Fox Marble Holdings Plc (LON:FOX), the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region has today announced its preliminary results for the year ended 31 December 2017.
Highlights of 2017 financial year
– Marble processing factory completed in September 2017, with over 14,000 m2 of material processed up to 31 December 2017. The factory is capable of producing high quality slabs cut to internationally recognised standards to within a 2mm tolerance with a high quality finish.
– Production of 8,811 tonnes of material at the Prilep and Maleshevë quarries (2016 – 4,286 tonnes, of which 2,687 tonnes at Prilep and Maleshevë).
– Revenue for the year of €1.2 million (2016 – €0.8 million) with further advances of €0.4 million received. 4,641 tonnes of material sold in 2017 (2016 – 1,243 tonnes), together with over 5,000 sqm of processed material (2016 – 6,118 sqm).
– Operating loss for the year of €2.9 million (2016 – €3.0 million). Loss for the year of €3.4 million (2016 2.7 million). The increase in overall loss is caused by an increase in finance costs in the year.
– New sales contract entered into with OM Enterprises (“OM”) in September 2017 to purchase a minimum of 5,000 tonnes of material over the next three years. OM has paid a $500,000 advance payment in respect of the first 2,500 tonnes of material.
– Three year sales agreement signed with Mr Shailesh Patil. Subject to achieving a minimum commitment of 3,000 tonnes per annum, and payment of a £0.5 million advance, the agreement grants exclusivity over the GCC (Gulf Cooperation Council) region. The minimum commitment under the Agreement equates to approximately €0.6 million to €0.8 million per annum..
– Recurring block orders to large wholesalers in India and Turkey, including Mahadev Marble Pvt, RK Marble Pvt, and Simsekler Dogaltas Madencilik A.S totaling €0.5 million.
Highlights year to date 2018
– Successful share placing completed in January 2018 raising £2.8 million through the issue of 26,283,331 ordinary shares at 10.5p. The Company simultaneously issued 7,457,140 shares to discharge £783,000 of the Company’s outstanding loans and other liabilities to certain Directors and to Brandon Hill Capital Limited.
– On 30 January 2018 the Company repaid the Series 1 Loan Note due to Amati Global Investors Limited in the amount of €1.1 million and repaid the short term borrowings due to Peers Hardy (UK) Limited in the amount of €0.6 million.
– Following the repayment of debt completed on the 31 January 2018, and through the issue of shares, the debt outstanding in the Company as at 30 April 2018 was reduced to €0.76 million in the form of unsecured convertible loan notes.
– Cash balance as at 30 April 2018 of €0.44 million.
– Capital investment made in the quarries to support increased production in 2018 of €0.5 million, together with the purchase, installation and commissioning of a state of the art CNC machine to allow bespoke cut to size polished slabs and tiles to be produced in the factory.
Chris Gilbert, Fox Marble Holdings Plc CEO, commented: “I’m pleased to report that in 2017 we achieved a significant operational breakthrough with the successful completion of our factory in Kosovo. Furthermore, this major achievement was coupled with the securing of a number of key international sales agreements throughout the year. Our marketing, sales and distribution efforts have produced multiple customers in multiple jurisdictions who are repeat ordering our material.
“Today Fox Marble is in a unique period of development as our quarries are reaching maturity and our factory is fully operational. As global demand for marble continues to grow, our focus remains on capitalising on this growth and strengthening our position in the market.
“We are establishing Fox Marble as a major international supplier of high quality marble blocks and processed marble products as we increase our capacity and enhance our product range. Demand for our materials is increasing and our recent fund raising has enabled us to strengthen our balance sheet, increase production capacity in the quarries and drive our sales to deliver sustained growth going forward.”
Chairman’s statement
I’m pleased to present my report for the year ended 31 December 2017. The Company has made important progress over the year and whilst sales have been lower than expected, the business , particularly after the recent fundraising and repayment of debt, is on a firmer financial footing than it was a year ago. Our factory in Kosovo is now fully operational, we have entered into a number of promising sales agreements, and we are beginning to see momentum building in the demand for our marble.
Our long term goal is to expand our production capacity, and to create a premium marble brand through which Kosovo and the region is established as a major centre of marble production in the world. Throughout 2018 we will focus on developing our quarries and expanding production, increasing production of processed material at our factory, supplying quality stone to our existing customers, widening our customer base and identifying new markets. The Board remains dedicated to ensuring that our systems and controls are fit for purpose as the business grows and that our employees are appropriately looked after by ensuring high standards of training and workplace safety.
Over the course of 2017, Fox Marble focussed on the development of the M3 quarry in Maleshevë, where Illirico Selene and Illirico Bianco are produced. The market for this marble is proving to be very promising and the Company has sold over 1,900 tonnes of this material. 2017 saw a fourfold increase in production at this quarry and a new quarry face has been opened to further expand production. The Company’s other operational quarries at Cervenillë, Syriganë, and Prilep will be operated in line with demand. The fundraising in January 2018 has enabled the Company to invest in replacement and additional quarrying equipment which will be key to enabling the Company to increase production over the coming year.
Our marble processing factory in Lipjan, Kosovo, is producing polished marble slabs to a high degree of finish and precision. The factory, which is the first of its kind in the Balkans, provides a clear route to the local tile and slab market as well as significantly reducing the costs of processing our marble. The completion of the factory and the quality of material being produced marks a major milestone, not only for the Company but also for Kosovo’s marble industry and we expect to see significant growth in the sale of material processed in house in the year ahead.
Although sales in 2017 were lower than expected, we are beginning to see momentum build as the demand for our marble increases. We have entered into sales agreements with Mahadev Marmo PVT ltd, RK Marble Pvt Ltd, and OM Enterprises in India, and Simsekler Dogaltas Madencilik AS in Turkey for block marble. Additionally we have also entered into distribution agreements in the USA and Middle East for cut and polished slabs and we continue to supply marble for high-end developments in London, elsewhere in the UK and Australia.
The results for the year reflect on-going costs incurred in developing our quarries, quarry operating expenses, overhead expenditure and financing costs. The loss for the year of €3.4 million is higher than in 2016 due to higher financing costs and increased inventory provisions. Costs and cash continue to be managed very tightly. Net cash at 31 December 2017 was €0.5 million and at 30 April 2018 was €0.4 million.
Stone Alliance, 59% owned by Fox Marble, now has exclusive rights for a 40 year period to 40 quarry sites. The initial stages of fund raising for this significant project have commenced and we hope to be able to report further progress in the year ahead.
I would like to thank all of our employees who work incredibly hard, and importantly, have embraced our vision to establish Kosovo as a major supplier of high quality marble worldwide.
I remain confident in the prospects and potential for Fox Marble. Our objectives for 2018 are to achieve notably higher sales and to significantly reduce operating losses. This will be critically dependent on the Company’s ability to produce sufficient quantities of material to satisfy existing orders as well as to win new orders.
Andrew Allner
Non-Executive Chairman
10 May 2018
