REG - Eco Buildings Group - Final Results
28/06/2024 14:15
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RNS Number : 4126U Eco Buildings Group PLC 28 June 2024
28/06/2024
Eco Buildings Group Plc
("Eco Buildings" or the "Company")
Final Results for the year ended 31 December 2023
Eco Buildings Group Plc, the AIM listed company is pleased to announce its
final results for the year ended 31 December 2023.
Highlights for the year ended 2023
· 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
shares 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.
· The transaction to acquire Eco Buildings Group Ltd has been
accounted for using the acquisition method of accounting in accordance with
IFRS 3, which requires the identification of the acquirer and the acquiree for
accounting purposes.. As a result, the financial statements of Eco Buildings
Group Plc in subsequent filings will represent the historical financial
statements of Eco Buildings Group Ltd.
· Machinery for the production of GFRG panels dismantled from its
previous site in the UAE, shipped and re assembled in Albania in a purpose
build site in Durres providing access to European market. The machinery was
reconditioned, updated to increase both production speed and accuracy. The
first walls were produced by the factory in December 2023.
· Contracts signed with Andra Invest LLC and Egeu stone for a
total of €38 million per annum over the next three years, forming the
cornerstone of a significant order book for the Eco Buildings business.
· Losses for the year were €2.5 million (2022: €0.4 million),
due to costs incurred as part of the RTO process and the one off impact of the
conversion of pre RTO convertible loan note instrument, offset by strict
measures to control expenditure.
Highlights since year end
· Since producing our first wall in December 2023, the purchased
machinery was subject to a significant process of innovation and upgrades to
allow it to operate in a fully automated mode. This has led to 33% decrease
in production time as well as reduction in operating costs going forward.
· As previously announced, commercial production began at the
factory in June 2024 following the completion of this work. We have
already begun to supply material for our first order, and have received a
purchase order for the first rolling program of panels from AED Shpk for
25,000 sqm to be drawn down in accordance with a schedule of works. The
sale of these panels will allow the company to generate revenue as we roll out
the more complex complete dwellings.
· The group received official certification for Latin American
Markets. The Group's walls have been approved for use under national
building regulations in Chile, following a full range of stress tests carried
out by the University of Chile in Santiago including revalidation of the fire
safety certification. This certification can be utilised across a large
proportion of Latin America.
· On 7 February 2024 Eco Buildings Group Plc raised £827,000 via a
subscription for new ordinary shares. The Subscription was effected at a price
of 12 pence per share.
Sanjay Bowry, CEO, commented "2023 was a highly eventful year for Eco
Buildings, including the completion of our RTO and raising £2.7m,
transferring plant and equipment from Dubai to Albania, constructing a new
purpose-built factory and refurbishing and upgrading plant and equipment
With the upgrades installed, we can now project higher production volumes of
the highest quality walls at lower costs. We are planning our production
schedule over the next 12 months to fulfill two existing contracts expected to
generate over €114m over the next three years, and we anticipate soon
announcing the results of advanced discussions for contracts in other
fast-growing markets."
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,
The past year has been eventful and transformative for the Company, marked by
significant changes and strategic advancements. With the acquisition of Eco
Buildings Group Limited, our Group has successfully ventured into a new
sector, broadening our horizons and opportunities. Over the last year, our
primary focus has been on commissioning our new operations in Durres. This
crucial step enables us to unlock and realize the full potential of our
capabilities, paving the way for future success.
Housing is a fundamental human need, providing safety, stability, and a
foundation for both individual and societal well-being. Beyond its basic
necessity, housing is a powerful driver of economic development, creating jobs
and bolstering local economies. It plays a vital role in fostering healthy,
stable, and prosperous communities. However, despite its importance, housing
deficits persist worldwide, posing ongoing challenges that need to be
addressed.
Eco Buildings presents an innovative, cost-effective, and high-quality
solution to the global housing demand. Our approach is characterized by a
rapid and efficient construction process, essential for addressing both urgent
housing needs and long-term projects. The flexibility and customization
options of our materials allow for a diverse range of designs, accommodating
various housing types and preferences. Furthermore, our GFRG based housing
solutions contribute to environmental sustainability by minimizing waste,
incorporating energy-efficient designs, and utilizing sustainable materials.
