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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| ECO Buildings Group Plc | AQSE:ECOB.GB | Aquis Stock Exchange | Ordinary Share | GB00BRJTP124 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 7.50 | 6.50 | 8.50 | 7.50 | 6.91 | 7.50 | 48,013 | 15:29:22 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Nov 2022 to Nov 2024
TIDMECOB
RNS Number : 4472Q
Eco Buildings Group PLC
18 October 2023
Certain information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon publication of this Announcement, this information is now considered to be in the public domain.
Eco Buildings Group PLC
("Eco Buildings" or the "Company")
Final Results for the year ended 31 December 2022
Eco Buildings Group Plc, the AIM listed company is pleased to announce its final results for the year ended 31 December 2022.
Shareholders should be aware that Company's Shares will remain suspended until publication of its Interim Results for the Six Months ended 30 June 2023.
Highlights for the year ended 2022
-- Revenue for the year of EUR0.9 million (2021 - EUR0.6 million). Revenue from the sale of processed marble consistent with prior year at EUR0.6 million (2021 - EUR0.6 million) driven by processing contracts in Kosovo.
-- Operating loss for the year of EUR1.9 million (2021 -loss of EUR1.7 million). Loss for the year of EUR1.9 million (2021 - loss of EUR1.9million). Adjusted LBITDA of EUR1.1 million (2021 - LBITDA of EUR1.2 million) helped by strict measures to control cost.
-- In April 2022 the company shares were suspended following the announcement of the planned reverse takeover transaction with Eco Buildings Group Ltd.
-- In November 2022 the company was notified that the London Court of International Arbitration had found in its favour in its arbitration against OM enterprises a former client. The Company was awarded EUR454,584 in costs and EUR383,177 in damages. The Company is currently pursuing collection of these amounts from OM Enterprises.
Highlights since year end
-- Acquisition of Eco Buildings Group Ltd completed on the 2 June 2023 following the general meeting held on the 26 May 2023. The acquisition was classified as a Reverse Takeover under the AIM rules and as such required approval from shareholders at a General Meeting.
-- Share reorganisation completed on the 2 June 2023, with the share of Fox Marble Holdings Plc. readmitted to AIM under a new ticker symbol ECOB. Fox Marble Holdings plc name was changed to Eco Buildings Group Plc.
-- Placing completed raising GBP2.7 million before expenses via the issue of shares in Eco Buildings Group Plc at 55p per share.
-- 8,232,857 preference shares issued to holders of record in Fox Marble Holdings Plc on the 1 June 2023, which will allow them to participate in the net proceeds arising from a successful conclusion to the current arbitration case being pursued against the republic of Kosovo.
-- Commissioning of the Eco Buildings Group factory producing GFRG panelling significantly underway in Durres. The factory is expected to be commissioned during Q4 2023, with commercial production beginning shortly after
For more information on Eco Buildings please visit www.eco-buildingsplc.com or contact:
Eco Buildings Group plc Tel: +44 (0)20 7380 Sanjay Bowry, Chief Executive Officer 0999 Fiona Hadfield, Finance Director Spark Advisory Partners Limited (Nominated Tel: +44 (0)20 3368 Adviser) 3550 Matt Davis / James Keeshan Tavira Financial Limited (Broker) Tel: +44 (0)20 3192 Oliver Stansfield/Jonathan Evans 1739
Chairman's statement
Dear Shareholders,
It has been a very busy period for Eco Buildings Group Plc, with major changes in the company and its future direction.
In May 2023 Fox Marble Holdings Plc entered into an agreement to acquire Eco Buildings Group Ltd, a company with the technology and process for the construction of glass fibre reinforced gypsum ("GFRG") and walling systems. GFRG is an alternative construction method which can be leveraged to achieve faster and more economic construction of residential commercial and industrial dwellings. By placing GFRG technology at the centre of the construction approach Eco Buildings captures many inherent advantages compared to conventional construction and other 'smart' buildings technologies.
Eco Buildings intends to offer a turnkey solution to large- and small-scale developers with standard frame two and three bedroom residential units constructed with all utilities installed ready for the developers to make finishing decorative touches. Establishing Eco Buildings operations in Albania will allow our connection to a growing market with low costs and a skilled workforce, greater customer accessibility and shorter supply chains.
Fox Marble will be able to supply and process dimensional stone for use within housing projects, while the development of Eco Buildings product worldwide will help expand the reach of Fox Marble's dimensional stone project.
The primary objective of the acquisition and reorganization is to create long-term value for shareholders. The company aims to meet its key milestones, drive revenue growth, and maximize profitability. The acquisition and reorganization can enable the company to diversify its business portfolio, reducing its dependence on the marble market.
The Board recognises that especially in the early stages of development of Eco Buildings it is important to focus on key priorities. Accordingly the Board has agreed five important objectives as follows:-
1. Monitoring and rigorous focus on delivering key milestones including completion of the factory and commencing operations.
2. Close review of cash flow and cash position.
3. Best practice corporate governance and effective internal controls and risk management process.
4. Strong HSE culture. 5. Monitoring performance and development of Fox Marble including the Arbitration proceedings.
There is much to do in achieving these objectives, and we will continue to update the market on our progress in the coming year.
In March 2023 we said goodbye to Sir Colin Terry who has served as a Non-Executive Director since the company's IPO in 2012. He has provided significant advice and a steady hand as Chair of the audit committee and we are very grateful for all his help over the years.
In June 2023, in conjunction with the completion of the RTO, we welcomed to the Board Dr Ahmet Shala and Dr Etrur Albani as Non-Executive Directors. Sanjay Bowry joined the company as CEO, replacing Chris Gilbert, who will stay on as an advisor to the Board for the foreseeable future to ensure a smooth transition. In addition Dominic Redfern, the founder of Gulf Walling has joined the Board as Executive Vice Chairman. Lastly Roy Harrison stepped down as Non-Executive Director. Roy has also been with us since the initial IPO of the company and has provided invaluable support and advice to the company for over ten years.
We extend our heartfelt gratitude to all our dedicated and hardworking employees who have wholeheartedly embraced our vision as we evolve into this new chapter.
We would also like to express our sincere gratitude to our valued shareholders for their unwavering patience and support during the prolonged duration of the recent transaction. We understand that the extended timeline may have tested your patience, and we truly appreciate your understanding and steadfastness throughout the process.
Your continued trust and commitment to our organization are truly appreciated. We remain dedicated to maintaining transparency and open communication as we move forward. We are confident that the results of this transaction will prove worthwhile and bring long-term benefits to our shareholders.
Andrew Allner
Non-Executive Chairman
Strategic Report
Eco Buildings Group Acquisition and Reverse Takeover
On the 2 June 2023 the Company completed the acquisition of the entire share capital of Eco Buildings Group Limited, a company that will operate in the prefabricated modular housing sector.
Eco Buildings Group Ltd had acquired proven and innovative prefabricated modular technology which has been in development and commercial use since 2006. Based on this technology, Eco Buildings' management team has utilised its network, in the Balkans and initially secured two contracts in Albania that are expected to generate sales revenue of up to EUR114 million in total for the first three years following the commissioning of the factory. Eco Buildings' technology system is not subject to patent protection and embodies know how and process innovations that have been developed using its system.
The Directors believe Eco Buildings' range of modular housing products provide a solution for the construction of both affordable and high-end housing, with Eco Buildings' products being up to 50% cheaper, two-thirds lighter and five times faster to build than conventionally built homes. Eco Buildings' vision is to alleviate the global housing deficit in a sustainable and profitable way.
The Directors believe that the Company's existing building products and operations should deliver revenue synergies when combined with Eco Buildings. These include the supply of processed dimensional marble from its existing quarries for use within Eco Buildings' modular housing projects.
