REG - Eco Buildings Group - Final Results for the year ended 31 December 2022
18/10/2023 07:00
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RNS Number : 4472Q Eco Buildings Group PLC 18 October 2023
Certain information contained within this Announcement is deemed by the
Company to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now considered to be in
the public domain.
Eco Buildings Group PLC
("Eco Buildings" or the "Company")
Final Results for the year ended 31 December 2022
Eco Buildings Group Plc, the AIM listed company is pleased to announce its
final results for the year ended 31 December 2022.
Shareholders should be aware that Company's Shares will remain suspended until
publication of its Interim Results for the Six Months ended 30 June 2023.
Highlights for the year ended 2022
· Revenue for the year of €0.9 million (2021 - €0.6 million).
Revenue from the sale of processed marble consistent with prior year at €0.6
million (2021 - €0.6 million) driven by processing contracts in Kosovo.
· Operating loss for the year of €1.9 million (2021 -loss of
€1.7 million). Loss for the year of €1.9 million (2021 - loss of
€1.9million). Adjusted LBITDA of €1.1 million (2021 - LBITDA of €1.2
million) helped by strict measures to control cost.
· In April 2022 the company shares were suspended following the
announcement of the planned reverse takeover transaction with Eco Buildings
Group Ltd.
· In November 2022 the company was notified that the London Court
of International Arbitration had found in its favour in its arbitration
against OM enterprises a former client. The Company was awarded €454,584
in costs and €383,177 in damages. The Company is currently pursuing
collection of these amounts from OM Enterprises.
Highlights since year end
· Acquisition of Eco Buildings Group Ltd completed on the 2 June
2023 following the general meeting held on the 26 May 2023. The acquisition
was classified as a Reverse Takeover under the AIM rules and as such required
approval from shareholders at a General Meeting.
· Share reorganisation completed on the 2 June 2023, with the share
of Fox Marble Holdings Plc. readmitted to AIM under a new ticker symbol
ECOB. Fox Marble Holdings plc name was changed to Eco Buildings Group Plc.
· Placing completed raising £2.7 million before expenses via the
issue of shares in Eco Buildings Group Plc at 55p per share.
· 8,232,857 preference shares issued to holders of record in Fox
Marble Holdings Plc on the 1 June 2023, which will allow them to participate
in the net proceeds arising from a successful conclusion to the current
arbitration case being pursued against the republic of Kosovo.
· Commissioning of the Eco Buildings Group factory producing GFRG
panelling significantly underway in Durres. The factory is expected to be
commissioned during Q4 2023, with commercial production beginning shortly
after
For more information on Eco Buildings please visit www.eco-buildingsplc.com
(http://www.eco-buildingsplc.com) or contact:
Eco Buildings Group plc Tel: +44 (0)20 7380 0999
Sanjay Bowry, Chief Executive Officer
Fiona Hadfield, Finance Director
Spark Advisory Partners Limited (Nominated Adviser) Tel: +44 (0)20 3368 3550
Matt Davis / James Keeshan
Tavira Financial Limited (Broker) Tel: +44 (0)20 3192 1739
Oliver Stansfield/Jonathan Evans
Chairman's statement
Dear Shareholders,
It has been a very busy period for Eco Buildings Group Plc, with major changes
in the company and its future direction.
In May 2023 Fox Marble Holdings Plc entered into an agreement to acquire Eco
Buildings Group Ltd, a company with the technology and process for the
construction of glass fibre reinforced gypsum ("GFRG") and walling systems.
GFRG is an alternative construction method which can be leveraged to achieve
faster and more economic construction of residential commercial and industrial
dwellings. By placing GFRG technology at the centre of the construction
approach Eco Buildings captures many inherent advantages compared to
conventional construction and other 'smart' buildings technologies.
Eco Buildings intends to offer a turnkey solution to large- and small-scale
developers with standard frame two and three bedroom residential units
constructed with all utilities installed ready for the developers to make
finishing decorative touches. Establishing Eco Buildings operations in Albania
will allow our connection to a growing market with low costs and a skilled
workforce, greater customer accessibility and shorter supply chains.
Fox Marble will be able to supply and process dimensional stone for use within
housing projects, while the development of Eco Buildings product worldwide
will help expand the reach of Fox Marble's dimensional stone project.
The primary objective of the acquisition and reorganization is to create
long-term value for shareholders. The company aims to meet its key milestones,
drive revenue growth, and maximize profitability. The acquisition and
reorganization can enable the company to diversify its business portfolio,
reducing its dependence on the marble market.
The Board recognises that especially in the early stages of development of Eco
Buildings it is important to focus on key priorities. Accordingly the Board
has agreed five important objectives as follows:-
1. Monitoring and rigorous focus on delivering key milestones
including completion of the factory and commencing operations.
2. Close review of cash flow and cash position.
3. Best practice corporate governance and effective internal controls
and risk management process.
4. Strong HSE culture.
5. Monitoring performance and development of Fox Marble including the
Arbitration proceedings.
There is much to do in achieving these objectives, and we will continue to
update the market on our progress in the coming year.
In March 2023 we said goodbye to Sir Colin Terry who has served as a
Non-Executive Director since the company's IPO in 2012. He has provided
significant advice and a steady hand as Chair of the audit committee and we
are very grateful for all his help over the years.
In June 2023, in conjunction with the completion of the RTO, we welcomed to
the Board Dr Ahmet Shala and Dr Etrur Albani as Non-Executive Directors.
Sanjay Bowry joined the company as CEO, replacing Chris Gilbert, who will stay
on as an advisor to the Board for the foreseeable future to ensure a smooth
transition. In addition Dominic Redfern, the founder of Gulf Walling has
joined the Board as Executive Vice Chairman. Lastly Roy Harrison stepped
down as Non-Executive Director. Roy has also been with us since the initial
IPO of the company and has provided invaluable support and advice to the
company for over ten years.
We extend our heartfelt gratitude to all our dedicated and hardworking
employees who have wholeheartedly embraced our vision as we evolve into this
new chapter.
We would also like to express our sincere gratitude to our valued shareholders
for their unwavering patience and support during the prolonged duration of the
recent transaction. We understand that the extended timeline may have tested
your patience, and we truly appreciate your understanding and steadfastness
throughout the process.
Your continued trust and commitment to our organization are truly appreciated.
