REG - Eco Buildings Group - Interim Results
19/10/2023 07:00
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RNS Number : 5907Q Eco Buildings Group PLC 19 October 2023
AIM: ECOB
19 October 2023
Eco Buildings Group PLC
("Eco Buildings" or the "Company")
Interim Results for the six months ended 30 June 2023
Eco Buildings Group PLC (AIM: ECOB), announces its unaudited interim results
for the six months ended 30 June 2023 (the "Interim Results").
As a result of the publication of the Interim Results, the Company's ordinary
shares of 1 pence each will resume trading on the AIM Market of the London
Stock Exchange with effect from 7.30 am on 3 October 2023.
Operational Highlights
· 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.
· Factory commission of Eco Buildings Group factory producing GFRG
panelling significantly underway in Durres. The factory is expected to be
fully commissioned during Q4 2023, with commercial production beginning
shortly after.
Financial Highlights
· 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 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 Group Ltd.
· Losses for the half year were €0.9 million (H1 2022: €0.6
million), due to costs incurred as part of the RTO process, offset by strict
measures to control expenditure.
Operational Update
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 26 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.
Operating Update
Factory
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.
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 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.
Arbitration Proceedings
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.
This announcement contains inside information for the purposes of Article 7 of
EU regulation 596/2014.
For more information on Eco Buildings please
visit www.eco-buildingsplc.com or contact:
Eco Buildings Group plc
Sanjay Bowry, Chief Executive Officer
Tel: +44 (0)20 7380 0999
Fiona Hadfield, Finance Director
Tel: +44 (0)20 7380 0999
Spark Advisory Partners Limited (Nominated Adviser)
Matt Davis / James Keeshan
Tel: +44 (0)20 3368 3550
Tavira Securities Limited (Broker)
Oliver Stansfield/Jonathan Evans
+44 (0)203 192 1739
ECO BUILDINGS GROUP PLC
Condensed unaudited consolidated income statement and statement of
comprehensive income
Six months ended 30 June Six months ended 30 June For the year ended
2023 2023 2022
Note Unaudited Unaudited Unaudited
€'000s €'000s €'000s
Revenue 32 - -
Cost of Sales (4) - -
Gross Profit 28 - -
Administrative and other operating expenses (132) (63) (242)
Charge on conversion of Pre IPO loan instrument (749) - -
Operating loss (854) (63) (242)
Net finance (costs)/income 4 (53) (19) (92)
Loss before taxation (907) (82) (334)
Taxation - - -
Loss for the period (907) (82) (334)
Other comprehensive income - - -
Total comprehensive loss for the period attributable to owners of the parent (907) (82) (334)
company
Loss per share
Basic loss per share 7 €0.016 €0.0015 €0.0061
Diluted loss per share 7 €0.016 €0.0015 €0.0061
ECO BUILDINGS GROUP PLC
Condensed unaudited consolidated statement of financial position
Notes As at 30 June 2023 As at 31 December 2022 As at 30 June 2022
Unaudited Unaudited Unaudited
€'000s €'000s €'000s
Assets
Non-current assets
Intangible assets 5 4,246 - -
Property, plant and equipment 6 5,639 1,341 906
Total non-current assets 9,885 1,341 906
Current assets
Trade and other receivables 2,543 90 187
Inventories 2,392 - -
Cash and cash equivalents 638 10 167
Total current assets 5,573 100 354
Total assets 15,458 1,441 1,260
Current liabilities
Trade and other payables 2,447 15
Borrowings 7 - 728 611
Total current liabilities 2,447 743 611
Non-current liabilities
Deferred tax liability 85 - -
Lease Commitments 351 265 -
Borrowings 7 5,430 767 731
Total non-current liabilities 5,866 1,032 731
Total liabilities 8,313 1,775 1,342
Net assets/(loss) 7,145 (334) (82)
Equity
Share capital 8 5,772 1 1
Share premium 8 4,446 - -
Retained loss (1,241) (335) (83)
Other reserves (1,832) - -
Total equity/(loss) attributable to owners of the parent company 7,145 (334) (82)
ECO BUILDINGS GROUP PLC
Condensed consolidated statement of cash flows
Six months ended Six months ended Year
30 June 2023 30 June 2022 ended 31 December 2022
Unaudited Unaudited €'000s
€'000s €'000s
Notes
Cash flows from operating activities
Loss before taxation (907) (82) (334)
Adjustment for:
Net finance costs/(income) 53 19 92
Operating loss for the period (854) (63) (242)