The Acquisition constituted a reverse takeover by the Company under the AIM Rules and was, therefore, subject to the approval of shareholders at a General Meeting held on the 23 May 2023
Share Reorganisation
At close of business on 11 April 2022, the date prior to which trading in its Existing Ordinary Shares on AIM was suspended, the Company had 417,333,753 Existing Ordinary Shares which had a mid-market closing price of 1.085 pence per share.
On the 2 June 2023 each Ordinary Share in the issued share capital of the Company at the 1 June 2023 was sub-divided into 13 Sub-divided Shares, following which 113,974 Sub-divided Shares were issued at nominal value. Following the Sub-divided Share Issuance, every 659 Sub-divided Shares was consolidated into one Post-Consolidation Ordinary Share and then each Post-Consolidation Share was sub-divided into one New Ordinary Share with a nominal value of 1p and one New Deferred Share with a nominal value of 50p.
The New Ordinary Shares have the same rights as the previous Ordinary Shares including voting, dividend, return of capital and other rights.
The New Deferred Shares do not have any voting rights and do not carry any entitlement to attend general meetings of the Company; nor will they be admitted to AIM or any other market.
The Share Reorganisation resulted in the Company having 8,232,857 New Ordinary Shares and 8,232,857 New Deferred Shares being in issue immediately following the Share Reorganisation.
Eco Business Operations
History and Background
Eco Buildings Group Ltd was established to acquire the business and assets of Gulf Walling FZCO in Dubai; the main assets being the manufacturing plant and equipment (which produces its glass fibre reinforced gypsum walling and slab system), its know-how and its inventory. These assets were relocated to Durres, the principal port of Albania, where a new manufacturing facility has been built in the industrial zone adjacent to the port to satisfy Eco Buildings ' two existing sales contracts. In order for the facility to become operational, the plant and equipment remains to be assembled.
Durres is well connected with transport links to Eastern Europe and hosts a deep-water port. By establishing Eco Buildings ' operations in Albania, the Directors believe that this will allow for greater customer accessibility, shorter supply chains and a lower cost manufacturing environment which will reduce costs as the Group targets growth in the Balkan region.
GFRG is an alternative construction method to achieve faster and more economical construction of residential, commercial and industrial dwellings. Over $6 million was invested in the technology since 2006 to date to establish a high quality, low cost and environmentally friendly product.
Eco Buildings has developed a sales approach which the Directors believe will better exploit the proven potential of GFRG based construction. Through this approach and its network in the Balkans region, Eco Buildings has been successful in securing two sales contracts with major construction companies, one in Albania, the other in Kosovo, which are expected to generate gross sales revenue of up to EUR 114 million in total over the first three years of operation.
Coupled with the Group ' s initial focus on the Balkans region, the Group has entered into a manufacturing and licence agreement with North Eco, a third-party company proposing to build modular housing in the United Kingdom utilising the intellectual property of Eco Buildings. Under the terms of the agreement with North Eco, Eco Buildings will receive 30% of the gross receipts of each unit sold by North Eco.
As part of its medium-term strategy, the Group will target geographies with appropriate new housing demand as well as historic housing deficits. It intends to develop locally deployed mobile manufacturing plants globally for " just in time, on site " production for large-scale housing developments, thereby reducing transportation costs and emissions.
Eco Buildings' Product Offering
Eco Buildings ' large format construction panels will be formed from GFRG. This building method is designed to achieve faster, more cost effective and sustainable construction of residential, commercial and industrial dwellings. The Directors believe that with its integration of design, construction and manufacturing capability, Eco Buildings will represent an attractive development partner for affordable, high quality construction projects which can be delivered faster, cheaper and cleaner than traditional building methods for the following sectors:
-- Public Social: large scale projects, multi-storey housing, social, entry-level and key worker housing
-- Private Residential: town homes, duplexes, apartments, semi- and highly-customisable homes -- Commercial: hotels & hospitality, business centres, retail, other leisure centres -- Other: workforce housing, senior housing, crisis housing, coastal
The Directors believe the advantages of Eco Buildings ' products include the following:
-- Factory controlled precision fabrication with added quality assurance reducing material wastage and onsite storage requirements;
-- The main raw material for the production of GFRG walling and decking is gypsum powder which is cheaper and lighter than alternative building materials whilst providing good structural integrity. It can either be used alone or reinforced sparingly with steel and concrete as the structural design requires. As well as being an inherently inexpensive material, the weight advantage of GFRG construction reduces the use of expensive inputs such as steel and cement as well as transportation and on site costs like labour and craneage. When combined, these savings and efficiencies can cut building costs by as much as 50 percent when compared with conventionally built dwellings;
-- Eco Buildings ' GFRG walling and decking system delivers equivalent or superior levels of noise-resistance, termite/mould resistance and fireproofing as conventional building materials at lower cost and environmental impact. The Eco Buildings ' GFRG walling system has been certified under intense fire test conditions to internationally accepted standards by the Australian CSIRO for structural integrity and insulation performance with fire resistant properties, achieving a 4 hour fire rating in load bearing structures (concrete filled);
-- GFRG panelling is a green product that helps save energy and protect the environment as it has a lower embodied energy (EE) coefficient and uses less CO2 gas emission to produce and install (from the manufacturing of panels to the completion of construction) when compared with other traditional building construction materials, such as bricks, blocks, in situ poured concrete, and precast concrete panels.
-- Simple on-site installation of large format panels significantly reduces building and labour time. The Directors anticipate that this will make Eco Buildings ' solution five times faster to build than conventional building methods;
-- A low carbon footprint compared to traditional buildings products as the materials are manufactured from less energy intensive raw materials, fully recyclable, inert and non toxic and less dependent on landfilling, making them more environmentally friendly; and
-- GFRG engineered buildings have excellent cyclone and seismic resistance while the panels can be used for multi-storey buildings.
Walling System Manufacturing Process
Eco Buildings ' panels are manufactured using a panel casting system that was innovated by Eco Buildings ' co-founder, Dominic Redfern. The process involves a Single Vertical Panel Casting Machine which automates the moulding process and uses a liquid mix of calcined plaster, water, fiberglass rovings, together with waterproofing agents and curing admixtures. A machine can produce 512m(2) of wall panels per day, working in two 8-hour shifts, which results in approximately 1.5 housing units.
Each panel is made up of the following key constituent materials:
-- Calcined plaster: is the bulk material and is commonly known as gypsum plaster. It is a water containing calcium sulphate (CaSO4* 1/2 H2O). when re-combined with water it recrystallises to become a hard, rock-like substance (CaSO4 * 2 H2O).
-- Water: water is added to rehydrate the calcined plaster. It should have a relatively neutral pH of 6.5 to 8.5 and low dissolved mineral salt content.
-- Strengthening: Glass fibre rovings are added into the liquid plaster mix and distributed evenly to create an integrated matrix of fibres throughout the product. These are 2.5 centimetres long shreds of glass filament treated to be antistatic (non-clumping), hydrophobic (resistant to moisture absorption) and with reduced splintering tendencies to improve the strength and integration properties of the product.
-- Waterproofing: A waterproofing agent such as a silicon mineral oil is added into the liquid plaster which impregnates the product mass making it water resistant.
-- Chemistry regulation: Curing admixtures are added into the liquid plaster mix to regulate the plaster chemistry during production usually by extending the setting time of the product.
After manufacturing, the twelve-metre walls are air cured in a vertical rack for drying that has a capacity to store 400 panels, then cut to the dimensions required by the customer using a computer numerically controlled (CNC) saw to maximise off-site fabrication. Panels are placed in a 40-meter saw frame which can accommodate three panels at a time and can operate continuously.
