As
such, whilst we expect to see growth in the sales of block marble
in 2021, we do not expect a return to normality for some time.
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.
In 2020, Fox Marble has focused on developing the local market
for its processed material and range of products from cut and
polished tiles to stair pieces, door and window lintels to slabs,
which is driving increased production at the factory.
In June 2020, the Company announced that it had acquired two
additional automatic CNC cutting machines to be installed in its
factory in Kosovo. The two machines were manufactured by Simec Srl
and Garcia Ramos SA and with the existing Gravellona Machine Marmo
CNC machine has doubled the capacity to cut tiles. The machines
have been installed and are now fully operational. This will help
underpin the 3-year factory expansion plan currently being
developed by the COO/GM Sales.
The machines, and procedural improvements implemented have
helped drive an increase in processing volumes from 2019 to 2020.
The factory processed 29,737 square metres of slabs in 2020 (2019 -
10,349 square metres) and over 24,000 square metres of tile and cut
to size material processed (2019 - 8,882 square metres).
We continue to examine ways to increase levels of production and
operating efficiency through 2021, despite COVID-19 related
restrictions.
Quarry Operations
Prilep
T he 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 highly
desirable white marble, Alexandrian White and Alexandrian Blue.
This is one of a small cluster of quarries, in the Stara river
valley, overlooked by the Sivec pass. Quarrying operations were
stopped in April 2020 as a result of the unfolding COVID 19 crisis.
Production in 2020 was 4,955 tonnes (2019 - 11,520 tonnes).
A royalty of 35% of gross revenue is payable to the original
licence holder of the quarry.
Quarrying was suspended at Prilep in April 2020 as a result of
the un-folding COVID-19 crisis. It was re-opened in August 2020,
though to a limited level.
The Company also has the rights to an additional adjacent
quarry, Prilep Omega, which it acquired in 2014. The Company has
not yet developed this quarry.
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) and 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 London.
In 2016, the decision was made to focus quarry resources at the
nearby Maleshevë quarry to accelerate development to address
expected demand. Quarry staff and equipment were therefore re
allocated from this quarry. Production was re-started in September
2020 to address the anticipated upcoming demand for Grigio Argento
from existing and future contracts. Production in 2020 was 1,112
tonnes (2019 - Nil).
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).
Growing marble reserves base and the opening of new quarries in
Kosovo
The foundation of a successful and growing natural stone company
is its reserves base. Fox Marble's strategy is to seek to grow this
over the medium term, finding and aiming to open on average at
least one new quarry a year in opportunity rich Kosovo. For 2020,
two new potential quarries were identified and after initial
examination of the resource the Company secured the licence over
one new quarry site. Progress on developing the quarry is expected
to start in 2021, subject to an initial drilling programme. This
will provide the opportunity to increase both block sales and
processed marble from the factory from the end of 2021 onwards.
Maleshevë
In October 2015, the Company acquired the rights to a
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.
The quarry contained 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 2,850 tonnes during 2019 (2018
- 7,278 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. However, prior to approval of the
issue of shares at the Company's AGM in June 2019, Green Power
announced their intention to breach the agreed acquisition contract
and blocked Fox Marble's access to the quarry site.
Quarry production at the Maleshevë quarry in Kosovo was stopped
in July 2019 as a result of the ongoing dispute with Green Power
Sh.P.K.. The Company has filed civil claims in Kosovo against Green
Power Sh.P.K. for breach of contract and damages, in addition to
the wider Arbitration case launched against the Government of
Kosovo, as announced in September 2019. Further details on the
arbitration claim can be found below.
Arbitration Proceedings
On 4 September 2019, Fox Marble launched United National
Commission on International Trade Law (UNCITRAL) arbitration
proceedings, against the Republic of Kosovo for damages in excess
of EUR195 million, as a result of the failure of the State to
protect Fox Marble's rights over the Maleshevë quarry.
The Company believes the Kosovan Government to be in clear
breach of its responsibilities towards the Company as a foreign
investor in Kosovo and that this action is in the best interests of
its shareholders and employees. The Company anticipates a fair and
satisfactory resolution. All the Company's other operations,
including the quarries and processing factory in Kosovo and the
Prilep quarry in Northern Macedonia, are unaffected.
The background to the claim is the dispute arising with the
former shareholders of Green Power Sh.P.K and Scope Sh.P.K, which
has resulted in Fox Marble being prevented from operating the
Maleshevë quarry. Since the dispute arose, Fox Marble has been
working to resolve the matter with the appropriate Kosovan
Government agencies, namely the Kosovo mining regulator, the
Independent Commission of Mines and Mineral ("ICMM") and the
Agjencia e Regjistrimit të Bizneseve ("ARBK"), the Kosovo business
registration agency. However, in what is a clear breach of Kosovo
Law 04/L-220 "On Foreign Investment" (2014), Fox Marble has been
prevented from asserting its rights in these matters.