We believe that our unique construction methodology represents an
underexploited opportunity with immense potential. Recent test results in
Chile have underscored the superior quality of our products. The extensive
work undertaken on our factory during its reinstallation and recommissioning
has significantly upgraded the assets acquired. We have invested substantial
time and resources into renewing and enhancing almost every aspect of our
production machinery, resulting in improved production speeds and reduced
operating costs.
The journey to achieve fully automated continuous production at our Durres
facility has been both challenging and rewarding, made possible by the
exceptional skills and innovation of our local teams. This milestone marks a
substantial leap forward, enhancing our productivity, efficiency, and overall
output. Moreover, it has fortified our intellectual property portfolio,
further distinguishing us within our industry.
Significant advancements in our software systems are poised to drive even
greater productivity and efficiency, extending the lifespan of our initial
production line in Durres. These improvements will now serve as the benchmark
for all future production lines, ensuring standardized excellence across our
operations.
We extend our sincere appreciation to all stakeholders for their patience and
support throughout this innovative transformation of our production
capabilities to full automation. With these enhancements in place, we are
eager to intensify our market presence, fulfilling current commitments and
venturing into new markets that we have already identified.
We extend our deepest gratitude to all our dedicated and hardworking employees
who have wholeheartedly embraced our vision. Your commitment and efforts are
the cornerstone of our success as we embark on this new chapter. Over the past
year, there have been substantial changes within our board, both as part of
the transaction and in subsequent developments. I would like to extend
particular thanks to Andrew Allner who retired as Non-Executive Chairman early
this year and who has led the board since its inception in 2011. With the
recent appointment of Etrur Albani as Executive Vice Chairman, we are
confident that our board now possesses the focus and expertise necessary to
steer the Company towards a prosperous future.
Your ongoing trust and commitment to our organization mean a great deal to us.
We remain steadfast in our dedication to maintaining transparency and open
communication as we move forward together.
Don Nicolson
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 and
Kosovo 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.
The transaction to acquire Eco Buildings Group Ltd has been accounted for
using the acquisition method of accounting in accordance with IFRS 3, which
requires the identification of the acquirer and the acquiree for accounting
purposes. Based on the assessment of the indicators under IFRS 3 and
consideration of all pertinent facts and circumstances, Eco Buildings'
management determined that Eco Buildings Group Limited (since renamed Eco
Buildings Operations Limited) is the acquirer for accounting purposes and as
such, the transaction will be accounted for as a reverse acquisition under
IFRS 3. As a result, the financial statements of Eco Buildings Group Plc in
subsequent filings will represent the historical financial statements of Eco
Buildings Group Ltd.
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.
After a lengthy process of innovation and equipment and software upgrades, the
company announces that it had achieved fully automated production at its
Albanian facility in June 2024. The fully automated production line not only
delivers walls of the highest quality and consistency, but equally, does so at
significantly higher output per day than previously achieved.
A single production line is capable of producing over 177,000 sqm of GFRG
(glass fibre reinforced gypsum) walls per year - enough to deliver768 houses a
year based on a standard 60 sqm two story flat roof detached house plan.
These improvements have been achieved through incorporating new technology
into the production process and a rigorous engineering overhaul of every
component. This has yielded a reduction in cycle-time to produce a wall,
vastly improved panel quality standards and increased operational efficiency
and cost reduction. This upgrade will improve revenue and profit projections
for the current production line in Albania, now and into the future. It will
also increase the Company's store of Intellectual Property.
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.
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 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 are 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 and the Chilean Government 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. 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 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.
· 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.
· A waterproofing agent such as a silicon mineral oil is added into
the liquid plaster which impregnates the product mass making it water
resistant.
· 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, 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-metre 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 purchased from a business in the UAE
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 produced its first walls in late 2023. A
production line is capable of producing 14,784m(2) of panelling per month or
the equivalent of 66 housing units (60sqm footprint). The 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 completed.
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
before being reassembled and fixed in place. This will result in an 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.
The entire software system controlling the machinery has been rewritten
allowing a fully automated process for the machine, software which is now the
proprietary IP of Eco Buildings Group.
Certification
In April 2024, the government-approved testing department at the Catholic
University of Chile in Santiago, has informed the Company that its wall
panels, have successfully passed the government's rigorous testing program for
use in its construction market.