Spaces for doors and windows can also be pre-cut to further reduce personnel on site and increase the speed of construction. After cutting, Eco Buildings ' walls are loaded onto stillages, ready for transport. Up to 500m2 of Eco Buildings panels can be transported on each heavy goods vehicle which is the equivalent to 1.5 houses. Normal height walls of up to 1 metre in length can be installed manually, with longer panels of up to 3 metres requiring a forklift and those up to 12 metres requiring a crane.
Eco Buildings ' panels are cast with hollow, void channels oriented vertically and spaced regularly along the wall length. These reduce the weight of the product as well as providing conduits for electrical wiring to be concealed, reducing the time spent at site to channel, drill or groove out these services as in traditional installations. The same voids can be used to provide conduits for piping. Finally, by filling these cavities with concrete and steel reinforcement bars if required, internal reinforced columns are formed within the thickness of the wall. This allows the Eco Buildings panel to be used as an integral load bearing system of the structure, supporting multi-storey construction without incurring the loss of floor space which a conventional reinforced structural frame usually entails.
Factory
Eco Buildings' first production line was developed by its co-founder in the United Arab Emirates and consists of a vertical panel casting machine and supporting equipment. It was moved to a newly built facility in Albania for the sake of proximity to its contracted customers and is anticipated to be operational in Q3 2023. A production line is capable of producing 11,264m2 of panelling per month or the equivalent of 31 housing units (372 units annually). The 8,000m2 factory site is located close to Albania's capital, Tirana, adjacent to the port of Duress, Albania's principal sea port. .
Eco Buildings Group Limited (ECOB) is pleased to confirm that the recommissioning of the plant and machinery from Dubai at the new factory in Durres is progressing according to plan.
The main components of the production line have now been assembled and fixed in place in the factory.
This includes the following which are all assembled and fixed in place:
-- the main press mould, its framework, its surrounding equipment platforms and gantries;
-- the CNC saw table, the caddy on which the saw travels down the saw table and the multi-directional CNC saw unit itself;
-- the gypsum powder bulk silo, the weighing hopper it loads into and the mixer hopper for the slurry which our wall product is moulded from; and
-- the dust extraction towers and blower motors.
As contemplated in the initial relocation plan, ECOB made a significant number of improvements and upgrades to the plant while it was fully dismantled. Most of the components listed above were refurbished to almost "as new" condition before being reassembled and fixed in place. This will result in a significantly extended useful life for these components. Also the normally inaccessible waterproof seals under the heavy mould walls have now been replaced entirely with a more reliable and maintenance-friendly sealing system. The rollers on which the mould wall moves in and out of its casting position have been entirely replaced. Modification and simplification to the press framework have restored its operability and accessibility for maintenance. Measures to improve the efficiency of dust extraction above the CNC saw and the plaster mixing station have also been designed anew and it is expected that this innovation will have a major impact on air quality in the factory. Water is a major raw material and cost input for the product. Bore holes have been drilled in the domain of the factory as part of a programme to meet the production and 'cleaning-in-process' water requirements of the factory with cheap self-extracted bore water rather than municipal industrial water which comes at a much higher cost.
Sales and Marketing
The Group has been successful in securing sales contracts with the following construction companies:
-- Andrra Invest LLC A Kosovan company specialising in construction of residential and non-residential projects. Its activities include project management and development as well as marketing already finished construction sites. One of the best known completed projects is Andrra Residence in the capital Pristina, which is a high rise residential and business building complex.
-- Egeu Stone LLC A well-recognised construction company in Albania, which has won 9 public tenders and has completed over 25 diverse construction projects in Albania, including multistorey residential dwellings, hotels and other commercial and industrial buildings, schools and public spaces.
Both sales agreements follow the same framework and involve the targeted production of between 350 and 450 residential units per year with sizes ranging from 120 square meters to 150 square meters.
The payment terms for Eco Buildings are structured as follows:
-- a fixed price per square metre produced, of which: a. 65 percent will be paid to Eco Buildings in advance of the product shipment; and b. the remaining 35 percent will be paid to Eco Buildings on installation of the units.
-- Eco Buildings will also receive a profit share from the unit sales of Andrra Invest LLC and Egeu Stone LLC to their end customers.
The Company has received details of the first project to be undertaken under the Andrra Invest contract. The construction of a model home on site is being completed using existing stock of walls shipped from the UAE site to the specifications laid out by Andrra, whilst the commissioning process at the factory is ongoing.
Fox Marble Operations
Sales and marketing
Sales for the year were EUR0.9 million (2021 - EUR0.6 million). Revenue fromr the sale of processed marble remained broadly flat for the year. During the year the company recognised EUR266,840 of revenue following the resolution of the arbitration against OM Enterprises which represented the balance of deferred revenue that had been prepaid by OM Enterprises.
Factory
The Company has successfully constructed a 5,400 square metre double-skinned steel factory on a 10-hectare site in Lipjan, Kosovo, which was acquired in 2013. Situated near Pristina airport, this facility specializes in the cutting and processing of blocks into polished slabs and tiles.
In June 2020, the Company announced its acquisition of two additional automatic CNC cutting machines, which have been installed in the Kosovo factory. These machines, manufactured by Simec Srl and Garcia Ramos SA, joined the existing Gravellona Machine Marmo CNC machine, effectively doubling the capacity for cutting tiles.
During 2022, the factory successfully processed 25,705 square metres of slabs (compared to 30,529 square metres in 2021) and over 20,400 square metres of tile and cut-to-size materials (compared to 20,184 square metres in 2021).
Throughout 2022, the Company maintained its focus on the local market, catering to the demand for processed materials and a diverse range of products. These offerings include cut and polished tiles, stair pieces, door and window lintels, as well as slabs.
Overall, the Company's factory expansion, augmented by the addition of new cutting machines, has allowed for increased processing capabilities and strengthened its position in the local market for various high-quality marble products.
Quarry Operations
Prilep
In 2013, the Company entered into a significant agreement to operate a quarry located in Prilep, North Macedonia. The initial agreement spanned 20 years, with an irrevocable option to extend the period for an additional 20 years. Situated in the Stara river valley, the Prilep quarry boasts sought-after white marbles known as Alexandrian White and Alexandrian Blue. It is part of a small cluster of quarries, overlooked by the Sivec pass.
As a consequence of the COVID-19 crisis, quarrying operations came to a halt in April 2020. However, in August 2020, the quarry was reopened, albeit at a limited capacity. Currently, the Company relies on existing stock to fulfill the requirements of its processing operations at the factory. Simultaneously, the block market is closely monitored, and quarrying operations will resume once there is a sufficient demand for block marble that cannot be met from the existing stock levels.
Under the terms of the agreement, a royalty of 35% of gross revenue is payable to the original license holder of the quarry, acknowledging their rights to the quarry's resources.
Additionally, the Company holds the rights to an adjacent quarry called Prilep Omega, which was acquired in 2014. Although the Company possesses the rights, development of this quarry has not been undertaken as of yet.
Cervenillë
This site was the first of our quarries to be opened in November 2012. It is being exploited across three separate locations (Cervenillë A, B & C) from which red (Rosso Cait), red tinged grey (Flora) and light and darker grey (Grigio Argento) marble is being produced in significant quantities. The polished slabs from this quarry have sold well. The most noteworthy sales included those to St George PLC (Berkeley Homes) for the prestigious Thames riverside Chelsea Creek development in London.
At present the Company is using existing stock to supply its processing operations in the factory, whilst monitoring the block market and will restart quarrying operations when there is sufficient demand for block marble that cannot be satisfied from existing levels of stock.