Despite the cumulative weight of evidence, Fox Marble was denied
the right to appeal any decision relating to the Maleshevë quarry
in direct contravention of the provisions of the Kosovo foreign
investment law, Law 04 /L-220. As a direct consequence of the ARBK
and ICMM decisions, the Company has brought arbitration proceedings
against the Republic of Kosovo pursuant to Article 16 of the Kosovo
foreign investment law (as above). The basis of the claim for
damages is the investment made to date in the Maleshevë quarry,
loss of future revenues associated with the site and future
investment plans in Kosovo. Significant future investment plans are
the subject of the MOU signed in October 2016 by the Government of
Kosovo and Stone Alliance LLC which is majority owned by Fox
Marble.
On 16 December 2020 the Company announced that it had engaged
the services of Dentons CS Europe LLP to act on the Company's
behalf in its circa EUR195 million claim against the Republic of
Kosovo. Dentons have agreed a fee arrangement which enables Fox
Marble to bring the Arbitration through to its conclusion.
The Company announced the appointment of the eminent British
Barrister and Queens Counsel, Samuel Wordsworth QC of Essex Court
Chambers on the 19 May 2021. He will work with Dentons Europe CS
LLP, the world's largest law firm by number of lawyers, in support
of the Company's EUR195M claim against the Republic of Kosovo.
Financing
Please refer to the Report of the Directors for the going
concern assessment by the Directors.
COVID-19 Response
The spread of Coronavirus (COVID-19) continues to have a
significant impact across industries worldwide, including the
marble extraction and processing market, given the changeable
international travel and working restrictions in place in many
countries. The Board's highest priority is the continued wellbeing
of its employees, customers and stakeholders both in the UK and
Kosovo. Given the continued uncertainty on the potential impact and
duration of the COVID-19 pandemic, the Board has taken pre-emptive
steps not only to ensure the well-being of those affected, but also
to best position the Company for future operations.
In line with many other nations, Kosovo introduced a number of
measures to try and curb the further spread of COVID-19, including
travel restrictions, school closures and closures of non-essential
shops and venues. To date, some restrictions have been lifted,
however travel continues to be tightly controlled.
Fox Marble's factory operations were permitted to continue, as
it fell within a designated sector. The Company continued to
operate the factory, though with scaled back operations. Extra
distancing procedures to protect our workforce were implemented.
Operations were slowly increased over the summer.
Demand for block marble fell significantly as a result of travel
restrictions placed on China, the principal buyers of the Company's
block marble, since January 2020. The spread of the virus into
Europe and the resulting impact on cross border travel and trade
has magnified this effect. The Company elected to suspend
production at the quarries during 2020 in order to keep operational
cash flow neutral until the international block marble market
returns to normality. Operations at the Prilep quarry were
re-started in August 2020, and at Cervenillë in September 2020,
prior to the normal winter stoppage.
Whilst quarrying operations were temporarily suspended, the
Company sought to eliminate all unnecessary expenditure and the
Board offered to not take any salary or fees until operations
resumed. Head Office staff in London were placed on furlough
through to June 2020.
Results
Key Performance Indicators 2020 2019
------------------------------------ ---------------- ---------------
Number of operational quarries 4 4
Quarry production (tonnes) 6,060 14,370
Revenue EUR715,900 EUR1,422,872
Average recorded selling price
(blocks per tonne) EUR120 EUR217
Average recorded selling processed
(per sqm) EUR28 EUR28
EBITDA (EUR2,435,315) (EUR2,022,027)
ADJUSTED EBITDA (EUR1,486,119) (EUR1,629,615)
Operating loss for the year (EUR2,637,872) (EUR2,273,673)
Loss for the year (EUR2,804,371 ) (EUR2,533,540)
Expenditure on property, plant
and equipment EUR89,503 EUR649,015
The Group recorded revenues of EUR715,900 in the year ended 31
December 2020 (2019 - EUR1,422,872). Revenues for the year fell as
a direct result of the Covid-19 pandemic's effect on block sales,
partially offset by significant growth in the sale of processed
marble. The Group incurred an operating loss of EUR2,637,872 for
the year ended 31 December 2020 (2019 - EUR2,273,673). The
operating loss reflects the fall in block revenues due to the
impact of the COVID-19 pandemic. In addition, the Company has
recognised an additional provision of EUR926,762 on the stock held
by the Group due to the impact of the market disruption caused by
the pandemic on block pricing. The average recorded selling price
per sqm for processed material remained consistent with the prior
year. The fall in the selling price per sqm for block material has
been driven by the disruption of COVID 19 on the international
block market.
The Group incurred a loss after tax for the year ended 31
December 2020 of EUR2,804,371 (2019 - EUR2,533,540).
Reconciliation of Year to 31 December Year to 31 December
EBITDA to Loss for 2020 2019 EUR
the year EUR
---------------------------- -------------------- --------------------
Loss for the year
before tax (2,924,086 ) (2,533,540)
Plus/(less):
Net finance costs/(income) 286,214 259,867
Depreciation 158,751 207,850
Amortisation 43,807 43,796
EBITDA (2,435,315) (2,022,027)
Stock Provision 927,481 392,412
Share option charge 21,355 -
Adjusted EBITDA (1,486,119) (1,629,615)
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 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 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 considered 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 Group'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.