We remain dedicated to maintaining transparency and open communication as we
move forward. We are confident that the results of this transaction will prove
worthwhile and bring long-term benefits to our shareholders.
Andrew Allner
Non-Executive Chairman
Strategic Report
Eco Buildings Group Acquisition and Reverse Takeover
On the 2 June 2023 the Company completed the acquisition of the entire share capital of Eco Buildings Group Limited, a company that will operate in the prefabricated modular housing sector.
Eco Buildings Group Ltd had acquired proven and innovative prefabricated modular technology which has been in development and commercial use since 2006. Based on this technology, Eco Buildings' management team has utilised its network, in the Balkans and initially secured two contracts in Albania that are expected to generate sales revenue of up to €114 million in total for the first three years following the commissioning of the factory. Eco Buildings' technology system is not subject to patent protection and embodies know how and process innovations that have been developed using its system.
The Directors believe Eco Buildings' range of modular housing products provide a solution for the construction of both affordable and high-end housing, with Eco Buildings' products being up to 50% cheaper, two-thirds lighter and five times faster to build than conventionally built homes. Eco Buildings' vision is to alleviate the global housing deficit in a sustainable and profitable way.
The Directors believe that the Company's existing building products and operations should deliver revenue synergies when combined with Eco Buildings. These include the supply of processed dimensional marble from its existing quarries for use within Eco Buildings' modular housing projects.
The Acquisition constituted a reverse takeover by the Company under the AIM Rules and was, therefore, subject to the approval of shareholders at a General Meeting held on the 23 May 2023
Share Reorganisation
At close of business on 11 April 2022, the date prior to which trading in its
Existing Ordinary Shares on AIM was suspended, the Company had 417,333,753
Existing Ordinary Shares which had a mid-market closing price of 1.085 pence
per share.
On the 2 June 2023 each Ordinary Share in the issued share capital of the
Company at the 1 June 2023 was sub-divided into 13 Sub-divided Shares,
following which 113,974 Sub-divided Shares were issued at nominal value.
Following the Sub-divided Share Issuance, every 659 Sub-divided Shares was
consolidated into one Post-Consolidation Ordinary Share and then each
Post-Consolidation Share was sub-divided into one New Ordinary Share with a
nominal value of 1p and one New Deferred Share with a nominal value of 50p.
The New Ordinary Shares have the same rights as the previous Ordinary Shares
including voting, dividend, return of capital and other rights.
The New Deferred Shares do not have any voting rights and do not carry any
entitlement to attend general meetings of the Company; nor will they be
admitted to AIM or any other market.
The Share Reorganisation resulted in the Company having 8,232,857 New Ordinary
Shares and 8,232,857 New Deferred Shares being in issue immediately following
the Share Reorganisation.
Eco Business Operations
History and Background
Eco Buildings Group Ltd was established to acquire the business and assets of
Gulf Walling FZCO in Dubai; the main assets being the manufacturing plant and
equipment (which produces its glass fibre reinforced gypsum walling and slab
system), its know-how and its inventory. These assets were relocated to
Durres, the principal port of Albania, where a new manufacturing facility has
been built in the industrial zone adjacent to the port to satisfy Eco
Buildings' two existing sales contracts. In order for the facility to become
operational, the plant and equipment remains to be assembled.
Durres is well connected with transport links to Eastern Europe and hosts a
deep-water port. By establishing Eco Buildings' operations in Albania, the
Directors believe that this will allow for greater customer accessibility,
shorter supply chains and a lower cost manufacturing environment which will
reduce costs as the Group targets growth in the Balkan region.
GFRG is an alternative construction method to achieve faster and more
economical construction of residential, commercial and industrial dwellings.
Over $6 million was invested in the technology since 2006 to date to establish
a high quality, low cost and environmentally friendly product.
Eco Buildings has developed a sales approach which the Directors believe will
better exploit the proven potential of GFRG based construction. Through this
approach and its network in the Balkans region, Eco Buildings has been
successful in securing two sales contracts with major construction companies,
one in Albania, the other in Kosovo, which are expected to generate gross
sales revenue of up to €114 million in total over the first three years of
operation.
Coupled with the Group's initial focus on the Balkans region, the Group has
entered into a manufacturing and licence agreement with North Eco, a
third-party company proposing to build modular housing in the United Kingdom
utilising the intellectual property of Eco Buildings. Under the terms of the
agreement with North Eco, Eco Buildings will receive 30% of the gross receipts
of each unit sold by North Eco.
As part of its medium-term strategy, the Group will target geographies with
appropriate new housing demand as well as historic housing deficits. It
intends to develop locally deployed mobile manufacturing plants globally for
"just in time, on site" production for large-scale housing developments,
thereby reducing transportation costs and emissions.
Eco Buildings' Product Offering
Eco Buildings' large format construction panels will be formed from GFRG. This
building method is designed to achieve faster, more cost effective and
sustainable construction of residential, commercial and industrial dwellings.
The Directors believe that with its integration of design, construction and
manufacturing capability, Eco Buildings will represent an attractive
development partner for affordable, high quality construction projects which
can be delivered faster, cheaper and cleaner than traditional building methods
for the following sectors:
· Public Social: large scale projects, multi-storey housing,
social, entry-level and key worker housing
· Private Residential: town homes, duplexes, apartments, semi- and
highly-customisable homes
· Commercial: hotels & hospitality, business centres, retail,
other leisure centres
· Other: workforce housing, senior housing, crisis housing, coastal
The Directors believe the advantages of Eco Buildings' products include the
following:
· Factory controlled precision fabrication with added quality
assurance reducing material wastage and onsite storage requirements;
· The main raw material for the production of GFRG walling and
decking is gypsum powder which is cheaper and lighter than alternative
building materials whilst providing good structural integrity. It can either
be used alone or reinforced sparingly with steel and concrete as the
structural design requires. As well as being an inherently inexpensive
material, the weight advantage of GFRG construction reduces the use of
expensive inputs such as steel and cement as well as transportation and on
site costs like labour and craneage. When combined, these savings and
efficiencies can cut building costs by as much as 50 percent when compared
with conventionally built dwellings;
· Eco Buildings' GFRG walling and decking system delivers
equivalent or superior levels of noise-resistance, termite/mould resistance
and fireproofing as conventional building materials at lower cost and
environmental impact. The Eco Buildings' GFRG walling system has been
certified under intense fire test conditions to internationally accepted
standards by the Australian CSIRO for structural integrity and insulation
performance with fire resistant properties, achieving a 4 hour fire rating in
load bearing structures (concrete filled);
· GFRG panelling is a green product that helps save energy and
protect the environment as it has a lower embodied energy (EE) coefficient and
uses less CO2 gas emission to produce and install (from the manufacturing of
panels to the completion of construction) when compared with other traditional
building construction materials, such as bricks, blocks, in situ poured
concrete, and precast concrete panels.