Adjustment for:
Amortisation 8 - -
Depreciation 6 128 - 32
Charge on conversion of Pre IPO loan instrument 794 - -
Changes in working capital: =
Increase in receivables (1,109) (188) (89)
Decrease in inventories 166 - -
Increase in trade and other payables 685 - 14
Net cash used in operating activities (182) (251) (286)
Cash flow from investing activities
Expenditure on property, plant and equipment 6 (220) (175) (372)
Expenditure on rights of use assets (41) - (68)
Net cash outflow from investing activities (261) (175) (439)
Cash flows from financing activities
Proceeds from issue of shares 8 1,153 - -
Drawdown or (Repayment) of debt (145) 592 735
Interest paid (37) - -
Net cash inflow from financing activities 971 592 735
Net increase/(decrease) in cash and cash equivalents 528 167 10
Foreign exchange difference arising on translation - -
Cash and cash equivalents at beginning of 10 - -
Period
Cash and cash equivalents at end of period 638 167 10
ECO BUILDINGS GROUP PLC
Condensed consolidated statement of changes in equity
Share capital Share premium Share based payment reserve Other reserve Profit and loss reserve Total
€'000s ( )
€'000s €'000s €'000s €'000s
€'000s
As at 1 January 2022 1 - - - - 1
Total comprehensive loss for the period (82) (82)
As at 30 June 2022 1 - - - (82) (81)
Total comprehensive loss for the period (253) (253)
As at 31 December 2022 1 - - - (335) (334)
Total comprehensive loss for the period (907) (907)
Transactions with owners
Share based transactions
RTO transaction 5,772 4,446 - (1,832) - 8,386
As at 30 June 2023 5,773 4,446 - (1,832) (1,242) 7,145
Notes to the condensed consolidated financial statements for the period ended
30 June 2023
1) General information
The principal activity of Eco Buildings Group plc and its subsidiary and
associate companies (collectively "Fox Marble Group" or "Group") is the
exploitation of quarry reserves in the Republic of Kosovo and the Republic of
North Macedonia.
Eco Buildings Group 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 results presented in this report are unaudited and they have been prepared
in accordance with the principles of International Financial Reporting
Standards ("IFRS") as adopted by the European Union that are applicable to the
financial statements for the year ending 31 December 2022.
The accounting policies applied in these results are consistent with those
applied in the Group's Annual Report and Accounts for the year ended 31
December 2022 and those expected to be applicable to the financial statements
for the year ending 31 December 2023.
This half yearly report does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. Statutory accounts for Eco
Buildings Group plc for the year ended 31 December 2022 were approved by the
Board on 16 October 2023 and have been filed with the Registrar of Companies.
The report of the auditors on those accounts was unqualified and did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
These condensed interim financial statements for the six months ended 30 June
2021 have been prepared in accordance IAS 34, 'Interim financial reporting',
as adopted by the European Union. The condensed interim financial statements
should be read in conjunction with the annual financial statements for the
year ended 31 December 2022, which have been prepared in accordance with IFRS
as adopted by the European Union. The Annual Report and Accounts 2022 for
the Group are available at www.eco-buildingsplc.com
During 2023 the Company completed the acquisition of Eco Buildings Group Ltd,
as described further in Note 9.
The transaction will be 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.
Consolidated financial statements prepared following a reverse acquisition are
issued under the name of the legal parent (accounting acquiree - Eco Buildings
Group PLC(formerly Fox Marble Holdings PLC)) but described in the notes as a
continuation of the financial statements of the legal subsidiary (accounting
acquirer - Eco Buildings Operations Ltd (formerly Eco Buildings Group Ltd) ),
with one adjustment, which is to adjust retroactively the accounting
acquirer's legal capital to reflect the legal capital of the accounting
acquiree. That adjustment is required to reflect the capital of the legal
parent. Comparative information presented in those consolidated financial
statements also is retroactively adjusted to reflect the legal capital of the
legal parent.
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.