In August 2021 the Company is due to repay the existing EUR1.8
million Gulf Loan Note. The Company is already in discussion as to
securing an extension to this loan note and is confident that it
can secure such a concession, however at this point the
arrangements have not yet been finalised.
The forecasts assume that production at the Prilep and
Cervenillë quarries will continue, which were reopened respectively
in August and September 2020. It further assumes that production at
the factory will continue to operate and that recently installed
machinery will drive an increase in the rate of production. The
forecast assumes existing contracts held by the Company will be
fulfilled on a timely basis. Furthermore the forecasts assume that
sales of block marble will resume during 2021, in line with the
reopening of international borders. 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 scenarios which management have considered
that could impact the financial performance of the Company. These
include:
(a) The Company may not be able to secure an extension to the
Gulf Marble Loan note, and the loan note may become payable in full
or in part in August 2021.
(b) levels of production at Cervenillë 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;
(c) Fulfilment of the Company's order book could be delayed, or
the payment of amounts due under such contracts could be
delayed.
(d) The continued progression of the Covid-19 may have a further
detrimental impact on sales or on operations, and
(e) The resumption of block sales to the international block market may be slower than expected.
As at 31 May 2021 the Company had EUR0.8 million in cash
including EUR0.4 million of restricted funds related to litigation
funding.
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. On 1 May 2021, 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 31 May
2022, and is undrawn at 31 May 2021. In addition to this Company
has agreed a further facility of GBP700,000 with a non related
party high net worth individual that can be used if required.
In conclusion having regard to the existing and future working
capital position and projected sales, the Directors are of the
opinion that the application of the going concern basis is
appropriate.
Signed, on behalf of the Board of Directors
Chris Gilbert
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
Note 2020 2019
EUR EUR
------------------------------------ ------ ------------ ------------
Revenue 715,900 1,422,872
Cost of sales (559,358) (814,626)
------------ ------------
Gross profit 156,542 608,246
============ ============
Administrative and other operating
expenses (2,794,414) (2,881,919)
Operating loss (2,637,872) (2,273,673)
============ ============
Finance costs (456,785) (517,638)
Finance income 170,572 257,771
Loss before taxation (2,924,086) (2,533,540)
============ ============
Taxation credit 119,715 -
Loss for the year (2,804,371) (2,533,540)
============ ============
Other comprehensive income - -
============ ============
Total comprehensive loss for
the year attributable to owners
of the parent company (2,804,371) (2,533,540)
============ ============
Earnings per share
Basic earnings per share (0.01) (0.01)
Diluted earnings per share (0.01) (0.01)
Consolidated Statement of Financial Position
As at 31 December 2020
Note As at 31
December
As at 31 December 2019
2020
EUR EUR
------------------------------- ------ --------------------- -------------
Assets
Non-current assets
Intangible assets 2,793,135 2,836,942
Property, plant and equipment 4,818,716 5,088,344
Total non-current assets 7,611,851 7,925,286
==================== =============
Current assets
Trade and other receivables 1,152,317 1,182,685
Inventories 3,041,278 3,928,397
Cash and cash equivalents 337,741 578,417
Restricted cash 39,937 -
Total current assets 4,521,273 5,689,499
==================== =============
Total assets 12,133,124 13,614,785
==================== =============
Current liabilities
Trade and other payables 1,560,865 1,199,376
Borrowings 1,841,493 1,929,696
Total current liabilities 3,402,358 3,129,072
==================== =============
Non-current liabilities
Deferred tax liability 84,504 84,504
Lease Commitments 260,481 220,721
Borrowings 2,799,128 2,524,721
Total non-current liabilities 3,144,113 2,829,946
==================== =============
Total liabilities 6,546,471 5,959,018
==================== =============
Net assets 5,636,653 7,655,767
Equity
Called up share capital 3,721,007 3,220,221
Share premium 32,056,986 31,793,870
Accumulated losses (30,283,485) (27,479,114)
Share based payment reserve 106,602 85,247
Other reserve 35,543 35,543
Total equity 5,636,653 7,655,767
==================== =============
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020 2019
EUR EUR
----------------------------------------------- ------------- ------------
Cash flows from operating activities
Loss before taxation (2,924,086) (2,533,540)
Adjustment for:
Finance costs 456,786 517,638
Finance income (170,572) (257,771)
Operating loss for the year (2,637,872) (2,273,673)
============ ============
Adjustment for:
Amortisation 43,807 43,796
Depreciation 420,693 648,133
Equity settled transactions 21,355 -
Disposal of PPE 28,571 -
Provision for impairment of receivables 14,359 162,578
Provision for inventory 927,841 392,412
Changes in working capital:
Decrease/(increase) in trade and
other receivables 135,723 (455,965)
Increase in inventories (40,721) (513,669)
(Decrease)/increase in accruals (46,807) 124,116
Increase/(decrease) in trade and
other payables 424,324 (109,593)
Net cash used in operating activities (708,727) (1,981,865)
============ ============
Cash flow from investing activities
Expenditure on property, plant &
equipment (179,635) (649,715)
Expenditure on rights of use assets - (23,736)