· Simple on-site installation of large format panels significantly
reduces building and labour time. The Directors anticipate that this will make
Eco Buildings' solution five times faster to build than conventional building
methods;
· A low carbon footprint compared to traditional buildings products
as the materials are manufactured from less energy intensive raw materials,
fully recyclable, inert and non toxic and less dependent on landfilling,
making them more environmentally friendly; and
· GFRG engineered buildings have excellent cyclone and seismic
resistance while the panels can be used for multi-storey buildings.
Walling System Manufacturing Process
Eco Buildings' panels are manufactured using a panel casting system that was
innovated by Eco Buildings' co-founder, Dominic Redfern. The process involves
a Single Vertical Panel Casting Machine which automates the moulding process
and uses a liquid mix of calcined plaster, water, fiberglass rovings, together
with waterproofing agents and curing admixtures. A machine can produce 512m(2)
of wall panels per day, working in two 8-hour shifts, which results in
approximately 1.5 housing units.
Each panel is made up of the following key constituent materials:
· Calcined plaster: is the bulk material and is commonly known as
gypsum plaster. It is a water containing calcium sulphate (CaSO4* 1/2 H2O).
when re-combined with water it recrystallises to become a hard, rock-like
substance (CaSO4 * 2 H2O).
· Water: water is added to rehydrate the calcined plaster. It
should have a relatively neutral pH of 6.5 to 8.5 and low dissolved mineral
salt content.
· Strengthening: Glass fibre rovings are added into the liquid
plaster mix and distributed evenly to create an integrated matrix of fibres
throughout the product. These are 2.5 centimetres long shreds of glass
filament treated to be antistatic (non-clumping), hydrophobic (resistant to
moisture absorption) and with reduced splintering tendencies to improve the
strength and integration properties of the product.
· Waterproofing: A waterproofing agent such as a silicon mineral
oil is added into the liquid plaster which impregnates the product mass making
it water resistant.
· Chemistry regulation: Curing admixtures are added into the liquid
plaster mix to regulate the plaster chemistry during production usually by
extending the setting time of the product.
After manufacturing, the twelve-metre walls are air cured in a vertical rack
for drying that has a capacity to store 400 panels, then cut to the dimensions
required by the customer using a computer numerically controlled (CNC) saw to
maximise off-site fabrication. Panels are placed in a 40-meter saw frame which
can accommodate three panels at a time and can operate continuously.
Spaces for doors and windows can also be pre-cut to further reduce personnel
on site and increase the speed of construction. After cutting, Eco Buildings'
walls are loaded onto stillages, ready for transport. Up to 500m2 of Eco
Buildings panels can be transported on each heavy goods vehicle which is the
equivalent to 1.5 houses. Normal height walls of up to 1 metre in length can
be installed manually, with longer panels of up to 3 metres requiring a
forklift and those up to 12 metres requiring a crane.
Eco Buildings' panels are cast with hollow, void channels oriented vertically
and spaced regularly along the wall length. These reduce the weight of the
product as well as providing conduits for electrical wiring to be concealed,
reducing the time spent at site to channel, drill or groove out these services
as in traditional installations. The same voids can be used to provide
conduits for piping. Finally, by filling these cavities with concrete and
steel reinforcement bars if required, internal reinforced columns are formed
within the thickness of the wall. This allows the Eco Buildings panel to be
used as an integral load bearing system of the structure, supporting
multi-storey construction without incurring the loss of floor space which a
conventional reinforced structural frame usually entails.
Factory
Eco Buildings' first production line was developed by its co-founder in the
United Arab Emirates and consists of a vertical panel casting machine and
supporting equipment. It was moved to a newly built facility in Albania for
the sake of proximity to its contracted customers and is anticipated to be
operational in Q3 2023. A production line is capable of producing 11,264m2 of
panelling per month or the equivalent of 31 housing units (372 units
annually). The 8,000m2 factory site is located close to Albania's capital,
Tirana, adjacent to the port of Duress, Albania's principal sea port. .
Eco Buildings Group Limited (ECOB) is pleased to confirm that the
recommissioning of the plant and machinery from Dubai at the new factory in
Durres is progressing according to plan.
The main components of the production line have now been assembled and fixed
in place in the factory.
This includes the following which are all assembled and fixed in place:
· the main press mould, its framework, its surrounding equipment
platforms and gantries;
· the CNC saw table, the caddy on which the saw travels down the
saw table and the multi-directional CNC saw unit itself;
· the gypsum powder bulk silo, the weighing hopper it loads into
and the mixer hopper for the slurry which our wall product is moulded from;
and
· the dust extraction towers and blower motors.
As contemplated in the initial relocation plan, ECOB made a significant number
of improvements and upgrades to the plant while it was fully dismantled. Most
of the components listed above were refurbished to almost "as new" condition
before being reassembled and fixed in place. This will result in a
significantly extended useful life for these components. Also the normally
inaccessible waterproof seals under the heavy mould walls have now been
replaced entirely with a more reliable and maintenance-friendly sealing
system. The rollers on which the mould wall moves in and out of its casting
position have been entirely replaced. Modification and simplification to the
press framework have restored its operability and accessibility for
maintenance. Measures to improve the efficiency of dust extraction above the
CNC saw and the plaster mixing station have also been designed anew and it is
expected that this innovation will have a major impact on air quality in the
factory. Water is a major raw material and cost input for the product. Bore
holes have been drilled in the domain of the factory as part of a programme to
meet the production and 'cleaning-in-process' water requirements of the
factory with cheap self-extracted bore water rather than municipal industrial
water which comes at a much higher cost.
Sales and Marketing
The Group has been successful in securing sales contracts with the following
construction companies:
· Andrra Invest LLC A Kosovan company specialising in construction
of residential and non-residential projects. Its activities include project
management and development as well as marketing already finished construction
sites. One of the best known completed projects is Andrra Residence in the
capital Pristina, which is a high rise residential and business building
complex.