This noteworthy development is the result of months of meticulous testing that
began back in July 2023 where the Group's building materials were subjected to
the most extensive evaluations for strength, durability, fire-resistance,
sound insulation and structural integrity. The results from the Catholic
University testing center surpassed their stringent standards on all test
variables, demonstrating the reliability and adaptability required to meet the
exacting building regulation standards governing the construction industry in
the region.
As a result of this performance success in Chile, it is the Company's
understanding that its walls will also be deemed compliant across a
substantial number of Latin American markets, allowing for significant future
growth prospects in Chile and across the wider region.
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 metres to 150 square metres.
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.
As previously announced, commercial production began at the factory in June
2024 following the completion of this work. We have already begun to
supply material for our first order, and have received a purchase order for
the first rolling program of panels from AED Shpk for 25,000 sqm to be drawn
down in accordance with a schedule of works. The sale of these panels will
allow the company to generate revenue as we roll out the more complex complete
dwellings.
Fox Marble Operations
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.
Overall, the Company's factory expansion, augmented by the addition of new
cutting machines in 2021, 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.
On 7 February 2024 Eco Buildings Group Plc raised £827,000 via a subscription
for new ordinary. The Subscription was effected at a price of 12 pence per
share.
Results
Key Performance Indicators 2023 2022
Revenue 139,552 -
LBITDA((1)) (1,239,987) (210,618)
Adjusted LBITDA (1,032,326) (210,618)
Operating loss for the year (1,447,935) (242,823)
Loss for the year (2,540,093) (334,513)
1) Loss for the year before interest, tax, depreciation and
amortisation.
The Group recorded revenues of €139,552 in the year ended 31 December 2023
(2022 - nil). The Group incurred an operating loss of €1,447,935 for the
year ended 31 December 2023 (2022 - €242,823). The Group incurred a loss
after tax for the year ended 31 December 2023 of €2,540,093 (2022 -
€334,513), which includes €749,490 charge on conversion of Pre-RTO loan
notes.
Reconciliation of LBITDA to Loss for the year 2023 2022
Loss for the year before tax (2,540,093) (334,513)
Plus/(less):
Loss on conversion of Pre RTO Loan Notes 749,490 -
Net finance costs 342,668 91,690
Depreciation 179,782 32,205
Amortisation 28,166 -
LBITDA (1,239,987) (210,618)
Plus:
Inventory Provision 200,714 -
Share option charge 6,947 -
Adjusted LBITDA (1,032,326) (210,618)
The Company does not anticipate payment of dividends until its operations
become significantly cash generative.
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 2023
Note 2023 2022
€ €
Revenue 139,552 -
Cost of sales (117,834) -
Gross profit 21,718 -
Administrative and other operating expenses 5 (1,469,653) (242,823)
Operating loss (1,447,935) (242,823)
Finance costs 6 (342,668) (91,690)
Charge on conversion of pre RTO Loan Notes 7 (749,490) -
Loss before taxation (2,540,093) (334,513)
Taxation charge for the year - -
Loss for the year (2,540,093) (334,513)
Other comprehensive income - -
Total comprehensive income for the year attributable to owners of the parent (2,540,093) (334,513)
company
Earnings per share
Basic earnings per share 8 (0.04) (0.01)
Diluted earnings per share 8 (0.04) (0.01)
Consolidated Statement of Financial Position
As at 31 December 2023
As at 31 December Note
2023 2022
€ €
Assets
Non-current assets
Intangible assets 9 10,002,299 -
Property, plant and equipment 10 5,411,829 1,341,421
Total non-current assets 15,414,128 1,341,421
Current assets
Trade and other receivables 612,795 89,781
Inventories 2,085,237 -
Cash and cash equivalents 676,750 10,154
Total current assets 3,374,782 99,936
Total assets 18,788,910 1,441,357
Current liabilities
Trade and other payables 2,280,786 14,698
Lease Commitments - 64,150
Borrowings 11 58,280 728,398
Total current liabilities 2,339,066 807,246
Non-current liabilities
Deferred tax liability 84,504 -
Lease Commitments 290,073 200,460
Borrowings 11 4,934,659 767,793
Total non-current liabilities 5,309,236 968,253
Total liabilities 7,648,302 1,775,499
Net assets 11,140,608 (334,142)