Interest on bank deposits 189 1,437
Net cash used in investing activities (179,446) (672,014)
============ ============
Cash flows from financing activities
Proceeds from issue of shares (net
of issue costs) 763,902 2,371,425
Proceeds from the issue of long-term
debt (net of issue costs) - 609,696
Interest paid on loan note instrument (76,470) (187,096)
Net cash generated from financing
activities 687,434 2,794,026
============ ============
Net increase/(decrease) in cash and
cash equivalents (200,739) 140,147
Cash and cash equivalents at beginning
of year 578,417 438,270
Cash and cash equivalents at end
of year 377,678 578,417
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Share Capital Share Premium Share based Other Reserve Accumulated
payment reserve losses Total equity
Note
EUR EUR EUR EUR EUR EUR
----------------- -------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 1
January 2019 2,700,688 29,941,977 85,247 35,543 (24,945,574) 7,817,881
Loss and total
comprehensive
loss for the
year (2,533,540) (2,533,540)
Transactions
with owners
Share capital
issued 519,533 1,851,893 - - - 2,371,426
Balance at 31
December 2019
and at 1
January 2020 3,220,221 31,793,870 85,247 35,543 (27,479,114) 7,655,767
-------------- -------------- ----------------- -------------- ----------------- -------------
Loss and total
comprehensive
loss for the
year (2,804,371) (2,804,371)
Transactions
with owners
Share options
charge 21,355 21,355
Share capital
issued 500,786 263,116 - - 763,902
-------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 31
December 2020 3,721,007 32,056,986 106,602 35,543 (30,283,485) 5,636,653
-------------- -------------- ----------------- -------------- ----------------- -------------
Notes to the Consolidated Financial Statements
1. General information
The principal activity of Fox Marble Holdings plc and its
subsidiary and associate companies (collectively "Fox Marble Group"
or "Group") is the exploitation of quarry reserves in the Republic
of Kosovo and the Republic of North 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 160
Camden High Street, London, NW1 0NE. 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 2020, but is derived from the Group's audited full
financial statements. The auditors have reported on the 2020
financial statements and their report was unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006. The
2020 Annual Report was approved by the Board of Directors on 4 June
2021, and was mailed to shareholders on 5 June 2021. 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 2019 Annual Report, have been prepared in accordance with
interational accounting standards in conformity with the
requirements of the Companies Act 2006 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
Critical accounting estimates and areas of judgement
The preparation of consolidated nancial 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. The key areas of
judgement and critical accounting estimates are explained
below.
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 EUR159,222 at
31 December 2020 (2019 - EUR6.125). The main assumptions used in
the valuation of the derivative conversion option as at 31 December
2020 were: underlying share price of GBP0.0250 (31 December 2019:
GBP0.0245), EUR/GBP spot rate of 1.1053 (31 December 2019: 1.1815),
historic volatility of 34% (31 December 2019: 53%) and risk free
rate of 0.3% (31 December 2019: 1.9%).
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 the 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 next 18 months.
In August 2021 the Company is due to repay the existing EUR1.8
million Gulf Loan Note. The Company is already in discussion as to
securing an extension to this loan note and is confident that it
can secure such a concession, however at this point the
arrangements have not yet been finalised.
The forecasts assume that production at the Prilep and
Cervenillë quarries will continue, which were reopened respectively
in August and September 2020. It further assumes that production at
the factory will continue to operate and that recently installed
machinery will drive an increase in the rate of production. The
forecast assumes existing contracts held by the Company will be
fulfilled on a timely basis. Furthermore the forecasts assume that
sales of block marble will resume during 2021, in line with the
reopening of international borders. 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 scearios which management have considered that could
impact the financial performance of the Company. These include:
(a) The Company may not be able to secure an extension to the
Gulf Marble Loan note, and the loan note may become payable in full
or in part in August 2021.
(b) levels of production at Cervenillë 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;
(c) Fulfilment of the Company's order book could be delayed, or
the payment of amounts due under such contracts could be
delayed.
(d) The continued progression of the Covid-19 may have a further
detrimental impact on sales or on operations, and
(e) The resumption of block sales to the international block market may be slower than expected.
As at 31 May 2021 the Company had EUR0.8 million in cash
including EUR0.4 million of restricted funds related to litigation
funding.
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. On 1 May 2021, 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 31 May
2022, and is undrawn at 31 May 2021. In addition to this Company
has agreed a further facility of GBP700,000 with a non related
party high net worth individual that can be used if required.
In conclusion having regard to the existing and future working
capital position and projected sales, the Directors are of the
opinion that the application of the going concern basis is
appropriate.