· Egeu Stone LLC A well-recognised construction company in Albania,
which has won 9 public tenders and has completed over 25 diverse construction
projects in Albania, including multistorey residential dwellings, hotels and
other commercial and industrial buildings, schools and public spaces.
Both sales agreements follow the same framework and involve the targeted
production of between 350 and 450 residential units per year with sizes
ranging from 120 square meters to 150 square meters.
The payment terms for Eco Buildings are structured as follows:
· a fixed price per square metre produced, of which: a. 65 percent
will be paid to Eco Buildings in advance of the product shipment; and b. the
remaining 35 percent will be paid to Eco Buildings on installation of the
units.
· Eco Buildings will also receive a profit share from the unit
sales of Andrra Invest LLC and Egeu Stone LLC to their end customers.
The Company has received details of the first project to be undertaken under
the Andrra Invest contract. The construction of a model home on site is
being completed using existing stock of walls shipped from the UAE site to the
specifications laid out by Andrra, whilst the commissioning process at the
factory is ongoing.
Fox Marble Operations
Sales and marketing
Sales for the year were €0.9 million (2021 - €0.6 million). Revenue fromr
the sale of processed marble remained broadly flat for the year. During the
year the company recognised €266,840 of revenue following the resolution of
the arbitration against OM Enterprises which represented the balance of
deferred revenue that had been prepaid by OM Enterprises.
Factory
The Company has successfully constructed a 5,400 square metre double-skinned
steel factory on a 10-hectare site in Lipjan, Kosovo, which was acquired in
2013. Situated near Pristina airport, this facility specializes in the cutting
and processing of blocks into polished slabs and tiles.
In June 2020, the Company announced its acquisition of two additional
automatic CNC cutting machines, which have been installed in the Kosovo
factory. These machines, manufactured by Simec Srl and Garcia Ramos SA, joined
the existing Gravellona Machine Marmo CNC machine, effectively doubling the
capacity for cutting tiles.
During 2022, the factory successfully processed 25,705 square metres of slabs
(compared to 30,529 square metres in 2021) and over 20,400 square metres of
tile and cut-to-size materials (compared to 20,184 square metres in 2021).
Throughout 2022, the Company maintained its focus on the local market,
catering to the demand for processed materials and a diverse range of
products. These offerings include cut and polished tiles, stair pieces, door
and window lintels, as well as slabs.
Overall, the Company's factory expansion, augmented by the addition of new
cutting machines, has allowed for increased processing capabilities and
strengthened its position in the local market for various high-quality marble
products.
Quarry Operations
Prilep
In 2013, the Company entered into a significant agreement to operate a quarry
located in Prilep, North Macedonia. The initial agreement spanned 20 years,
with an irrevocable option to extend the period for an additional 20 years.
Situated in the Stara river valley, the Prilep quarry boasts sought-after
white marbles known as Alexandrian White and Alexandrian Blue. It is part of a
small cluster of quarries, overlooked by the Sivec pass.
As a consequence of the COVID-19 crisis, quarrying operations came to a halt
in April 2020. However, in August 2020, the quarry was reopened, albeit at a
limited capacity. Currently, the Company relies on existing stock to fulfill
the requirements of its processing operations at the factory. Simultaneously,
the block market is closely monitored, and quarrying operations will resume
once there is a sufficient demand for block marble that cannot be met from the
existing stock levels.
Under the terms of the agreement, a royalty of 35% of gross revenue is payable
to the original license holder of the quarry, acknowledging their rights to
the quarry's resources.
Additionally, the Company holds the rights to an adjacent quarry called Prilep
Omega, which was acquired in 2014. Although the Company possesses the rights,
development of this quarry has not been undertaken as of yet.
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.
At present the Company is using existing stock to supply its processing
operations in the factory, whilst monitoring the block market and will restart
quarrying operations when there is sufficient demand for block marble that
cannot be satisfied from existing levels of stock.
Syriganë
The quarry at Syriganë is open across four benches with a significant block
yard adjacent to the quarry site. 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).
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, the Company announced it had conditionally acquired the
entire share capital of Green Power, for a consideration of £1,000,000 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 the
Company'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, the Company launched United National Commission on
International Trade Law (UNCITRAL) arbitration proceedings, against the
Republic of Kosovo for damages in excess of €195 million, as a result of the
failure of the State to protect the Company'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 the
Company being prevented from operating the Maleshevë quarry. Since the
dispute arose, the Company 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), the Company has been prevented from asserting its rights
in these matters.
Despite the cumulative weight of evidence, the Company 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 the Company.
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 €195
million claim against the Republic of Kosovo. Dentons have agreed a fee
arrangement which enables Eco Buildings to bring the Arbitration through to
its conclusion.
The Company announced the appointment of the eminent British Barrister and
Kings 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 €195M claim against the
Republic of Kosovo.
As announced on 11 April 2022 it has been agreed between the parties that any
benefit derived from this litigation should be for the account of the Fox
Marble shareholders on the register prior to completion of the proposed
Acquisition of Eco Buildings and associated readmission. The Company
considered a number of options for how best to achieve this and following
receipt of advice from its lawyers and tax advisers has determined to carry
out the Bonus Issue of New Preference Shares, such bonus issue being completed
by capitalising £82,328.57 standing to the credit of the Company's share
premium account.
On 28 April 2023, the Company entered into a deed of assignment with Fox
Marble SPV, a wholly owned subsidiary of the Company pursuant to which the net
proceeds arising from the Kosovo Dispute will be paid to Fox Marble SPV. The
deed of assignment also includes an indemnity from Fox Marble SPV to the
Company for all costs and liabilities that may arise in respect of the Kosovo
Dispute. Pursuant to this deed, Fox Marble SPV issued 8,232,857 shares of
£0.01 each to the Company
Pursuant to the Bonus Issue, every shareholder of the Company as at the 1 June
2023 will receive 1 New Preference Share. The New Preference Shares shall
entitle the holders thereof to receive a preferential dividend equal to the
net proceeds of any successful arbitration. In the event that the Arbitration
is not successful, no amount shall be payable to the holders of the Preference
Shares by the Company.
Financing
On the 2 June 2023 the Company raised approximately £2.7 million (before
expenses) by issuing 4,946,313 shares at 55p per share.
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.