Syriganë
The quarry at Syriganë is open across four benches with a significant block yard adjacent to the quarry site. The site contains a variety of the multi-tonal breccia and Calacatta-type marble and produces significant volumes of breccia marble in large compact blocks. Output is marketed as Breccia Paradisea (predominantly grey and pink) and Etrusco Dorato (predominantly gold and grey).
Maleshevë
In October 2015, the Company acquired the rights to a 300-hectare site close to the Company's existing licence resource in Maleshevë from a local company. By November 2015, this quarry had been opened and the first blocks extracted and sent for testing. The quarry was operated subject to an agreement with the licence holder, Green Power Sh.P.K ('Green Power'), a company incorporated in Kosovo, which granted Fox Marble's Kosovan subsidiary the rights to develop and operate the quarry, in return for a royalty arrangement.
The quarry contained a mixture of Illirico Bianco, Illirico Superiore and the silver-grey marble Illirico Selene. The initial market response to both the Illirico Selene and Illirico Bianco was significant and to address this anticipated demand the Company has invested significant resources and effort since 2016 to accelerate the development of these quarries to produce multiple open high-volume benches capable of producing blocks in the quantities to meet demand. The Company quarried 2,850 tonnes during 2019 (2018 - 7,278 tonnes).
On 4 April 2019, the Company announced it had conditionally acquired the entire share capital of Green Power, for a consideration of GBP1,000,000 to be satisfied by the issue of 13,000,000 new ordinary shares in the Company at a price that equates to 7.69 pence per share. However, prior to approval of the issue of shares at the Company's AGM in June 2019, Green Power announced their intention to breach the agreed acquisition contract and blocked 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 EUR195 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 EUR195 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 EUR195M 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 GBP82,328.57 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 GBP0.01 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 GBP2.7 million (before expenses) by issuing 4,946,313 shares at 55p per share.
COVID-19 Response
The spread of Coronavirus (COVID-19) continues to have a significant impact across industries worldwide, including the marble extraction and processing market, given the changeable international travel and working restrictions in place in many countries. The Board's highest priority is the continued wellbeing of its employees, customers and stakeholders both in the UK and Kosovo. Given the continued uncertainty on the potential impact and duration of the COVID-19 pandemic, the Board has taken pre-emptive steps not only to ensure the well-being of those affected, but also to best position the Company for future operations.
Demand for block marble fell significantly in January 2020 as a result of travel restrictions placed on China, the principal buyers of the Company's block marble. The spread of the virus into Europe and the resulting impact on cross border travel and trade magnified this effect through 2020 and 2021. As travel restrictions have lifted the market for block marble continues to show weakness as a result of increased transport and fuel costs, and continued uncertainty in China. The Company elected to suspend production at the quarries during 2020 in order to keep operational cash flow neutral until the international block marble market returned to normality. Production at the quarries continues to be tightly managed, with quarries in use solely to meet known demand for blocks.
Results
Hot Features
Premium
Key Performance Indicators 2022 2021
----------------------------------------- -------------------- --------------------
Revenue EUR888,137 EUR646,064
Average recorded selling processed
(per sqm) EUR24 EUR25
LBITDA(1) (EUR1,660,731) (EUR1,387,116)
Operating loss for the year (EUR1,934,805) (EUR1,650,693)
(EUR1,895,738
Loss for the year (EUR1,935,248) )
1) Loss for the year before interest, tax, depreciation and amortisation.
The Group recorded revenues of EUR888,137 in the year ended 31 December 2022 (2021 - EUR646,064). Revenue for the sale of processed marble remained broadly flat for the year. During the year the company recognised EUR266,840 of revenue following the resolution of the arbitration against OM Enterprises which represented the balance of deferred revenue that had been prepaid by OM Enterprises.. The Group incurred an operating loss of EUR1,934,805 for the year ended 31 December 2022 (2021 - EUR1,650,693). The higher operating loss is due to the increase in the level of stock provision recognised in 2022 compared to 2021. The Company has recognised an additional provision of EUR470,714 (2021 - EUR118,137) on the stock held by the Group based on the anticipated net realisable value. The average recorded selling price per sqm for processed material remained consistent with the prior year.
The Group incurred a loss after tax for the year ended 31 December 2022 of EUR1,935,248 (2021 - EUR1,895,738).
Reconciliation of EBITDA to Loss for Year to Year to
the year 31 December 31 December
2022 2021 EUR
EUR
------------------------------------------- -------------------- --------------------
Loss for the year before tax (EUR1,935,248) (EUR1,895,738)
Plus/(less):
Net finance costs 443 245,045
Depreciation 230,720 219,213
Amortisation 43,354 44,364
LBITDA (1,660,731) (1,387,116)
Plus/(less):
Inventory Provision 470,715 118,137
Share option charge 11,658 19,444
Adjusted LBITDA (EUR1,178,448) (EUR1,249,535)
Finally, I would like to thank all our staff and our Board colleagues for their unstinting efforts on behalf of Eco Buildings.
On behalf of the board
Sanjay Bowry
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
EUR EUR
------------------------------------ ----------------- ------------
Revenue 888,137 646,064
Cost of sales (482,422) (530,295)
----------------- ------------
Gross profit 405,715 115,769
================= ============
Administrative and other operating
expenses (2,340,520) (1,766,462)
Operating loss (1,934,805) (1,650,693)
================= ============
Finance costs (181,062) (386,198)
Finance income 180,618 141,153
Loss before taxation (1,935,248) (1,895,738)
================= ============
Taxation credit - -
Loss for the year (1,935,248) (1,895,738)
================= ============
Other comprehensive income - -
================= ============
Total comprehensive income
for the year attributable to
owners of the parent company (1,935,248) (1,895,738)
================= ============
Earnings per share
Basic earnings per share (0.235) (0.256)
Diluted earnings per share (0.235) (0.256)
Consolidated Statement of Financial Position
As at 31 December 2022
2022 2021
As at 31 December EUR EUR
-------------------------------- ------------- -------------
Assets
Non-current assets
Intangible assets 2,705,417 2,748,771
Property, plant and equipment 4,200,839 4,429,161
Total non-current assets 6,906,256 7,177,932
============= =============
Current assets
Trade and other receivables 992,219 1,134,487
Inventories 2,344,839 2,986,621
Cash and cash equivalents 13,025 558,282
Total current assets 3,350,083 4,679,390
============= =============
Total assets 10,256,339 11,857,322
============= =============
Current liabilities
Trade and other payables 1,779,853 1,407,650
Borrowings 2,104,968 1,997,852
Total current liabilities 3,884,822 3,405,502
============= =============
Non-current liabilities
Deferred tax liability 84,504 84,504
Lease Commitments 100,152 146,206
Borrowings 2,594,258 2,704,916
Total non-current liabilities 2,778,913 2,935,626
============= =============
Total liabilities 6,663,735 6,341,128
============= =============
Net assets 3,592,604 5,516,194
Equity
Called up share capital 4,958,386 4,958,386
Share premium 32,575,443 32,575,443
Accumulated losses (34,114,471) (32,179,224)
Share based payment reserve 137,704 126,046
Other reserve 35,543 35,543
Total equity 3,592,604 5,516,194
============= =============
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
EUR EUR
----------------------------------------------- --- ------------ ------------------
Cash flows from operating activities
Loss before taxation (1,935,248) (1,895,738)
Adjustment for:
Finance costs 181,062 386,198
Finance income (180,618) (141,153)
Operating loss for the year (1,934,805) (1,650,693)
============ ==================
Adjustment for:
Amortisation 43,354 44,364
Depreciation 230,721 318,481
Disposal of PPE - 42,311
Equity settled transactions 11,658 19,444
Provision for impairment of receivables 152,223 69,515
Provision for inventory 470,715 118,137
Changes in working capital:
Increase in trade and other receivables (9,955) (51,685)
Decrease/(increase) in inventories 171,066 (63,481)
Increase/(decrease) in accruals 152,668 (129,408)
Increase/(decrease) in trade and
other payables 219,534 (23,804)
Net cash used in operating activities (492,822) (1,306,819)
============ ==================