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.
Of the non-current assets held by the Group of EUR7,611,850
(2019 - EUR7,925,286), EUR4,309,546 (2019 - EUR4,262,651) relates
to Property, Plant and Machinery acquired for the exploitation of
assets in Kosovo and EUR433,702 (2019 - EUR588,902) relates to
Property, Plant and Machinery acquired for the exploitation of
assets in North Macedonia. Intangible assets held by the Group
relate to intangible assets acquired in relation to mining rights
and licences in North Macedonia of EUR2,633,424 (2019 -
EUR2,674,866) and exploration and evaluation expenditure incurred
in Kosovo of EUR75,207 (2019 - EUR77,572).
Kosovo Macedonia Other Total
31 December 31 December 31 December 31 December
2020 2020 2020 2020
EUR EUR EUR EUR
Property, Plant
and Machinery 4,309,546 433,072 75,492 4,818,716
Intangible assets 75,207 2,633,424 84,504 2,793,135
Total non-current
assets 7,611,851
31 December 31 December 31 December 31 December
2019 2019 2019 2019
EUR EUR EUR EUR
Property, Plant
and Machinery 4,262,651 588,902 236,791 5,088,344
Intangible assets 77,572 2,674,866 84,504 2,836,942
Total non-current
assets 7,925,286
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 EUR2,794,414 (2019 - EUR2,881,919)
were costs incurred in the United Kingdom of EUR1,175,189 (2019 -
EUR1,385,145). Of the net interest cost of the Group of EUR286,213
(2019 - EUR259,867) EUR279,002 is incurred in the United Kingdom
(2019 - EUR25,867).
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
2020 2019
EUR EUR
Revenue by territory
Europe 662,305 883,271
Middle East - 148,976
China 53,595 390,625
Total revenue 715,900 1,422,872
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
2020 2019
EUR EUR
---------------------------------- ------------- -------------
Revenue by product
Sale of block marble 154,606 1,219,618
Sale of processed marble 547,513 168,807
Provision of processing services 13,781 34,447
Total revenue 715,900 1,422,872
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
2020 2019
EUR EUR
----------------------- ------------- -------------
Contractual basis 414,346 745,201
Non-contractual basis 301,554 677,671
Total revenue 715,900 1,422,872
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
2020 2019
EUR EUR
----------------------------------------- ------------- -------------
Trade receivables 189,448 142.216
Contract Liabilities (Advances received
from customers) 293,360 313,582
6. Expenses by nature
Year ended Year ended
31 December 31 December
2020 2019
EUR EUR
------------------------------------------------------ ------------- -------------
Operating loss is stated after charging/(crediting):
Cost of materials sold 559,358 814,626
Inventory provision 927,841 392,412
Fees payable to the Company's auditors 73,979 76,050
Legal & professional fees 280,542 293,972
Consultancy fees and commissions 285,792 400,458
Staff costs 491,488 690,074
Operating lease rental - 16,424
Other head office costs 116,947 147,304
Travelling, entertainment & subsistence
costs 28,340 106,194
Depreciation 158,751 207,850
Amortisation 43,807 43,796
Quarry operating costs 279,615 172,564
Foreign exchange (loss)/ gain 16,802 (19,205)
Share option charge 21,355 -
Marketing & PR 3,807 47,690
Testing, storage, sampling and transportation
of materials 59,671 94,858
Provision for bad debts 14,359 162,578
Sundry expenses (8,682) 48,900
Cost of sales, administrative and other
operational expenses 3,353,773 3,696,545
The analysis of auditors' remunerations is as follows:
Year ended Year ended
31 December 31 December
2020 2019
EUR EUR
Fees payable to the Company's auditors and its associates
for services to the group
Audit of UK parent company 16,711 16,711
Audit of consolidated financial
statements 42,763 44,834
Audit of overseas subsidiaries 14,505 14,505
Audit of UK subsidiaries
Total audit services 73,979 76,050
7. Net finance costs
2020 2019
EUR EUR
------------------------------------------ -------- --------
Finance costs
Interest expense on borrowings 279,956 343,952
Net foreign exchange loss on loan note
instrument - 171,235
Movement in the fair value of derivative 153,096 -
(note 19)
Interest payable on lease liabilities 23,733 2,451
456,785 517,638
8. Net finance income
2020 2019
EUR EUR
------------------------------------------ -------- --------
Finance income
Movement in the fair value of derivative
(note 19) - 256,335
Net foreign exchange gain on loan note 170,383 -
instrument
Interest income on bank deposits 189 1,436
170,572 257,771
9. Loss per share
2020 2019
EUR EUR
------------------------------------- ----------------------- -----------------------
Loss for the year used for the
calculation of basic EPS (2,804,371) (2,533,540)
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
EPS 287,591,514 230,948,303
Effect of potentially dilutive -
ordinary shares
Weighted average number of ordinary
shares for the purpose of diluted
EPS 287,591,514 230,948,303
Earnings per share:
Basic (0.01) (0.01)
Diluted (0.01) (0.01)
Basic earnings 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.