Demand for block marble fell significantly in January 2020 as a result of
travel restrictions placed on China, the principal buyers of the Company's
block marble. The spread of the virus into Europe and the resulting impact
on cross border travel and trade magnified this effect through 2020 and
2021. As travel restrictions have lifted the market for block marble
continues to show weakness as a result of increased transport and fuel costs,
and continued uncertainty in China. 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 returned to normality.
Production at the quarries continues to be tightly managed, with quarries in
use solely to meet known demand for blocks.
Results
Key Performance Indicators 2022 2021
Revenue €888,137 €646,064
Average recorded selling processed (per sqm) €24 €25
LBITDA((1)) (€1,660,731) (€1,387,116)
Operating loss for the year (€1,934,805) (€1,650,693)
Loss for the year (€1,935,248) (€1,895,738)
1) Loss for the year before interest, tax, depreciation and
amortisation.
The Group recorded revenues of €888,137 in the year ended 31 December 2022
(2021 - €646,064). Revenue for the sale of processed marble remained
broadly flat for the year. During the year the company recognised €266,840
of revenue following the resolution of the arbitration against OM Enterprises
which represented the balance of deferred revenue that had been prepaid by OM
Enterprises.. The Group incurred an operating loss of €1,934,805 for the
year ended 31 December 2022 (2021 - €1,650,693). The higher operating loss
is due to the increase in the level of stock provision recognised in 2022
compared to 2021. The Company has recognised an additional provision of
€470,714 (2021 - €118,137) on the stock held by the Group based on the
anticipated net realisable value. The average recorded selling price per sqm
for processed material remained consistent with the prior year.
The Group incurred a loss after tax for the year ended 31 December 2022 of
€1,935,248 (2021 - €1,895,738).
Reconciliation of EBITDA to Loss for the year Year to 31 December 2022 Year to 31 December 2021
€ €
Loss for the year before tax (€1,935,248) (€1,895,738)
Plus/(less):
Net finance costs 443 245,045
Depreciation 230,720 219,213
Amortisation 43,354 44,364
LBITDA (1,660,731) (1,387,116)
Plus/(less):
Inventory Provision 470,715 118,137
Share option charge 11,658 19,444
Adjusted LBITDA (€1,178,448) (€1,249,535)
Finally, I would like to thank all our staff and our Board colleagues for
their unstinting efforts on behalf of Eco Buildings.
On behalf of the board
Sanjay Bowry
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
€ €
Revenue 888,137 646,064
Cost of sales (482,422) (530,295)
Gross profit 405,715 115,769
Administrative and other operating expenses (2,340,520) (1,766,462)
Operating loss (1,934,805) (1,650,693)
Finance costs (181,062) (386,198)
Finance income 180,618 141,153
Loss before taxation (1,935,248) (1,895,738)
Taxation credit - -
Loss for the year (1,935,248) (1,895,738)
Other comprehensive income - -
Total comprehensive income for the year attributable to owners of the parent (1,935,248) (1,895,738)
company
Earnings per share
Basic earnings per share (0.235) (0.256)
Diluted earnings per share (0.235) (0.256)
Consolidated Statement of Financial Position
As at 31 December 2022
As at 31 December
2022 2021
€ €
Assets
Non-current assets
Intangible assets 2,705,417 2,748,771
Property, plant and equipment 4,200,839 4,429,161
Total non-current assets 6,906,256 7,177,932
Current assets
Trade and other receivables 992,219 1,134,487
Inventories 2,344,839 2,986,621
Cash and cash equivalents 13,025 558,282
Total current assets 3,350,083 4,679,390
Total assets 10,256,339 11,857,322
Current liabilities
Trade and other payables 1,779,853 1,407,650
Borrowings 2,104,968 1,997,852
Total current liabilities 3,884,822 3,405,502
Non-current liabilities
Deferred tax liability 84,504 84,504
Lease Commitments 100,152 146,206
Borrowings 2,594,258 2,704,916
Total non-current liabilities 2,778,913 2,935,626
Total liabilities 6,663,735 6,341,128
Net assets 3,592,604 5,516,194
Equity
Called up share capital 4,958,386 4,958,386
Share premium 32,575,443 32,575,443
Accumulated losses (34,114,471) (32,179,224)
Share based payment reserve 137,704 126,046
Other reserve 35,543 35,543
Total equity 3,592,604 5,516,194
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
€ €
Cash flows from operating activities
Loss before taxation (1,935,248) (1,895,738)
Adjustment for:
Finance costs 181,062 386,198
Finance income (180,618) (141,153)
Operating loss for the year (1,934,805) (1,650,693)
Adjustment for: 44,364
Amortisation 43,354
Depreciation 230,721 318,481
Disposal of PPE - 42,311
Equity settled transactions 11,658 19,444
Provision for impairment of receivables 152,223 69,515
Provision for inventory 470,715 118,137
Changes in working capital:
Increase in trade and other receivables (9,955) (51,685)
Decrease/(increase) in inventories 171,066 (63,481)
Increase/(decrease) in accruals 152,668 (129,408)
Increase/(decrease) in trade and other payables 219,534 (23,804)
Net cash used in operating activities (492,822) (1,306,819)
Cash flow from investing activities
Expenditure on property, plant & equipment (2,398) (37,440)
Expenditure on rights of use assets (57,708) (62,556)
Interest on bank deposits 5 42
Net cash used in investing activities (60,101) (99,954)
Cash flows from financing activities
Proceeds from issue of shares (net of issue costs) - 1,755,836
Reclass from other creditors 40,261 -
Repayment of loan notes (22,586) (83,905)
Interest paid on loan note instrument (50,608) (84,554)
Net cash generated from financing activities (32,933) 1,587,377
Net (decrease)/increase in cash and cash equivalents (585,856) 180,604
Cash and cash equivalents at beginning of year 558,282 377,678
Exchange losses on cash and cash equivalents
Cash and cash equivalents at end of year (27,573) 558,282
Cash at bank and in hand 13,025 558,282
Arranged overdraft (40,598) -
Cash and cash equivalents at end of year (27,573) 558,282
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Capital Share Premium Share based payment reserve Other Reserve Accumulated losses Total equity
€ € € € € €
Balance at 1 January 2021 3,721,007 32,056,986 106,602 35,543 (30,283,486) 5,636,654
Loss and total comprehensive loss for the year - - - - (1,895,738) (1,895,738)
Transactions with owners
Share options charge - - 19,444 - - 19,444
Share capital issued 1,237,379 518,457 - - - 1,755,836
Balance at 31 December 2021 and at 1 January 2022 4,958,386 32,575,443 126,046 35,543 (32,179,224) 5,516,194
Loss and total comprehensive loss for the year (1,935,248) (1,935,248)
Transactions with owners -
Share options charge - - 11,658 - - 11,658
Balance at 31 December 2022 4,958,386 32,575,443 137,704 35,543 (34,114,471) 3,592,604
Notes to the Consolidated Financial Statements
1. General information
The principal activity of Eco Buildings Group plc and its subsidiary and
associate companies (collectively 'Eco Buildings Group' or 'Group') is the
exploitation of quarry reserves in the Republic of Kosovo and the Republic of
North Macedonia and the development of GFRG walling panels for use in
construction. .