Cash flow from investing activities
Expenditure on property, plant &
equipment (2,398) (37,440)
Expenditure on rights of use assets (57,708) (62,556)
Interest on bank deposits 5 42
------------------
Net cash used in investing activities (60,101) (99,954)
============ ==================
Cash flows from financing activities
Proceeds from issue of shares (net
of issue costs) - 1,755,836
Reclass from other creditors 40,261 -
Repayment of loan notes (22,586) (83,905)
Interest paid on loan note instrument (50,608) (84,554)
Net cash generated from financing
activities (32,933) 1,587,377
============ ==================
Net (decrease)/increase in cash
and cash equivalents (585,856) 180,604
Cash and cash equivalents at beginning
of year 558,282 377,678
Exchange losses on cash and cash
equivalents
Cash and cash equivalents at end
of year (27,573) 558,282
Cash at bank and in hand 13,025 558,282
Arranged overdraft (40,598) -
Cash and cash equivalents at end
of year (27,573) 558,282
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Capital Share Premium Share based Other Reserve Accumulated
payment reserve losses Total equity
EUR EUR EUR EUR EUR EUR
----------------- -------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 1
January 2021 3,721,007 32,056,986 106,602 35,543 (30,283,486) 5,636,654
Loss and total
comprehensive
loss for the
year - - - - (1,895,738) (1,895,738)
Transactions
with owners
Share options
charge - - 19,444 - - 19,444
Share capital
issued 1,237,379 518,457 - - - 1,755,836
-------------- -------------- ----------------- -------------- ----------------- -------------
Balance at 31
December 2021
and at 1
January 2022 4,958,386 32,575,443 126,046 35,543 (32,179,224) 5,516,194
-------------- -------------- ----------------- -------------- ----------------- -------------
Loss and total
comprehensive
loss for the
year (1,935,248) (1,935,248)
Transactions -
with owners
Share options
charge - - 11,658 - - 11,658
Balance at 31
December 2022 4,958,386 32,575,443 137,704 35,543 (34,114,471) 3,592,604
-------------- -------------- ----------------- -------------- ----------------- -------------
Notes to the Consolidated Financial Statements
1. General information
The principal activity of Eco Buildings Group plc and its subsidiary and associate companies (collectively 'Eco Buildings Group' or 'Group') is the exploitation of quarry reserves in the Republic of Kosovo and the Republic of North Macedonia and the development of GFRG walling panels for use in construction. .
Eco Buildings Group plc (formerly Fox Marble Holdings Plc) is the Group's ultimate Parent Company ('the parent company'). It is incorporated in England and Wales and domiciled in England. The address of its registered office is 160 Camden High Street, London, NW1 0NE. Eco Buildings Group plc shares are admitted to trading on the London Stock Exchange's AIM market.
2. Basis of Preparation
The financial information set out herein does not constitute the Group's statutory financial statements for the year ended 31 December 2022, but is derived from the Group's audited full financial statements. The auditors have reported on the 2022 financial statements and their report was unqualified and did not contain statements under s498(2) or (3) Companies Act 2006. The 2020 Annual Report was approved by the Board of Directors on 4 June 2021, and was mailed to shareholders on 5 June 2021. The financial information in this statement is audited but does not have the status of statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The Group's consolidated financial statements, which form part of the 2022 Annual Report, have been prepared in accordance with interational accounting standards in conformity with the requirements of the Companies Act 2006 and the requirements of the Companies Act applicable to companies reporting under IFRS. IFRS includes Interpretations issued by the IFRS Interpretations Committee (formerly - IFRIC).
The consolidated financial statements have been prepared under the historical cost convention, apart from financial assets and financial liabilities (including derivative instruments) which are recorded at fair value through the profit and loss. The preparation of consolidated financial statements under IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
3. Critical accounting estimates and areas of judgement
The preparation of consolidated nancial statements under IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The key areas of judgement and critical accounting estimates are explained below.
Impairment assessment
The Group assesses at each reporting date whether there are any indicators that its assets and cash generating units ('CGUs') may be impaired. Operating and economic assumptions, which could affect the valuation of assets using discounted cash flows, are updated regularly as part of the Group's planning and forecasting processes. Judgement is therefore required to determine whether the updates represent significant changes in the service potential of an asset or CGU and are therefore indicators of impairment or impairment reversal.
In performing the impairment reviews, the Group assesses the recoverable amount of its operating assets principally with reference to fair value less costs of disposal, assessed using discounted cash flow models. These models are subject to estimation uncertainty and there is judgement in determining the assumptions that are considered to be reasonable and consistent with those that would be applied by market participants as outlined below.
Going concern
The Group assesses at each reporting date whether it is a going concern for the foreseeable future. In making this assessment management considers:
(a) the current working capital position and operational requirements; (b) the timing of expected sales receipts and completion of existing orders; (c) the sensitivities of forecast sales figures over the next two years; (d) the timing and magnitude of planned capital expenditure; and
(e) the level of indebtedness of the company and timing of when such liabilities may fall due, and accordingly the working capital position over the next 18 months.
Management considers in detail the going concern assessment, including the underlying assumptions, risks and mitigating actions to support the assessment. The assessment is subject to estimation uncertainty and there is judgement in determining underlying assumptions.
Quarry reserves
Geological estimates of the Group's quarry reserves are inherently imprecise and represent only approximate amounts because of the significant judgments involved in developing such information. There are authoritative guidelines regarding the geological criteria that must be met before estimated quarry reserves can be designated as "proved" and "probable". Proved and probable quarry reserve estimates are updated at regular intervals considering recent production and technical information about each quarry. In addition, as prices and cost levels change from year to year, the value of proved and probable quarry reserves also changes. This change is considered a change in estimate for accounting purposes and is reflected on a prospective basis in depreciation and amortisation rates calculated on units of production ('UOP') basis.
Changes in the estimate of quarry reserves are also considered in impairment assessments of non-current assets.
Treatment of convertible loan notes
The convertible loan notes have been accounted for as a liability held at amortised cost. At the date of issue, the fair value of the liability component was estimated using the prevailing market interest rate for similar non-convertible debt.
The conversion option results in the Company repaying a GBP denominated liability in return for issuing a fixed number of shares and as such has been classified as a derivative liability. The liability is held at fair value and any changes in fair value over the period are recognised in profit or loss.
The Company has fair valued the identified embedded derivatives included within the contract using a Black Scholes methodology, which has resulted in the recording of a liability of EUR1,045 at 31 December 2022 (2021 - EUR17,920). The main assumptions used in the valuation of the derivative conversion option as at 31 December 2022 were: underlying share price of GBP0.01085 (31 December 2021: GBP0.0138), EUR/GBP spot rate of 1.12932 (31 December 2021: 1.1911),and historic volatility of 29% (31 December 2021 33%).
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined based on weighted average costs and comprises direct materials and direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.
In calculating the net realisable value of the inventory management has to make a judgment about the expected sales price of the material. Management makes this judgment based on its historical experience of the sale of similar material and taking into account the quality or age of the inventory concerned.
4. Segmental information
The chief operating decision maker is the Board of Directors. The Board of Directors reviews management accounts prepared for the Group as a whole when assessing performance.