Equity
Called up share capital 12 5,773,729 1,129
Share premium 12 9,106,574 -
Accumulated losses (2,875,278) (335,271)
Share based payment reserve 6,947 -
Other reserve (871,364) -
Total equity 11,140,608 (334,142)
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Note 2023 2022
€ €
Cash flows from operating activities
Loss before taxation (2,540,093) (334,513)
Adjustment for:
Finance costs 6 342,668 91,690
Charge on conversion of pre RTO Loan Notes 7 749,490 -
Operating loss for the year 1,447,935 (242,823)
Adjustment for: 9 28,166 -
Amortisation
Depreciation 10 179,782 32,205
Equity settled transactions 6,947 -
Provision for inventory 200,714 -
Changes in working capital:
Decrease/(Increase) in trade and other receivables 88,133 (88,652)
Decrease in inventories 41,124 -
Increase in accruals 268,086 -
Increase in trade and other payables 5,178 13,941
Net cash used in operating activities (629,805) (285,329)
Cash flow from investing activities
Expenditure on property, plant & equipment 9 (464,677) (372,009)
Expenditure on rights of use assets (78,515) (67,571)
Net cash used in investing activities (543,191) (439,580)
Cash flows from financing activities
Proceeds from issue of shares (net of issue costs) 12 2,587,039 -
Issue of convertible loan notes 11 - 728,399
Repayment of loan notes 11 (477,551) -
Interest paid on loan note instrument 11 (268,647) -
Net cash generated from financing activities 1,840,842 728,399
Net increase in cash and cash equivalents 667,845 3,489
Cash and cash equivalents at beginning of year 10,154 -
Exchange losses on cash and cash equivalents (1,250) 6,665
Cash and cash equivalents at end of year 676,750 10,154
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share Capital Share Premium Share based payment reserve Other Reserve Accumulated losses Total equity
€ € € € € €
Balance at 1 January 2021 1,129 - - - (671) 458
Loss and total comprehensive loss for the year - - - - (334,513) (334,513)
Transactions with owners - - - -
Share options charge - - - - -
Share capital issued - - - - -
Balance at 31 December 2021 and at 1 January 2022 1,129 - - - - (334,055)
Loss and total comprehensive loss for the year - - - - (2,540,093) (2,540,093)
Transactions with owners
Share options charge - - 6,947 - - 6,947
Reserve arising on reverse acquisition - - - (871,364) - (871,364)
Issue of shares 5,772,600 9,106,574 - - - 14,879,173
Balance at 31 December 2022 5,773,729 9,106,574 6,947 (871,364) (2,875,278) 11,140,608
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 2023, but is
derived from the Group's audited full financial statements. The auditors
have reported on the 2023 financial statements and their report was
unqualified and did not contain statements under s498(2) or (3) Companies Act
2006. The 2023 Annual Report was approved by the Board of Directors on 28 June
2024, and will be mailed to shareholders on 1 July 2024. 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 2023
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.
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.
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.
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 thoroughly reviewed detailed projected cash flow forecasts
and believe it is appropriate to prepare this report on a going concern basis.
In making this assessment, they have considered the following factors:
a) the current working capital position and operational requirements;
b) the proposed business plan for the combined entity including the
development of sales in Albania from the newly commissioned factory in
Albania;
c) rates of production at the newly operational plant in Durres, and
the any risks that may impact the levels of production;
d) current order book including purchase orders received in June 2024
and the companies ability to satisfy these from existing production;
e) the timing and expected start of revenues under the contracts for
construction secured by Eco Buildings with Andrra Invest LLC and Egeu Stone
LLC.
f) the timing of expected sales receipts and completion of other
existing orders, as well as collection of outstanding debtors;
g) the sensitivities of forecast sales figures over the next two
years;
h) the timing and magnitude of planned capital expenditure including
expansion of production facilities at the GFRG factory in Albania; and
i) the level of indebtedness of the company and timing of when such
liabilities may fall due, and accordingly the working capital position over
the next 18 months.