Because the consolidated financial statements represent the continuation of
the financial statements of Eco Buildings Operations Limited except for its
capital structure, the consolidated financial statements reflect: (a) the
assets and liabilities of the Eco Buildings Operations Limited (the accounting
acquirer) recognised and measured at their pre-combination carrying amounts.
(b) the assets and liabilities of the Eco Buildings Group PLC recognised and
measured in accordance with this IFRS. (c) the retained earnings and other
equity balances of the Eco Buildings Operations Limited (accounting acquirer)
before the business combination. (d) the amount recognised as issued equity
interests in the consolidated financial statements determined by adding the
issued equity interest of the legal subsidiary (the accounting acquirer)
outstanding immediately before the business combination to the fair value of
the legal parent, Eco Buildings Group PLC, (accounting acquiree). However, the
equity structure (ie the number and type of equity interests issued) reflects
the equity structure of the legal parent, Eco Buildings Group PLC, (the
accounting acquiree), including the equity interests the legal parent issued
to effect the combination. Accordingly, the equity structure of the legal
subsidiary, Eco Buildings Operations Limited (the accounting acquirer) is
restated using the exchange ratio established in the acquisition agreement to
reflect the number of shares of the legal parent (the accounting acquiree)
issued in the reverse acquisition.
3) Going concern
The Directors have reviewed detailed projected cash flow forecasts and are of
the opinion that it is appropriate to prepare this report on a going concern
basis. In making this assessment they have considered:
a) the current working capital position and operational requirements;
b) the proposed business plan for the combined entity including
commissioning of the new GFRG factory in Albania;
c) the timing and expected start of revenues under the contracts for
construction secured by Eco Buildings with Andrra Invest LLC and Egeu Stone
LLC.
d) the timing of expected sales receipts and completion of other
existing orders, as well as collection of outstanding debtors;
e) the sensitivities of forecast sales figures over the next two years;
f) the timing and magnitude of planned capital expenditure including
expansion of production facilities at the GFRG factory in Albania; and
g) 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 a new 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. Furthermore, the forecasts assume that sales of
block marble will resume as the global effect of the pandemic recedes.
Further the Company is anticipating significant growth in revenue through the
realisation of existing sale contracts and offtake agreements as well as from
newly generated sales.
There are several scenarios which management have considered that could impact
the financial performance of the Company. These include:
a) The business plan for the combined entity, including planned
capital and strategic expansions could be delayed or result in further losses
for the group;
b) Receipts of outstanding amounts due under the placing completed in
June 2023 could be delayed;
c) Commissioning of the new factory in Albania could be delayed;
levels of production at the factory could be lower than expected;
d) 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;
e) Costs of production and construction could be higher than planned, or
there could be unforeseen additional costs;
f) Fulfilment of the Company's order book could be delayed, or the
payment of amounts due under such contracts could be delayed; and
g) 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 further
renegotiation of the terms on its existing debt obligations.
In conclusion having regard to the existing and future working capital
position and projected sales, the Directors are of the opinion that the
application of the going concern basis is appropriate.
4) Loss per share
Six months ended Six months ended Year ended
30 June 30 June 31 December 2022
2023 2022 €'000 ((2))
€'000s ((1)) €'000s ((2))
Loss for the period used for the calculation of basic LPS (907) (82) (334)
Number of shares
Weighted average number of ordinary shares for the purpose of basic LPS 57,132,992 54,545,455 54,545,455
Effect of potentially dilutive ordinary shares - - -
Weighted average number of ordinary shares for the purpose of diluted LPS 57,132,992 54,545,455 54,545,455
Loss per share:
Basic €0.016 €0.0015 €0.0061
Diluted €0.016 €0.0015 €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.
(1) 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 a 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.
(2) Earnings per share for the periods ended 30 June 2022 and 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.