All the operations of Eco Buildings Group plc for the year ended 31 December 2022 are in the Republic of Kosovo and the Republic of North Macedonia. All sales of the Group for this period are as a result of the extraction and processing of marble. It is the opinion of the directors that the operations of the Company represent one segment and are treated as such when evaluating its performance.
Of the non-current assets held by the Group of EUR6,906,256 (2021 - EUR7,177,932), EUR3,748,907 (2021 - EUR3,934,751) relates to Property, Plant and Machinery acquired for the exploitation of assets in Kosovo and EUR356,758 (2021 - EUR350,079) relates to Property, Plant and Machinery acquired for the exploitation of assets in North Macedonia. Intangible assets held by the Group relate to intangible assets acquired in relation to mining rights and licences in North Macedonia of EUR2,550,423 (2021 - EUR2,591,865) and exploration and evaluation expenditure incurred in Kosovo of EUR70,490 (2021 - EUR72,402).
Kosovo Macedonia Other Total
31 December 31 December 31 December 31 December
2022 2022 2022 2022
EUR EUR EUR EUR
------------------- ------------ ------------ ------------ ------------
Property, Plant
and Machinery 3,748,908 356,757 95,174 4,200,839
Intangible assets 70,490 2,550,423 84,504 2,705,417
Total non-current
assets 3,819,398 2,907,180 179,678 6,906,256
31 December 31 December 31 December 31 December
2021 2021 2021 2021
EUR EUR EUR EUR
------------------- ------------ ------------ ------------ ------------
Property, Plant
and Machinery 3,934,751 350,080 144,330 4,429,161
Intangible assets 72,402 2,591,865 84,504 2,748,771
Total non-current
assets 4,007,153 2,941,945 228,834 7,177,932
The Group incurs certain costs in the United Kingdom in relation to head office expenses. In the year under review included in the operating costs for the year of EUR2,239,205 (2021 - EUR1,650,693) were costs incurred in the United Kingdom of EUR861,765 (2021 - EUR1, 022,251). Of the net interest cost of the Group of EUR118,800 (2021 - EUR245,045), EUR118,800 is incurred in the United Kingdom (2021 - EUR245,045).
All revenue, which represents turnover, arises solely within Kosovo and North Macedonia and relates to external parties.
Group Year ended Year ended
31 December 31 December
2022 2021
EUR EUR
---------------------- ------------- -------------
Revenue by territory
Europe 598,639 646,064
India 289,498 -
Total revenue 888,137 646,064
Revenues from contracts with customers
The Group generates revenue through the sale of quarried marble as well as the processing of marble into slabs, tiles and bespoke cut to size items.
Group Year ended Year ended
31 December 31 December
2022 2021
EUR EUR
---------------------------------- ------------- ------------------
Revenue by product
Release of deferred revenue 289,498 -
Sale of block marble - 80,761
Sale of processed marble 474,825 516,275
Provision of processing services 123,814 49,028
Total revenue 888,137 646,064
Revenue is recognised in a manner that depicts the pattern of the transfer of goods and services to customers. The amount recognised reflects the amount to which the Group expects to be entitled in exchange for those goods and services. Sales contracts are evaluated to determine the performance obligations, the transaction price and the point at which there is transfer of control. The transactional price is the amount of consideration due in exchange for transferring the promised goods or services to the customer, and is allocated against the performance obligations and recognised in accordance with whether control is recognised over a defined period or at a specific point in time.
Block marble may be sold under a sales agreement with a customer or on a non-contractual basis. Sales agreements for block marble generally contain agreed pricing and minimum volume, through which customers can gain exclusivity within a given region. Block marble may be sold on an ex-quarry basis or free on board ('FOB') basis. Revenue is recognised on the sale of block marble when control of the block marble is transferred to the buyer as the transfer of legal title, customer acceptance and an unconditional requirement to pay. The group derives revenue from the sale of blocks at a point in time.
Processed marble may be sold on an as seen basis or may be cut to order. The Company may enter into contracts to supply a given volume of processed marble as specified by the client. Processed marble may be sold on ex-factory basis or may include transport to customers. Revenue in relation to larger projects may involve separately identifiable performance obligations. Such performance obligations may include the separate delivery of instalments of product in accordance with the contractual schedule. Where marble is cut to order the Group does not consider the provision of marble and the processing of marble as separate obligations, unless the client selects and takes title to specific block marble.
The group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Consequently, the Group does not adjust any of the transaction prices for the time value of money.
Group Year ended Year ended
31 December 31 December
2022 2021
EUR EUR
----------------------- ------------- -------------
Contractual basis 289,498 318,163
Non-contractual basis 598,639 327,901
Total revenue 888,137 646,064
5. Expenses by nature
Group Year ended Year ended
31 December 31 December
2022 2021
EUR EUR
------------------------------------------------------ ------------- -------------
Operating loss is stated after charging/(crediting):
Cost of materials sold 482,422 530,295
Inventory provision 470,715 118,137
Fees payable to the Company's auditors 220,114 83,655
Legal & professional fees 257,279 50,346
Consultancy fees and commissions 82,846 342,648
Staff costs 446,289 472,609
Other head office costs 52,547 109,969
Rent and rates 21,911 -
Travelling, entertainment & subsistence
costs 8,626 18,705
Depreciation 230,720 219,213
Amortisation 43,354 44,364
Quarry operating costs 116,878 69,476
Foreign exchange (loss)/ gain 103,914 (4,532)
Share option charge 11,658 19,444
Marketing & PR - -
Testing, storage, sampling and transportation
of materials 81,642 85,319
Provision for bad debts 152,223 69,515
Sundry (income)/expenses 39,804 67,594
Cost of sales, administrative and other
operational expenses 2,822,942 2,296,757
6. Net finance costs
2022 2021
EUR EUR
---------------------------------------- -------- --------
Finance costs
Interest expense on borrowings 169,501 168,001
Net foreign exchange loss on loan note
instrument - 203,717
Interest payable on lease liabilities 11,561 14,480
181,062 386,198
7. Net finance income
2022 2021
EUR EUR
Finance income
Movement in the fair value of derivative 16,875 141,111
Movement in the fair value of debt 17,152 -
Net foreign exchange gain on loan note 146,587 -
instrument
Interest income on bank deposits 5 42
180,618 141,153
8. Loss per share
2022 2021
EUR EUR
-------------------------------------------- ------------ ------------
Loss for the year used for the
calculation of basic EPS (1,935,248) (1,895,738)
Number of shares
Weighted average number of ordinary shares
for the purpose of basic EPS 8,232,857 7,406,512
Effect of potentially dilutive
ordinary shares
Weighted average number of ordinary shares
for the purpose of diluted EPS 8,232,857 7,406,512
Earnings per share:
Basic (0.235) (0.256)
Diluted (0.235) (0.256)
Basic earnings per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.
Pursuant to IAS 33.20 and in conjunction with IAS 33.64 the share consolidation that occurred in June 2023, as disclosed in note 29, changes the average number of shares without an concomitant change in the level of resources. The number of common shares in issue prior to the share reorganisation in June 2023 is adjusted in accordance with the change in the number of ordinary shares as if the share reorganisation had occurred at the beginning of the period under review.