Eco Buildings Group plc (formerly 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. Eco Buildings Group 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 2022, but is
derived from the Group's audited full financial statements. The auditors
have reported on the 2022 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 2022
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
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. 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
Geological 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 geological 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 €1,045 at 31 December 2022 (2021 -
€17,920). The main assumptions used in the valuation of the derivative
conversion option as at 31 December 2022 were: underlying share price of
£0.01085 (31 December 2021: £0.0138), EUR/GBP spot rate of 1.12932 (31
December 2021: 1.1911),and historic volatility of 29% (31 December 2021 33%).
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. 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 Eco Buildings Group plc for the year ended 31 December
2022 are in the Republic of Kosovo and the Republic of North Macedonia. All
sales of the Group for this period 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 €6,906,256 (2021 -
€7,177,932), €3,748,907 (2021 - €3,934,751) relates to Property, Plant
and Machinery acquired for the exploitation of assets in Kosovo and €356,758
(2021 - €350,079) 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 €2,550,423 (2021 - €2,591,865) and
exploration and evaluation expenditure incurred in Kosovo of €70,490 (2021 -
€72,402).
Kosovo Macedonia Other Total
31 December 2022 31 December 2022 31 December 2022 31 December 2022
€ € € €
Property, Plant and Machinery 3,748,908 356,757 95,174 4,200,839
Intangible assets 70,490 2,550,423 84,504 2,705,417
Total non-current assets 3,819,398 2,907,180 179,678 6,906,256
31 December 2021 31 December 2021 31 December 2021 31 December 2021
€ € € €
Property, Plant and Machinery 3,934,751 350,080 144,330 4,429,161
Intangible assets 72,402 2,591,865 84,504 2,748,771
Total non-current assets 4,007,153 2,941,945 228,834 7,177,932
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 €2,239,205 (2021 - €1,650,693) were costs incurred in the
United Kingdom of €861,765 (2021 - €1, 022,251). Of the net interest
cost of the Group of €118,800 (2021 - €245,045), €118,800 is incurred in
the United Kingdom (2021 - €245,045).
All revenue, which represents turnover, arises solely within Kosovo and North
Macedonia and relates to external parties.
Group Year ended Year ended
31 December 31 December
2022 2021
€ €
Revenue by territory
Europe 598,639 646,064
India 289,498 -
Total revenue 888,137 646,064
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.
Group Year ended Year ended
31 December 31 December
2022 2021
€ €
Revenue by product
Release of deferred revenue 289,498 -
Sale of block marble - 80,761
Sale of processed marble 474,825 516,275
Provision of processing services 123,814 49,028
Total revenue 888,137 646,064
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.
Group Year ended Year ended
31 December 31 December
2022 2021
€ €
Contractual basis 289,498 318,163
Non-contractual basis 598,639 327,901
Total revenue 888,137 646,064
5. Expenses by nature
Group Year ended Year ended
31 December 31 December
2022 2021
€ €
Operating loss is stated after charging/(crediting):
Cost of materials sold 482,422 530,295
Inventory provision 470,715 118,137
Fees payable to the Company's auditors 220,114 83,655
Legal & professional fees 257,279 50,346
Consultancy fees and commissions 82,846 342,648
Staff costs 446,289 472,609
Other head office costs 52,547 109,969
Rent and rates 21,911 -
Travelling, entertainment & subsistence costs 8,626 18,705
Depreciation 230,720 219,213
Amortisation 43,354 44,364
Quarry operating costs 116,878 69,476
Foreign exchange (loss)/ gain 103,914 (4,532)
Share option charge 11,658 19,444
Marketing & PR - -
Testing, storage, sampling and transportation of materials 81,642 85,319
Provision for bad debts 152,223 69,515
Sundry (income)/expenses 39,804 67,594
Cost of sales, administrative and other operational expenses 2,822,942 2,296,757
6. Net finance costs
2022 2021
€ €
Finance costs
Interest expense on borrowings 169,501 168,001
Net foreign exchange loss on loan note instrument - 203,717
Interest payable on lease liabilities 11,561 14,480
181,062 386,198
7. Net finance income
2022 2021
€ €
Finance income
Movement in the fair value of derivative 16,875 141,111
Movement in the fair value of debt 17,152 -
Net foreign exchange gain on loan note instrument 146,587 -
Interest income on bank deposits 5 42
180,618 141,153
8. Loss per share
2022 2021
€ €
Loss for the year used for the calculation of basic EPS (1,935,248) (1,895,738)
Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 8,232,857 7,406,512
Effect of potentially dilutive ordinary shares
Weighted average number of ordinary shares for the purpose of diluted EPS 8,232,857 7,406,512
Earnings per share:
Basic (0.235) (0.256)
Diluted (0.235) (0.256)
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.
Pursuant to IAS 33.20 and in conjunction with IAS 33.64 the share
consolidation that occurred in June 2023, as disclosed in note 29, changes the
average number of shares without an concomitant change in the level of
resources. The number of common shares in issue prior to the share
reorganisation in June 2023 is adjusted in accordance with the change in the
number of ordinary shares as if the share reorganisation had occurred at the
beginning of the period under review.