10. Intangible assets
Capitalised
exploration
Mining rights and evaluation
Goodwill and licences expenditure Total
EUR EUR EUR EUR
--------------------------- ----------- ---------------- ---------------- ----------
As at 31 December 2019
,1 January 2020 and 31
December 2020 84,504 2,725,840 92,866 2,903,210
Accumulated amortisation
As at 1 January 2019 - 9,537 12,936 22,473
Amortisation charge - 41,438 2,358 43,796
As at 31 December 2019
and as at 1 January 2020 - 50,975 15,294 66,269
Charge for the year 41,442 2,365 43,807
As at 31 December 2020 92,417 17,659 110,076
Net Book Value
As at 1 January 2019 84,504 2,716,304 79,930 2,880,738
As at 31 December 2019 84,504 2,674,866 77,572 2,836,942
As at 31 December 2020 84,504 2,633,424 75,207 2,793,135
Capitalised exploration and evaluation expenditure represent
rights to the mining of decorative stone reserves in the Pejë,
Syriganë and Cervenillë 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 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 North
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 8 October 2018 the Company acquired Gulf Marble Investments
Limited (UAE). As part of this acquisition the Group acquired the
direct sub licence to the Prilep Alpha quarry and eliminated the
40% gross revenue royalty payable under the original agreements.
The Group has recognised an intangible asset with a provisional
fair 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 28. The acquisition gave rise to a technical
deferred tax liability and a corresponding entry to goodwill of
EUR84,504 in accordance with IFRS 3.
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 performed a review for impairment and
concluded that no such impairment exists. In considering the value
in use the company made a number of judgments around anticipated
production and sales, including judgments as to when block sales
and pricing might recover from the impact of the Covid 19
pandemic.
Other intangible assets 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 IAS 36.
11. Property, plant and equipment
Quarry Factory Rights Land Office Equipment Total
Plant Plant of use and buildings and
& Machinery & Machinery asset Leasehold
improvements
EUR
EUR EUR EUR EUR
EUR
-------------------------- -------------- ------------- -------- --------------- ----------------- ----------
Cost
As at 1 January 2019 3,431,312 - 160,000 30,488 6,933,293
Additions 597,773 50,306 242,710 - 936 891,725
As at 31 December 2019
and as at 1 January
2020 3,909,266 3,481,618 242,710 160,000 31,424 7,825,018
Additions 1,372 88,131 90,132 - - 179,635
Disposals (170,000) (170,000)
As at 31 December 2020 3,910,638 3,399,749 332,842 160,000 31,424 7,834,653
Accumulated depreciation
As at 1 January 2019 1,920,274 138,408 - - 29,859 2,088,541
Depreciation charge
(1) 530,593 110,056 6,827 - 657 648,133
As at 31 December 2019
and as at 1 January
2020 2,450,867 248,464 6,827 - 30,516 2,736,674
Depreciation charge
(1) 225,454 133,643 61,044 - 527 385,744
Disposals - 141,429 - - 141,429-
As at 31 December 2020 2,676,321 240,679 67,871 - 31,043 3,157,366
Net Book Value
As at 1 January 2019 1,391,219 3,292,904 - 160,000 629 4,844,752
As at 31 December 2019 1,458,399 3,233,154 235,883 160,000 908 5,088,344
As at 31 December 2020 1,234,317 3,159,070 264,971 160,000 382 4,818,716
(1) 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 2020
EUR261,871 of depreciation was included in the cost of inventory
produced (2019 EUR461,170).
The Group has assessed property, plant and equipment for
indicators of impairment and concluded there are no indicators of
impairment arising in the current year.
Included in property, plant and equipment is EUR161,000 of
assets that are currently located at the Maleshevë quarry site.
Access to the quarry site has been under dispute since July 2019,
as disclosed further in Note 30. Due to the dispute with Green
Power Sh.P.K the Company were unable to physically inspect the
assets as at 31 December 2020 year end. The assets were counted by
an independent assessor in October 2019 as part of ongoing civil
litigation against Green Power Sh.P.K, and an injunction was
granted to the Company stopping Green Power Sh.P.K or any other
third party moving, selling or interfering with them in any way.
The Company is confident of its rights over the assets and the
enforcement of those rights, and that the value of the assets is
not impaired.
Right-of-use assets
From 1 January 2019, the Group has adopted IFRS 16 Leases. Refer
to notes 2 for the accounting policy. The right-of-use assets
recognised on adoption of the new leasing standard are reflected in
the underlying asset classes of property, plant and equipment.
12. Borrowings
2019 2019
EUR EUR
------------------------------------------ ---------- ----------
Current borrowings
Convertible loan notes held at amortised
cost 1,841,027 1,924,821
Derivative over own equity at fair
value 466 4,875
1,841,493 1,929,696
Non-current borrowings
Convertible loan notes held at amortised
cost 2,640,372 2,523,471
Derivative over own equity at fair
value 158,756 1,250
2,799,128 2,524,721
a. Series 3, 4, 6, 7, 8, 9 and 10 Loan Notes
The Company has previously issued the following loan notes:
-- 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 had an interest rate of 8% per
annum. The Loan Note was due for conversion or repayment on 31
August 2020 with a conversion price set at 10p.