9. Intangible assets
Capitalised
Mining rights exploration
Goodwill and licences and evaluation
EUR EUR expenditure Total
EUR EUR
-------------------------- ----------- ---------------- ---------------- ----------
As at 31 December
2020 ,1 January
2021 and 31 December
2021 84,504 2,725,840 92,866 2,903,210
Additions - - - -
As at 31 December
2022 84,504 2,725,840 92,866 2,903,210
Accumulated amortisation
As at 1 January
2021 - 92,416 17,659 110,075
Amortisation charge - 41,559 2,805 44,364
As at 31 December
2021 and as at 1
January 2022 - 133,975 20,464 154,439
Charge for the year - 41,442 1,912 43,354
As at 31 December
2022 - 175,417 22,376 197,793
Net Book Value
As at 1 January
2021 84,504 2,633,424 75,207 2,793,135
As at 31 December
2021 84,504 2,591,865 72,402 2,748,771
As at 31 December
2022 84,504 2,550,423 70,490 2,705,417
Capitalised exploration and evaluation expenditure represent rights to the mining of decorative stone reserves in the Pejë, Syriganë and Cervenillë quarries in Kosovo. The Group was granted in 2011 rights of use by the local municipality for twenty years over land in the Syriganë and Rahovec region through acquisition of the issued share capital of Rex Marble SH.P.K and H&P SH.P.K.
On 16 August 2014 the Company entered into a sub-lease arrangement with New World Holdings (Malta) Limited in relation to the Omega Alexandrian White marble quarry at Prilep in North Macedonia. This new quarry site is adjacent to the Company's existing operations in Prilep. The consideration for the sub-lease was EUR1,256,376 (GBP1,000,000) and a subsequent 40% gross revenue royalty obligation. The sub-lease has an initial term of 20 years, which is extendable by the Company for a further twenty years. The sub-lease grants the Company the exclusive right to quarry, process, remove and sell marble from the quarry. The Company will pay for and provide all the equipment and staff required to operate this quarry. The quarry is not yet operational.
On 8 October 2018 the Company acquired Gulf Marble Investments Limited (UAE). As part of this acquisition the Group acquired the direct sub licence to the Prilep Alpha quarry and eliminated the 40% gross revenue royalty payable under the original agreements. The Group has recognised an intangible asset with a provisional fair value of EUR1,469,464 which will be amortised over the remaining period of the licence. Further detail on this acquisition can be found in note 15. The acquisition gave rise to a technical deferred tax liability and a corresponding entry to goodwill of EUR84,504 in accordance with IFRS 3.
Intangible assets relating to quarries not yet in operation are treated as exploration and evaluation assets and assessed for impairment in accordance with IFRS 6 Exploration and evaluation of mineral resources. The Group has assessed intangible assets for indicators of impairment and performed a review for impairment and concluded that no such impairment exists. In considering the value in use the company made a number of judgments around anticipated production and sales, including judgments as to when block sales and pricing might recover from the impact of the Covid 19 pandemic.
Other intangible assets relating to quarries in operation include amounts spent by the Group acquiring licences. Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is determined by discounting estimated future net cash flows generated by the asset. Intangible assets relating to quarries in operation are assessed annually for indicators of impairment in accordance with IAS 36. 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 Factory Rights Land Office Equipment Total
Plant Plant of use and buildings and
& Machinery & Machinery asset Leasehold
improvements
EUR
EUR EUR EUR EUR
EUR
-------------------------- -------------- ------------- --------- --------------- ----------------- ----------
Cost
As at 1 January
2021 3,910,638 3,399,749 332,842 160,000 31,424 7,834,653
Additions - 35,241 - - 2,198 37,439
Reclassification (170,000) 170,000 - - - -
Disposals (86,148) - (90,132) - - (176,280)
As at 31 December
2021 and as at 1
January 2022 3,654,490 3,604,990 242,710 160,000 33,622 7,695,812
Additions - 2,398 - - - 2,398
As at 31 December
2022 3,654,490 3,607,388 242,710 160,000 33,622 7,698,210
Accumulated depreciation
As at 1 January
2021 2,676,321 240,678 67,871 - 31,066 3,015,936
Depreciation charge 97,664 172,730 47,034 - 1,053 318,481
Reclassification (141,429) 141,429 - - - -
Disposals (52,744) - (15,022) - - (67,766)
As at 31 December
2021 and as at 1
January 2022 2,579,812 554,837 99,883 - 32,119 3,266,651
Depreciation charge 5,468 176,095 48,227 - 930 230,720
As at 31 December
2022 2,585,280 730,932 148,110 - 33,049 3,497,371
Net Book Value
As at 1 January
2021 1,234,317 3,159,070 264,971 160,000 359 4,818,717
As at 31 December
2021 1,074,678 3,050,153 142,827 160,000 1,503 4,429,161
As at 31 December
2022 1,069,210 2,876,456 94,600 160,000 573 4,200,839
The Group has assessed property, plant and equipment for indicators of impairment and concluded there are no indicators of impairment arising in the current year.
Included in property, plant and equipment is EUR161,000 of assets that are currently located at the Maleshevë quarry site. Access to the quarry site has been under dispute since July 2019, as disclosed further in Note 13. Due to the dispute with Green Power Sh.P.K the Company were unable to physically inspect the assets as at 31 December 2020 year end. The assets were counted by an independent assessor in October 2019 as part of ongoing civil litigation against Green Power Sh.P.K, and an injunction was granted to the Company stopping Green Power Sh.P.K or any other third party moving, selling or interfering with them in any way. The Company is confident of its rights over the assets and the enforcement of those rights, and that the value of the assets is not impaired.
11. Borrowings
Group 2022 2021
EUR EUR
------------------------------------------ ---------- ----------
Current borrowings
Convertible loan notes held at amortised
cost 2,052,405 1,997,391
Other borrowings held at amortised 52,563 -
cost
Derivative over own equity at fair
value - 461
2,104,968 1,997,852
Non-current borrowings
Convertible loan notes held at amortised
cost 2,564,916 2,687,458
Other borrowings held at amortised 28,296 -
cost
Derivative over own equity at fair
value 1,045 17,458
2,594,258 2,704,916
a. Series 11 Loan Note
On 27 May 2020 the Company reached agreement with the holders of the Series 3, 4, 6, 7, 8, 9 and 10 loan note holders to reschedule the terms of the loan notes.
The existing loan notes were cancelled and replaced by the Series 11 Loan Note. The Series 11 Loan Note has an interest rate of 2% per annum. The Loan note is due for conversion or repayment on the 1 December 2026 with a conversion price of 5p.
As at 31 December 2022, the Series 11 Loan Note held at amortised cost had a balance of EUR2,564,916 (2021 - EUR2,687,458). The Stockholders' option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2022, the derivative had a value of EUR1,045 (2021 - EUR17,459). The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data.
The Directors consider that the carrying amount of borrowings approximates their fair value at 31 December 2022.
Subsequent to year end the term of the loan note was varied to change the conversion price to 80p per share based on the post consolidation share capital of the Company.
b. Gulf Loan Note
As consideration for the acquisition of Gulf Marble Investments Limited Eco Buildings has issued an Unsecured Convertible Loan Note ('Gulf Loan Note') in the amount of EUR1,785,000. Under the terms of the Loan Note, the holder may elect to convert at a conversion price of 130% of the 3-month volume weighted average share price. The Loan Note was repayable from 1 October 2020. The Loan Note carries an interest rate of Libor plus 1.5% payable annually in arrears.
As at 31 December 2022, the Gulf Loan Note held at amortised cost had a balance of EUR1,939,463 (31 December 2021 - EUR1,855,611). The Stockholders' option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2022, the derivative had a value of EUR191 (31 December 2021 - EUR191). The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data.
Subsequent to year end the term of the loan note was varied to extend the repayment date to 1 January 2026 in return for an increase in the principal of EUR100,000.
c. Other Borrowings
In September 2019, the Company entered a short-term borrowing arrangement with a value of GBP345,000. The interest rate was 1% per calendar month with a repayment date of the 31 March 2020. On the 27 May 2020 holders of GBP225,000 of these borrowings agreed to exchange them with Series 11 Loan notes as described above. The term of the remaining borrowings amounting to GBP120,000 were varied to extend the repayment date to 30 September 2022. During the year GBP20,000 of these borrowings were repaid and the term of the remaining loan notes extended to 2 June 2023.