The forecasts assume that the Company will execute the business plan for the
combined entity, as described in the strategic report. It further assumes
that production at the Fox Marble factory will continue to operate in good
order. The forecast assumes existing contracts held by the Company will be
fulfilled on a timely basis, and that the newly commissioned factory in Durres
operates in good order. The Company also anticipates significant revenue
growth through the realization of existing sales 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 business plan for the combined entity, including planned
capital and strategic expansions could be delayed or result in further losses
for the group;
b) Levels of production at the factory could be lower than expected;
Costs of construction of the units could be higher than expected;
c) Levels of production at the quarries can be impacted by unforeseen
delays due to inclement weather or equipment failure; lower than expected
quality of material being produced, and the continuing effects of the
pandemic;
d) Costs of production and construction could be higher than planned, or
there could be unforeseen additional costs;
e) Fulfilment of the Company's order book could be delayed, or the
payment of amounts due under such contracts could be delayed; and
f) The resumption of block sales to the international block market may
be slower than expected.
If the cash receipts from sales are lower than anticipated the Company has
identified that it has available to it several other contingent actions, 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 renegotiation of
the terms on its existing debt obligations.
In conclusion having regard to the existing and future working capital
position and projected sales, the Directors are of the opinion that the
application of the going concern basis is appropriate.
5. Expenses by nature
Year ended Year ended
31 December 31 December
2023 2022
€ €
Operating loss is stated after charging:
Cost of materials sold 117,834 -
Inventory provision 200,714 -
Fees payable to the Company's auditors 57,612 -
Legal & professional fees 267,036 71,164
Consultancy fees and commissions 225,169 -
Staff costs 8,217 -
Other head office costs 36,078 21,919
Rent and rates 36,405 -
--Travelling, entertainment & subsistence costs 91,427 10,679
Depreciation 179,782 32,205
Amortisation 28,166 -
Quarry operating costs 128,255 95,393
Foreign exchange loss 62,588 10,991
Share option charge 6,947 -
Testing, storage, sampling and transportation of materials 98,796 -
Sundry expenses 42,461 472
Cost of sales, administrative and other operational expenses 1,587,487 242,823
6. Net finance costs
2023 2022
€ €
Finance costs
Interest expense on borrowings 293,238 48,048
Net foreign exchange loss on loan note instrument 23,265 28,407
Interest payable on lease liabilities 25,677 11.562
Movement in fair value of derivatives 490 -
342,669 91.690
7. Charge on conversion of Pre RTO Loan notes
2023 2022
€ €
Charge on conversion of pre RTO loan notes 749,490 -
Between 6 May 2022 and 31 December 2022, Eco Buildings Operations Limited
issued £645,000 of unsecured convertible loan notes. In the event of
admission of the Company and its parent to AIM these loan notes were to
convert to a variable number of ordinary shares of the Company to provide a
conversion value of 2:1.
On the 2 June 2023, loan notes were novated from Eco Buildings Operations
Limited to Eco Buildings Group plc.
Following the re-admission of the Company to AIM on the 2 June 2023 the loan
notes with a carrying value of €749,490 (£645,000) were converted into
2,345,455 shares at an issue price of 55p, with a total value of €1,498,980
(£1,290,000) resulting in a non-cash accounting charge of €749,490 being
recognised in the income statement.
8. Loss per share
2023 2022
€ €
Loss for the year used for the calculation of basic EPS (2,540,093) (334,513)
Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 63,413,058 54,545,455
Effect of potentially dilutive ordinary shares - -
Weighted average number of ordinary shares for the purpose of diluted EPS 63,413,058 54,545,455
Earnings per share:
Basic (0.040) (0.0061)
Diluted (0.040) (0.0061)
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.
Earnings per share for the periods ended 31 December 2022 weighted average
number of shares of former Eco Buildings Operations Limited have been adjusted
by the exchange ratio of 1:54,545 to provide comparability in accordance with
IFRS 3 - Business Combinations.
9. Intangible assets
Capitalised exploration and evaluation expenditure Total
Mining rights and licences € €
Goodwill €
€
As at 31 December 2021, 1 January 2022 and 31 December 2022
Additions 7,422,686 2,535,487 72,292 10,030,465
As at 31 December 2023 7,422,686 2,535,487 72,292 10,030,465
Accumulated amortisation
As at 1 January 2022, 31 December 2022 and as at 1 January 2023 - - - -
Charge for the year - 26,506 1,660 28,166
As at 31 December 2023 - 26,506 1,660 28,166
Net Book Value
As at 1 January 2022 and 31 December 2022 - - - -
As at 31 December 2023 7,422,686 2,508,981 70,631 10,002,299
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.