-- 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 had an interest rate
of 8% per annum. The Loan Note was due for conversion or repayment
on 31 August 2020 with a conversion price set at 10.5p.
-- 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 had an interest rate of 8% per
annum. The Loan Note was due for conversion or repayment on 30 July
2020 with a conversion price set at 10.5p.
-- 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 7 Loan Note had an interest rate
of 8% per annum. The Loan Note was due for conversion or repayment
on 30 September 2020 with a conversion price set at 10.5p.
-- On 4 February 2019, the Company issued a convertible loan
note with a value of GBP700,000 ("Series 8-10 Loan Note") to a
non-related party. This new Series 8-10 Loan Note had an interest
rate of 8% per annum. The Loan Note was due for conversion or
repayment on 4 February 2021 with a conversion price set at
10.5p.
As at 31 December 2020 , the above Loan Notes held at amortised
cost had a balance of EUR2,265,553. The Stockholders' option to
convert the loan was treated as an embedded derivative and measured
at fair value. As at 31 December 2020 the derivative had a value of
EUR2,243. The fair values were assessed using a Black Scholes
methodology. The derivative was 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 the 27 May 2020, the company reached agreement with the
holders of the Series 3, 4, 6, 7, 8, 9 and 10 loan note holders to
reschedule the terms of the loan notes. The loan note, together
with any accrued interest at that date was exchanged for Series 11
Loan Note, whose terms are considered below.
b. Series 5 Loan Note
On 19 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 was due for conversion or repayment on 19
January 2020 with a conversion price set at 10.5p.
As at 31 December 2020, the Series 5 Loan Note held at amortised
cost had a balance of EUR83,567 (31 December 2019 - EUR91,073). The
Stockholders' option to convert the loan has been treated as an
embedded derivative and measured at fair value. As at 31 December
2020, the derivative had a value of EUR52 (31 December 2019 -
EUR84). 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.
The Loan note was repaid in January 2021.
c. Other Borrowings
In September 2019, the Company entered a short-term borrowing
arrangement with a value of GBP345,000. The interest rate was 1%
per calendar month with a repayment date of the 31 March 2020. As
at 31 December 2020 the carrying value of these loans was
EUR407,618.
On the 27 May 2020 holders of GBP225,000 of these borrowings
agreed to exchange them with Series 11 Loan notes as described
below. The term of the remaining borrowings amounting to GBP120,000
were varied to extend the repayment date to 30 June 2023. As at 31
December 2020 these held at amortised cost had a balance
EUR145,901.
d. Gulf Loan Note
As consideration for the acquisition of Gulf Marble Investments
Limited Fox Marble has issued an Unsecured Convertible Loan Note
("Gulf Loan Note") in the amount of EUR1,785,000. 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 1 October 2020. The Loan Note
carries an interest rate of Libor plus 1.5% payable annually in
arrears.
The loan note is due for repayment on the 8 August 2020. The
Company is currently in negotiation with the loan note holders to
secure and extension fo the term of the loan note.
As at 31 December 2020, the Gulf Loan Note held at amortised
cost had a balance of EUR1,757,740 (31 December 2019 -
EUR1,676,062). The Stockholders' option to convert the loan has
been treated as an embedded derivative and measured at fair value.
As at 31 December 2020, the derivative had a value of EUR181 (31
December 2019 - EUR382). 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 11 Loan Note
On the 27 May 2020 the company reached agreement with the
holders of the Series 3, 4, 6, 7, 8, 9 and 10 loan note holders to
reschedule the terms of the loan notes.
The existing loan notes were cancelled and replaced by the
Series 11 Loan Note. The Series 11 Loan Note has an interest rate
of 2% per annum. The Loan note is due for conversion or repayment
on the 30 June 2026 with a conversion price of 5p.
As at 31 December 2020, the Series 11 Loan Note held at
amortised cost had a balance of EUR2,494,470. The Stockholders'
option to convert the loan has been treated as an embedded
derivative and measured at fair value. As at 31 December 2020, the
derivative had a value of EUR155,188. 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.
The Directors consider that the carrying amount of borrowings
approximates their fair value at 31 December 2020.
13. Share capital
Group and Company: 2020 2019 Share Share Share premium Share
Number Number capital capital 2020 premium
2020 2019 EUR 2019
EUR EUR EUR
-------------------- ------------ ------------ ---------- ---------- -------------- -----------
Issued, called up and fully paid
Ordinary shares of GBP0.01 each
At 1 January 262,657,882 217,885,322 3,220,221 2,700,688 31,793,870 29,941,977
Issued in the
year 45,714,292 44,772,560 500,786 519,532 263,116 1,851,893
At 31 December 308,372,174 262,657,882 3,721,006 3,220,221 32,056,986 31,793,870
On the 17 June 2020 the Company issued 45,714,292 new Ordinary
Shares at a price of 1.75 pence per share through Allenby Capital
and Brandon Hill Capital Limited to raise GBP0.8 million before
expenses.