9. Intangible assets
Capitalised exploration and evaluation expenditure Total
Mining rights and licences € €
Goodwill €
€
As at 31 December 2020 ,1 January 2021 and 31 December 2021 84,504 2,725,840 92,866 2,903,210
Additions - - - -
As at 31 December 2022 84,504 2,725,840 92,866 2,903,210
Accumulated amortisation
As at 1 January 2021 - 92,416 17,659 110,075
Amortisation charge - 41,559 2,805 44,364
As at 31 December 2021 and as at 1 January 2022 - 133,975 20,464 154,439
Charge for the year - 41,442 1,912 43,354
As at 31 December 2022 - 175,417 22,376 197,793
Net Book Value
As at 1 January 2021 84,504 2,633,424 75,207 2,793,135
As at 31 December 2021 84,504 2,591,865 72,402 2,748,771
As at 31 December 2022 84,504 2,550,423 70,490 2,705,417
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 €1,256,376 (£1,000,000) 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 €1,469,464 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
technical deferred tax liability and a corresponding entry to goodwill of
€84,504 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. When assessing the fair value of the licences the Company
considers the potential cash flows over the remaining period of the licence.
10. Property, plant and equipment
Quarry Plant & Machinery Factory Plant & Machinery Rights of use asset Land and buildings Office Equipment and Total
Leasehold improvements
€
€ €
€ €
€
Cost
As at 1 January 2021 3,910,638 3,399,749 332,842 160,000 31,424 7,834,653
Additions - 35,241 - - 2,198 37,439
Reclassification (170,000) 170,000 - - - -
Disposals (86,148) - (90,132) - - (176,280)
As at 31 December 2021 and as at 1 January 2022 3,654,490 3,604,990 242,710 160,000 33,622 7,695,812
Additions - 2,398 - - - 2,398
As at 31 December 2022 3,654,490 3,607,388 242,710 160,000 33,622 7,698,210
Accumulated depreciation
As at 1 January 2021 2,676,321 240,678 67,871 - 31,066 3,015,936
Depreciation charge 97,664 172,730 47,034 - 1,053 318,481
Reclassification (141,429) 141,429 - - - -
Disposals (52,744) - (15,022) - - (67,766)
As at 31 December 2021 and as at 1 January 2022 2,579,812 554,837 99,883 - 32,119 3,266,651
Depreciation charge 5,468 176,095 48,227 - 930 230,720
As at 31 December 2022 2,585,280 730,932 148,110 - 33,049 3,497,371
Net Book Value
As at 1 January 2021 1,234,317 3,159,070 264,971 160,000 359 4,818,717
As at 31 December 2021 1,074,678 3,050,153 142,827 160,000 1,503 4,429,161
As at 31 December 2022 1,069,210 2,876,456 94,600 160,000 573 4,200,839
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 €161,000 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 13.
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.
11. Borrowings
Group 2022 2021
€ €
Current borrowings
Convertible loan notes held at amortised cost 2,052,405 1,997,391
Other borrowings held at amortised cost 52,563 -
Derivative over own equity at fair value - 461
2,104,968 1,997,852
Non-current borrowings
Convertible loan notes held at amortised cost 2,564,916 2,687,458
Other borrowings held at amortised cost 28,296 -
Derivative over own equity at fair value 1,045 17,458
2,594,258 2,704,916
a. Series 11 Loan Note
On 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 1 December 2026 with a
conversion price of 5p.
As at 31 December 2022, the Series 11 Loan Note held at amortised cost had a
balance of €2,564,916 (2021 - €2,687,458). The Stockholders' option to
convert the loan has been treated as an embedded derivative and measured at
fair value. As at 31 December 2022, the derivative had a value of €1,045
(2021 - €17,459). 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 2022.
Subsequent to year end the term of the loan note was varied to change the
conversion price to 80p per share based on the post consolidation share
capital of the Company.
b. Gulf Loan Note
As consideration for the acquisition of Gulf Marble Investments Limited Eco
Buildings has issued an Unsecured Convertible Loan Note ('Gulf Loan Note') in
the amount of €1,785,000. 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 was repayable from 1 October 2020.
The Loan Note carries an interest rate of Libor plus 1.5% payable annually in
arrears.
As at 31 December 2022, the Gulf Loan Note held at amortised cost had a
balance of €1,939,463 (31 December 2021 - €1,855,611). The Stockholders'
option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2022, the derivative had a value
of €191 (31 December 2021 - €191). 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.
Subsequent to year end the term of the loan note was varied to extend the
repayment date to 1 January 2026 in return for an increase in the principal of
€100,000.
c. Other Borrowings
In September 2019, the Company entered a short-term borrowing arrangement with
a value of £345,000. The interest rate was 1% per calendar month with a
repayment date of the 31 March 2020. On the 27 May 2020 holders of
£225,000 of these borrowings agreed to exchange them with Series 11 Loan
notes as described above. The term of the remaining borrowings amounting to
£120,000 were varied to extend the repayment date to 30 September 2022.
During the year £20,000 of these borrowings were repaid and the term of the
remaining loan notes extended to 2 June 2023.
As at 31 December 2022, the carrying value of these loans was €112,932 (2020
- €141,780).
12. Share capital
2022 2021 Share capital Share capital Share premium Share premium
Number Number 2022 2021 2022 2021
€ € € €
Issued, called up and fully paid Ordinary shares of £0.01 each
At 1 January 417,333,713 308,372,174 4,958,386 3,721,006 32,575,443 32,056,986
Issued in the year - 108,961,579 - 1,237,380 - 518,457
At 31 December 417,333,713 417,333,753 4,958,386 4,958,386 32,575,443 32,575,443
On 4 January 2021 the Company issued 65,500,000 new Ordinary shares at a price
of 1.60 pence per share through their broker to raise £1,0 million before
expenses. On the 12 February 2021 the Company issued 5,000,000 new Ordinary
shares at a price of 1.60 pence per share in settlement of consultancy feed of
£80,0000. On the 22 December 2021 the Company issued 38,461,579 shares at a
price of 1.30 pence per share through their broker to raise £0.5 million
before expenses. Expenses of nil were offset to share premium in the year
ended 31 December 2022 (2021 - €85,887).
After the year end date the company undertook a share reorganisation and issue
as part of the acquisition of Eco Buildings Group Limited. This is
considered further in note 15.
13. 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 €119,424, due to investments made in the
power installation at the M3 quarry with a carrying value in the accounts of
€64,424, and deposit paid for quarry reconditioning of €55,000.