The transaction has been accounted for using the acquisition method of
accounting in accordance with IFRS 3, which requires the identification of the
acquirer and the acquiree for accounting purposes. Based on the assessment of
the indicators under IFRS 3 and consideration of all pertinent facts and
circumstances, Eco Buildings' management determined that Eco Buildings Group
Limited (since renamed Eco Buildings Operations Limited) is the acquirer for
accounting purposes and as such, the merger will be accounted for as a reverse
acquisition. As a result, the financial statements of Eco Buildings Group Plc
in subsequent filings will represent the historical financial statements of
Eco Buildings Operations Limited.
Goodwill on acquisition has been calculated based on deemed consideration
calculated based upon fair value of the notional number of equity instruments
that the legal subsidiary (Eco Buildings Operations Limited) would have had to
issue to the legal parent (Eco Buildings Group plc) to give the owners of the
legal parent the same percentage ownership in the combined entity of
€9,921,787, giving rise to €7,371,841 of goodwill.
As part of the acquisition the accounting acquirer acquired intangible assets
held by Eco Buildings Group Plc.
Capitalised exploration and evaluation expenditure represent rights to the
quarrying 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. At the 2 June 2023 these assets were deemed to have a fair
value of €95,365.
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 Eco Buildings Group Plc acquired Gulf Marble Investments
Limited (UAE) ("GMIL"). 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 recognised
an intangible asset with a fair value of €1,469,464 which is being
amortised over the remaining period of the licence. As at 2 June 2023 this
asset was deemed to have a fair value of €1,279,111. In addition the
acquisition of GMIL 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 Other Total
€ €
€ €
€ €
Cost
As at 1 January 2022 - - - - -
Additions - 1,051,579 322,047 - - 1,373,626
As at 31 December 2022 and as at 1 January 2023 - 1,051,579 322,047 - - 1,373,626
Additions - 464,677 - - - 464,677
Acquisitions 721,179 2,828,718 74,505 160,000 1,111 3,785,513
As at 31 December 2023 721,179 4,344,974 396,552 160,000 1,111 5,623,816
Accumulated depreciation
As at 1 January 2022 - - - - - -
Depreciation charge ((1)) - - 32,205 - - 32,205
As at 31 December 2022 and as at 1 January 2023 - - 32,205 - - 32,205
Depreciation charge ((1)) 2,093 86,070 91,391 - 228 179,782
As at 31 December 2023 2,093 86,070 123,596 - 228 211,987
Net Book Value
As at 1 January 2022 - - - - -
As at 31 December 2022 - 1,051,579 289,842 - - 1,341,421
As at 31 December 2023 719,086 4,258,904 272,956 160,000 883 5,411,829
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 27.
Due to the dispute with Green Power Sh.P.K the Company were unable to
physically inspect the assets as at 31 December 2023 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
2023 2022
€ €
Current borrowings
Convertible loan notes held at amortised cost - 728,399
Other borrowings held at amortised cost 58,280 -
58,280 728,399
Non-current borrowings
Convertible loan notes held at amortised cost 4,122,571 -
Other borrowings held at amortised cost 811,536 767,793
Derivative over own equity at fair value 552 -
4,934,659 767,793
4,992,939 1,496,192
a. RTO Convertible Loan Notes
Between 6 May 2022 and 31 December 2022, Eco Buildings Operations Limited
issued £645,000 of unsecured convertible loan notes. The loan notes converted
to shares on 50% discount on Admission of the Eco Buildings Group plc to AIM.
b. Eco Buildings Operations Limited Loan Note
On 3 March 2022 the Group entered into an agreement to acquire operational
assets from Gulf Wall FZO, a company registered in Dubai, United Arab
Emirates. The consideration for this purchase was the issue of shares in Eco
Buildings Group Ltd and the issue of $1,000,000 (£759,763) loan note. The
terms of the loan note were agreed on 7 September 2022. The loan note has a
four-year term and an interest rate of 2%. As at 31 December 2023 the loan
note held at amortised cost had a balance of €811,533. (2022 - €767,793).
c. Series 11 Loan Note
On 27 May 2020 Eco Buildings Group Plc 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.