5) Intangible assets
Goodwill Mining rights and licences Capitalised exploration and evaluation expenditure Total
Cost
As at 31 December 2021, 30 June 2022 and 31 December 2022 - - - -
Arising on acquisition 1,563 - - 1,563
Acquired 85 2,533 74 2,692
As at 30 June 2023 1,648 2,533 74 4,255
Depreciation
As at 31 December 2021, 30 June 2022 and 31 December 2022 - - - -
Charge for the period - 5 3 8
As at 30 June 2023 - 5 3 8
Net book value
As at 30 June 2023 1,648 2,528 71 4,246
As at 31 December 2022 - - - -
As at 30 June 2022 - - - -
6) Property, plant and equipment
GFRG Factory Plant and machinery Land Marble Factory Rights of use assets Quarry Office equipment and leasehold improvements Total
Plant and machinery Plant and machinery
€'000s
€'000s €.000 €'000s
€'000s €'000s
Cost
As at 31 December 2021
Additions 906 - - - - - 906
As at 30 June 2022 906 - - - - - 906
Additions 145 - - 322 - - 467
As at 31 December 2022 1,051 - - 322 - - 1,373
Additions 220 - - - - - 220
Arising on acquisition - 160 2,881 95 1,069 1 4,206
As at 30 June 2023 1,271 160 2,881 417 1,069 1 5,799
Depreciation
As at 31 December 2021 and 30 June 2022 - - - - - - -
Charge for the period - - - 32 - - 32
As at 31 December 2022 - - - 32 - - 32
Charge for the period - - 70 56 2 - 128
As at 30 June 2023 - - 70 88 2 - 161
Net book value
As at 30 June 2023 1,271 160 2,811 328 1,067 1 5,639
As at 31 December 2022 1,051 - - 290 - - 1,341
As at 30 June 2022 906 - - - - - 906
7) Borrowings
30 June 31 December 2022 30 June
2023 €'000s 2022
€'000s €'000s
Current liabilities
Convertible loan note - 728 611
728 611
Non-Current liabilities
Convertible loan note 5,431 767 731
5,431 767 731
On 3 March 2022 the Company 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 30 June 2023 the loan note
held at amortised cost had a balance of €818,272.Between 6 May 2022 and 31
December 2022, Eco Buildings Group Limited issued £645,000 of unsecured
convertible loan notes. The loan notes were novated into Fox Marble Holdings
PLC as part of the RTO transaction and were converted to shares on 50%
discount on re-admission of the Eco Buildings Group Plc. (formerly Fox Marble
Holdings PLC) to AIM.
Eco Buildings Group PLC (formerly Fox Marble Holdings PLC held the following
debt at the acquisition date of the 2nd June 2023.
a. 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.
On the 2 June 2023, effective on readmission, 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.
As at 30 June 2023, the Series 11 Loan Note held at amortised cost had a
balance of €2,525,616. The Stockholders' option to convert the loan has been
treated as an embedded derivative and measured at fair value. 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 30 June 2023.
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 30 June 2023, the Gulf Loan Note held at amortised cost had a balance of
€1,939,473. The Stockholders' option to convert the loan has been treated as
an embedded derivative and measured at fair value. As at 31 30 June 2023,
the derivative had a value of €123. 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 2025 in return for an increase in the principal of
€100,000.
c. Other Borrowings held at amortised cost
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 2 June 2023. As at 30 June
2023, these loans had been fully repaid.
8) 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.
30 June 2023 31 December 2022 Share capital Share capital Share premium Share premium
Number Number 30 June 31 December 30 June 31 December
2023 2022 2023 2022
€'000 €'000
€'000 €'000
Issued, called up and fully paid Ordinary shares of £0.01 each
At start of the period 54,545,455 54,545,455 1 1 - -
Issued in the year 15,524,625 - 815 - 4,446 -
At end of the period 70,070,080 54,545,455 816 1 4,446 -
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 - - -
At end of the period 8,232,857 - 95 - - -
Issued, called up and fully paid Deferred shares of £0.50 each
At start of the period - - - - - -
Issued in the year 8,232,857 - 4,861 - - -
At end of the period 8,232,857 - 4,861 - - -
5,772 1 4,446 -
On the 2 June 2023 each Ordinary Share in the issued share capital of the Eco
Buildings Group PLC 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
9) Acquisition of Eco Buildings Group Limited
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 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 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, 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' 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 (formally Eco Buildings Group PLC) 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
€'000
Fair value of consideration issued
Deemed consideration 5,262
5,262
The assets and liabilities recognised as a result of the acquisition are as Provisional fair value
follows:
€
Net assets acquired 3,699
Goodwill arising on acquisition 1,563
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 €816 to the group for the
period from 2 June 2023 to 30 June 2023. If the business had been acquired
at 1 January 2023 the impact on revenue would be €143k and the net loss
would have been €105k.
The Interim Results for the six months ended 30 June 2023 are available 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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