On 4 September 2019 Eco Buildings launched United National Commission on
International Trade Law (UNCITRAL) arbitration proceedings, against the
Republic of Kosovo for damages in excess of €195 million, as a result of the
failure of the State to protect Eco Buildings' 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 Eco
Buildings being prevented from operating the Maleshevë quarry. Since the
dispute arose Eco Buildings 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), Eco Buildings has been prevented from asserting its rights
in these matters.
Despite the cumulative weight of evidence, Eco Buildings 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 Eco Buildings.
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 €195
million claim against the Republic of Kosovo. Dentons have agreed a fee
arrangement which enables Eco Buildings to bring the Arbitration through to
its conclusion.
14. Contingent Asset
In November 2022 Fox Marble announced the results of its arbitration
proceedings in the London Court of International Arbitration ("LCIA") against
a customer based in India. In 2017, Fox Marble signed an off-take agreement
with the customer. The parties fell into dispute about their respective
obligations under, and the performance of, that agreement. On 13 August 2020,
commercial arbitration proceedings at the LCIA were initiated. Following a
hearing, on 11 November 2022, the LCIA issued an award in favour of the
Company with an award of 383,177 in damages plus £454,584 in costs. No other
issues remain to be determined in the arbitration.The company has not
recognised an asset within its account in respect of this award till such
point it has clear visibility as to when such an award may be collected.
15. Events after the reporting period
Acquisition of Eco Buildings Group Ltd
On 28 April 2023, the Company entered into an acquisition agreement pursuant
to which it agreed to purchase the entire issued share capital of Eco
Buildings in exchange for shares in the Company. The aggregate total
consideration to be paid by the Company for the shares in Eco Buildings is to
be satisfied at by the issue of 54,545,455 Shares in the enlarged group..
On the 2 June 2023 the Company completed the acquisition of 100% of the issued
share capital of Eco Buildings Group Ltd.
The Acquisition constitutes a reverse takeover by the Company under the AIM
Rules and was, therefore, subject to the approval of Shareholders at the
General Meeting.
Eco Buildings Group Limited had issued £645,000 of convertible notes.
Pursuant to the Novation Deeds, these Eco Buildings Group Limited CLNs were
novated to the Company on 2 June 2023 and repaid by the issuance of the CLN
Shares at a 50% discount to the Placing Price.
Following completion of the Acquisition, Eco Buildings will also be a direct,
wholly owned subsidiary of the Company. Eco Buildings also has a direct,
wholly owned subsidiary, Eco Buildings Group Albania Sh.P.K. Details of Eco
Buildings and its subsidiary can be found in the below table:
% Ownership Date acquired/ Registered Office Place of incorporation Principal activity
Incorporated
Eco Buildings Group Limited 100% 3 August 2012 160 Camden High Street NW1 0NE England & Wales Operating Company
Eco Buildings Group Albania Sh.P.K 100% 11 December 2012 Rruga "Frosina Plaku", pall 21, hyrja 13, Kati 1 , Tirana Albania Operating Company
Share reorganisation
On the 2 June 2023 each Ordinary Share in the issued share capital of the
Company at the 1 June 2023 was sub-divided into 13 Sub-divided Shares,
following which 113,974 Sub-divided Shares were issued at nominal value.
Following the Sub-divided Share Issuance, every 659 Sub-divided Shares was
consolidated into one Post-Consolidation Ordinary Share and then each
Post-Consolidation Share was sub-divided into one New Ordinary Share with a
nominal value of 1p and one New Deferred Share with a nominal value of 50p.
The New Ordinary Shares have the same rights as the previous Ordinary Shares
including voting, dividend, return of capital and other rights.
The New Deferred Shares do not have any voting rights and do not carry any
entitlement to attend general meetings of the Company; nor will they be
admitted to AIM or any other market.
The Share Reorganisation resulted in the Company having 8,232,857 New Ordinary
Shares and 8,232,857 New Deferred Shares being in issue immediately following
the Share Reorganisation.
Issue of Shares
On the 2 June 2023, following the share reorganisation described above the
Company issued in aggregate 61,837,223 new ordinary shares representing the
total of the Placing Shares, the Consideration Shares and the CLN Shares)
Name Number of ordinary share issue price ISSUE Date
Placing Shares 4,946,313 55p 2 June 2023
Consideration shares 54,545,455 55p 2 June 2023
CLN Shares 2,345,455 27.5p 2 June 2023
The Placing shares were issued as part of placing to raise £2.7
million prior to expense at a placing price of 55p.
Consideration shares were issued in settlement of the
consideration price for the acquisition of Eco Buildings Group Ltd .
CLN Shares were issued as settlement of the Convertible Loan
Notes totalling £645,000 novated into the Company as part of the Acquisition
of Eco Buildings Group Limited as noted above
Issue of Options
On the 2 June 2023 , the Company granted 2,272,725 Options to certain current
and proposed Directors of the Company as detailed below:
Name Number of ordinary share under option Exercise price Final Exercise Date
Andrew Allner 363,636 55p 3 years from admission
Dr Etrur Albani 363,636 55p 3 years from admission
Sanjay Bowry 454,545 55p 3 years from admission
Dominic Redfern 363,636 55p 3 years from admission
Christopher Gilbert 363,636 55p 3 years from admission
Fiona Evans 363,636 55p 3 years from admission
At 2 June 2023, the Company will have granted 1,748,017 Warrants to certain
advisers of the Company, as detailed below:
Name Number of ordinary share under option Exercise price Final Exercise Date
Spark ADvisory Partners 700,701 1p 3 years from admission
TAvira FINANCIAL LIMITED 247,316 55p 3 years from admission
Oliver Stansfield 800,000 30p 3 years from admission
Change of Directors
On the 2 June 2023 Sanjay Bowry, Dominic Redfern, Dr Etrur Albani and Dr Ahmet
Shala were appointed as directors of the Company. Sanjay Bowry joins as new
Chief Executive Officer and Dominic Redfern as Executive Vice Chairman. Dr
Etrur Albani and Dr Ahmet Shala join as Non-executive directors. On the
same date Christopher Gilbert and Roy Harrison resigned as directors of the
Company.
Change of Name
On the 2 June 2023 the Company changed its name from Fox Marble Holdings Plc
to Eco Buildings Group Plc.
16. Information
Copies of the Annual Report and Financial Statements will be posted to
shareholders. Further copies will be available from Eco Buildings Group
plc's registered office at 160 Camden High Street, NW1 0NE or on the Company's
website at www.eco-buildingsplc.com
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified 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 reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors
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