The noteholders had the right, in the event of a change of control of the
Company, to give written notice to the Company to require that the interest
rate on the stock increases to 25% per annum with effect from the date of the
change of control. In the event the noteholders elected to increase the
interest rate, the Company may repay the stock at par, together with all
accrued interest. On 27 April 2023, the Company amended the Series 11 CLNs
pursuant to which the terms of the Series 11 Instrument were altered to agree
that (i) the Acquisition shall not cause the interest rate payable pursuant to
the Series 11 Instrument to increase, notwithstanding that a change of control
of the Company will occur, and (ii) the Series 11 CLNs would convert at a rate
of 80 pence per ordinary share.
As at 31 December 2023, the Series 11 Loan Note held at amortised cost had a
balance of €2,297,603 (2022 Company only - €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 2023, the
derivative had a value of €555 (2022 Company only - €1,045). 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 2023.
d. Gulf Loan Note
As consideration for the acquisition of Gulf Marble Investments Limited Eco
Buildings Group plc 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.
The Gulf Loan Note was amended on 7 August 2021 pursuant to which the total
principal amount to be repaid under the Notes was increased to €1,885,000.
In addition, interest shall accrue in respect of the GM Notes at the rate of
4.5% in the period from 8 August 2021 to 1 January 2025. Furthermore, if the
Company raises more than €7 million prior to the date of repayment of the
Notes, 25% of the Notes are to be repaid immediately.
As at 31 December 2023, the Gulf Loan Note held at amortised cost had a
balance of €1,824,313 (31 December 2022 - €1,939,463). The Stockholders'
option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2023, the derivative had a value
of nil (31 December 2022 - €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.
e. Other Borrowings held at amortised cost
In September 2019, the Eco Buildings Group Plc 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 2022 £20,000 of these borrowings were repaid and
the term of the remaining loan notes extended to 2 June 2023. The
remaining balance of the loan note were repaid during 2023.
In July 2021 Eco Buildings Group Plc borrowed £50,000 under the Covid bounce
back loan scheme. The loan carries an interest rate of 2.5% and is repaid in
monthly instalments over five years. As at 31 December 2023 there remained
€29,732 outstanding on this debt.
12. Share capital
In accordance with IFRS 3 - Business Combinations, as applied to a reverse
acquisition, the share capital in the consolidated accounts of Eco Buildings
Group Plc reflects the share capital of the legal acquirer, Eco Buildings
Group Plc, with the difference between share capital of the legal acquirer and
the accounting acquirer, Eco Buildings Operations Limited (formerly Eco
Buildings Group Ltd), being aggregated and shown as part of retained earnings
and other reserves.
31 December 2023 31 December 2022 Share capital Share capital Share premium Share premium
Number Number 31 December 31 December 31 December 31 December
2023 2022 2023 2022
€ € € €
Issued, called up and fully paid Ordinary shares of £0.01 each
At start of the period 54,545,455 54,545,455 1,129 1,129 - -
Issued in the year 15,524,625 - 816,364 - 9,106,574 -
At end of the period 70,070,080 54,545,455 817,493 1,129 9,106,574 -
Issued, called up and fully paid Preference shares of £0.01 each
At start of the period - - - - - -
Issued in the year 8,232,857 - 95,665 - - -
At end of the period 8,232,857 - 95,665 - - -
Issued, called up and fully paid Deferred shares of £0.50 each
At start of the period - - - - - -
Issued in the year 8,232,857 - 4,860,571 - - -
At end of the period 8,232,857 - 4,860,571 - - -
86,535,794 54,545,455 5,773,729 1,129 9,106,574 -
13. Contingent Liabilities
The Group 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 Group 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 Group 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
Group anticipates a fair and satisfactory resolution.
All the Group'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 Group announced that it had engaged the services
of Dentons CS Europe LLP to act on the Group'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 Group
with an award of 383,177 in damages plus £454,584 in costs. No other issues
remain to be determined in the arbitration.
The Group 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. Acquisition of Eco Buildings
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 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 constituted a reverse takeover by the Company under the AIM
Rules and was, therefore, subject to the approval of Shareholders at the
General Meeting.