14. Contingent Liabilities
The Company has launched Civil Proceedings against the owners of
Green Power Sh.P.K in Kosovo for breach of contract for the sale of
Green Power and the pre-existing operating contract for the M3
quarry.
Should the Company be unsuccessful in asserting its rights over
the M3 quarry it will incur a direct loss of EUR119,424, due to
investments made in the power installation at the M3 quarry with a
carrying value in the accounts of EUR64,424, and deposit paid for
quarry reconditioning of EUR55,000.
On 4 September 2019 Fox Marble launched United National
Commission on International Trade Law (UNCITRAL) arbitration
proceedings, against the Republic of Kosovo for damages in excess
of EUR195 million, as a result of the failure of the State to
protect Fox Marble's rights over the Maleshevë quarry.
The Company believes the Kosovan Government to be in clear
breach of its responsibilities towards the Company as a foreign
investor in Kosovo and that this action is in the best interests of
its shareholders and employees. The Company anticipates a fair and
satisfactory resolution.
All the Company's other operations, including the quarries and
processing factory in Kosovo and the Prilep quarry in Northern
Macedonia, are unaffected.
The background to the claim is the dispute arising with the
former shareholders of Green Power Sh.P.K and Scope Sh.P.K, which
has resulted in Fox Marble being prevented from operating the
Maleshevë quarry. Since the dispute arose Fox Marble has been
working to resolve the matter with the appropriate Kosovan
Government agencies, namely the Kosovo mining regulator, the
Independent Commission of Mines and Mineral ("ICMM") and the
Agjencia e Regjistrimit të Bizneseve ("ARBK"), the Kosovo business
registration agency. However, in what is a clear breach of Kosovo
Law 04/L-220 "On Foreign Investment" (2014), Fox Marble has been
prevented from asserting its rights in these matters.
Despite the cumulative weight of evidence, Fox Marble was denied
the right to appeal any decision relating to the Maleshevë quarry
in direct contravention of the provisions of the Kosovo foreign
investment law, Law 04 /L-220.
As a direct consequence of the ARBK and ICMM decisions, the
Company has brought arbitration proceedings against the Republic of
Kosovo pursuant to Article 16 of the Kosovo foreign investment law
(as above). The basis of the claim for damages is the investment
made to date in the Maleshevë quarry, loss of future revenues
associated with the site and future investment plans in Kosovo.
Significant future investment plans are the subject of the MOU
signed in October 2016 by the Government of Kosovo and Stone
Alliance LLC which is majority owned by Fox Marble.
On the 16 December 2020 the Company announced that it had
engaged the services of Dentons CS Europe LLP to act on the
Company's behalf in its circa EUR195 million claim against the
Republic of Kosovo. Dentons have agreed a fee arrangement which
enables Fox Marble to bring the Arbitration through to its
conclusion.
15. Events after the reporting period
On 16 December 2020, the Company announced a conditional placing
of 65,500,000 new Ordinary Shares at a price of 1.6 pence per share
through Brandon Hill Capital Limited, the Company's joint broker,
to raise GBP1,048,000 million before expenses.
The Placing was conditional, inter alia, on shareholders giving
the directors authorities to issue new ordinary shares on a
non-pre-emptive basis. A General Meeting of shareholders was held.
on 4 January 2021 to grant the Board authority to allot the Placing
Shares for cash on a non pre-emptive basis, at which authority was
granted.
Application was made for the 65,500,000 Placing Shares to be
admitted to trading on AIM on the 5 January 2021 The Placing Shares
rank pari passu with the existing ordinary shares of the
Company.
On the 16 February 2021 The Company issued 5,000,000 new
ordinary shares in the Company to five individuals in lieu of cash
payments. The issue of shares reflects the contributions made to
the Company by these individuals.
On the 1 May 2021 Fox Marble agreed a credit facility with
Brandon Hill Capital Limited for GBP1,000,000. The repayment date
of the facility is 31 May 2022 and any amounts drawn down would
incur an interest reat of 9%. As at the date of the report no
amounts had been drawn down on this facility.
16. Information
Copies of the Annual Report and Financial Statements will be
posted to shareholders today. Further copies will be available from
Fox Marble Holding plc's registered office at 160 Camden High
Street, NW1 0NE or on the Company's website at
www.foxmarble.net
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"potentially", "expect", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR DKABPFBKDBAK
(END) Dow Jones Newswires
June 07, 2021 02:00 ET (06:00 GMT)
Fox Marble (LSE:FOX)
Gráfica de Acción Histórica
De Feb 2024 a Mar 2024
Fox Marble (LSE:FOX)
Gráfica de Acción Histórica
De Mar 2023 a Mar 2024