% Ownership Date acquired/ Registered Office Place of incorporation Principal activity
Incorporated
Eco Buildings Operations Limited 100% 30 November 2021 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, Albania Operating Company
hyrja 13, Kati 1, Tirana
The transaction has been accounted for using the acquisition method of
accounting in accordance with IFRS 3, which requires the identification of the
acquirer and the acquiree for accounting purposes. Based on the assessment of
the indicators under IFRS 3 and consideration of all pertinent facts and
circumstances, Eco Buildings's management determined that Eco Buildings Group
Limited (since renamed Eco Buildings Operations Limited) is the acquirer for
accounting purposes and as such, the merger will be accounted for as a reverse
acquisition. As a result, the financial statements of Eco Buildings Group Plc
in subsequent filings will represent the historical financial statements of
Eco Buildings Operations Limited.
The IFRS 3 acquisition method of accounting applies the fair value concepts
defined in IFRS 13 - Fair Value Measurement ("IFRS 13") and requires, among
other things, the assets acquired and the liabilities assumed in a business
combination to be recognized by the acquirer at their fair values as of the
acquisition date, with certain exceptions. As a result, the acquisition method
of accounting has been applied and the assets and liabilities of Eco Buildings
Group Plc (formerly Fox Marble Holdings Plc) have been recorded at their
respective fair values, with limited exceptions as permitted by IFRS 3.
Computation of consideration
Eco Buildings Group Ltd shareholders received 54,545 Eco Buildings Group plc
(formerly Fox Marble Holdings Plc) ordinary shares for each Eco Buildings
Operations Ltd (formerly Eco Buildings Group Ltd) ordinary share held
immediately prior to the acquisition as consideration in connection with the
merger, which represented 54,545,455 shares. However, as required by IFRS 3,
the consideration transferred is calculated as if Eco Buildings Operations
Limited, as the accounting acquirer, issued shares to the shareholders of the
accounting acquiree, Eco Buildings Group plc. The value of the consideration
transferred has been measured based on the issue price shares of 55 pence per
share on 2 June 2023. The number of Eco Buildings Operations Limited shares
that Eco Buildings Operations Limited is deemed to issue to Eco Buildings
Group Plc shareholders under reverse acquisition accounting provides the
former Eco Buildings Group Plc shareholders with the same ownership in the
combined group as obtained in the acquisition.
Provisional fair value
€
Fair value of consideration issued
Deemed consideration 9,921,787
Deemed consideration is calculated based upon fair value of the notional
number of equity instruments that the legal subsidiary (Eco Buildings
Operations Limited) would have had to issue to the legal parent (Eco Buildings
Group plc) to give the owners of the legal parent the same percentage
ownership in the combined entity. This was calculated as 22% of the
ownership of the enlarged group.
The assets and liabilities recognised as a result of the acquisition are as Provisional fair value
follows:
€
Net assets acquired 2,564,947
Goodwill arising on acquisition 7,371,841
The excess of the consideration transferred over the fair value of Eco
Buildings Group Plc's assets acquired and liabilities assumed has been
recorded as goodwill. Eco Building Operations Limited (formerly Eco Buildings
Group Limited) 's assets and liabilities together with its operations will
continue to be recorded at their pre-acquisition historical carrying values
for all periods presented in the consolidated financial statements of Eco
Buildings Group Plc. Following the completion of the transaction, the earnings
of the combined group reflect the impacts of purchase accounting adjustments,
including changes in amortization and depreciation expense for acquired
assets.
As permitted by IFRS 3 Business Combinations, the business combination is
accounted for using provisional amounts. Any adjustments to the provisional
amounts will be made within the measurement period to reflect new information
obtained about fact and circumstances that were in existence at the
acquisition date. The measurement period cannot exceed one year from the
acquisition date.
The acquired business contributed a net loss of €2,290,348 to the group for
the period from 2 June 2023 to 31 December 2023. If the business had been
acquired at 1 January 2023 the impact on net loss would have been
€1,008,999.
16. Events after the reporting period
On 7 February 2024 Eco Buildings Group Plc raised £827,000 via a subscription
for new ordinary. The Subscription was effected at a price of 12 pence per
share.
Warrants over new ordinary shares were issued on the basis of one for every
one Subscription Share. The warrants have a three year term, with an
exercise price of 12p for the first 12 months, 19p for the following 12
months, and 26p for the final twelve months.
Following the admission of the new ordinary shares, the total issued share
capital of the Company is 76,961,747 ordinary shares, each with voting rights.
17. Information
Copies of the Annual Report and Financial Statements will be posted to
shareholders today. 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-buildingsgplc.net
(http://www.eco-buildingsgplc.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 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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