As at 31 December 2022, the carrying value of these loans was EUR112,932 (2020 - EUR141,780).
12. Share capital
2022 2021 Share Share Share premium Share
Number Number capital capital 2022 premium
2022 2021 EUR 2021
EUR EUR EUR
---------------- ------------ ------------ ---------- ---------- -------------- -----------
Issued, called up and fully paid
Ordinary shares of GBP0.01 each
At 1 January 417,333,713 308,372,174 4,958,386 3,721,006 32,575,443 32,056,986
Issued in the
year - 108,961,579 - 1,237,380 - 518,457
At 31 December 417,333,713 417,333,753 4,958,386 4,958,386 32,575,443 32,575,443
On 4 January 2021 the Company issued 65,500,000 new Ordinary shares at a price of 1.60 pence per share through their broker to raise GBP1,0 million before expenses. On the 12 February 2021 the Company issued 5,000,000 new Ordinary shares at a price of 1.60 pence per share in settlement of consultancy feed of GBP80,0000. On the 22 December 2021 the Company issued 38,461,579 shares at a price of 1.30 pence per share through their broker to raise GBP0.5 million before expenses. Expenses of nil were offset to share premium in the year ended 31 December 2022 (2021 - EUR85,887).
After the year end date the company undertook a share reorganisation and issue as part of the acquisition of Eco Buildings Group Limited. This is considered further in note 15.
13. Contingent Liabilities
The Company has launched Civil Proceedings against the owners of Green Power Sh.P.K in Kosovo for breach of contract for the sale of Green Power and the pre-existing operating contract for the M3 quarry.
Should the Company be unsuccessful in asserting its rights over the M3 quarry it will incur a direct loss of EUR119,424, due to investments made in the power installation at the M3 quarry with a carrying value in the accounts of EUR64,424, and deposit paid for quarry reconditioning of EUR55,000.
On 4 September 2019 Eco Buildings launched United National Commission on International Trade Law (UNCITRAL) arbitration proceedings, against the Republic of Kosovo for damages in excess of EUR195 million, as a result of the failure of the State to protect Eco Buildings' rights over the Maleshevë quarry.
The Company believes the Kosovan Government to be in clear breach of its responsibilities towards the Company as a foreign investor in Kosovo and that this action is in the best interests of its shareholders and employees. The Company anticipates a fair and satisfactory resolution.
All the Company's other operations, including the quarries and processing factory in Kosovo and the Prilep quarry in Northern Macedonia, are unaffected.
The background to the claim is the dispute arising with the former shareholders of Green Power Sh.P.K and Scope Sh.P.K, which has resulted in Eco Buildings being prevented from operating the Maleshevë quarry. Since the dispute arose Eco Buildings has been working to resolve the matter with the appropriate Kosovan Government agencies, namely the Kosovo mining regulator, the Independent Commission of Mines and Mineral ('ICMM') and the Agjencia e Regjistrimit të Bizneseve ('ARBK'), the Kosovo business registration agency. However, in what is a clear breach of Kosovo Law 04/L-220 'On Foreign Investment' (2014), Eco Buildings has been prevented from asserting its rights in these matters.
Despite the cumulative weight of evidence, Eco Buildings was denied the right to appeal any decision relating to the Maleshevë quarry in direct contravention of the provisions of the Kosovo foreign investment law, Law 04 /L-220.
As a direct consequence of the ARBK and ICMM decisions, the Company has brought arbitration proceedings against the Republic of Kosovo pursuant to Article 16 of the Kosovo foreign investment law (as above). The basis of the claim for damages is the investment made to date in the Maleshevë quarry, loss of future revenues associated with the site and future investment plans in Kosovo. Significant future investment plans are the subject of the MOU signed in October 2016 by the Government of Kosovo and Stone Alliance LLC which is majority owned by Eco Buildings.
On the 16 December 2020 the Company announced that it had engaged the services of Dentons CS Europe LLP to act on the Company's behalf in its circa EUR195 million claim against the Republic of Kosovo. Dentons have agreed a fee arrangement which enables Eco Buildings to bring the Arbitration through to its conclusion.
14. Contingent Asset
In November 2022 Fox Marble announced the results of its arbitration proceedings in the London Court of International Arbitration ("LCIA") against a customer based in India. In 2017, Fox Marble signed an off-take agreement with the customer. The parties fell into dispute about their respective obligations under, and the performance of, that agreement. On 13 August 2020, commercial arbitration proceedings at the LCIA were initiated. Following a hearing, on 11 November 2022, the LCIA issued an award in favour of the Company with an award of 383,177 in damages plus GBP454,584 in costs. No other issues remain to be determined in the arbitration.The company has not recognised an asset within its account in respect of this award till such point it has clear visibility as to when such an award may be collected.
15. Events after the reporting period
Acquisition of Eco Buildings Group Ltd
On 28 April 2023, the Company entered into an acquisition agreement pursuant to which it agreed to purchase the entire issued share capital of Eco Buildings in exchange for shares in the Company. The aggregate total consideration to be paid by the Company for the shares in Eco Buildings is to be satisfied at by the issue of 54,545,455 Shares in the enlarged group..
On the 2 June 2023 the Company completed the acquisition of 100% of the issued share capital of Eco Buildings Group Ltd.
The Acquisition constitutes a reverse takeover by the Company under the AIM Rules and was, therefore, subject to the approval of Shareholders at the General Meeting.
Eco Buildings Group Limited had issued GBP645,000 of convertible notes. Pursuant to the Novation Deeds, these Eco Buildings Group Limited CLNs were novated to the Company on 2 June 2023 and repaid by the issuance of the CLN Shares at a 50% discount to the Placing Price.
Following completion of the Acquisition, Eco Buildings will also be a direct, wholly owned subsidiary of the Company. Eco Buildings also has a direct, wholly owned subsidiary, Eco Buildings Group Albania Sh.P.K. Details of Eco Buildings and its subsidiary can be found in the below table:
% Ownership Date acquired/ Registered Place Principal
Incorporated Office of incorporation activity
Eco Buildings 100% 3 August 160 Camden England Operating
Group Limited 2012 High Street & Wales Company
NW1 0NE
Eco Buildings 100% 11 December Rruga "Frosina Albania Operating
Group Albania 2012 Plaku", pall Company
Sh.P.K 21, hyrja
13, Kati 1
, Tirana
Share reorganisation
On the 2 June 2023 each Ordinary Share in the issued share capital of the Company at the 1 June 2023 was sub-divided into 13 Sub-divided Shares, following which 113,974 Sub-divided Shares were issued at nominal value. Following the Sub-divided Share Issuance, every 659 Sub-divided Shares was consolidated into one Post-Consolidation Ordinary Share and then each Post-Consolidation Share was sub-divided into one New Ordinary Share with a nominal value of 1p and one New Deferred Share with a nominal value of 50p.
The New Ordinary Shares have the same rights as the previous Ordinary Shares including voting, dividend, return of capital and other rights.
The New Deferred Shares do not have any voting rights and do not carry any entitlement to attend general meetings of the Company; nor will they be admitted to AIM or any other market.
The Share Reorganisation resulted in the Company having 8,232,857 New Ordinary Shares and 8,232,857 New Deferred Shares being in issue immediately following the Share Reorganisation.
Issue of Shares
On the 2 June 2023, following the share reorganisation described above the Company issued in aggregate 61,837,223 new ordinary shares representing the total of the Placing Shares, the Consideration Shares and the CLN Shares)
Name Number of ordinary issue price ISSUE Date
share
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 GBP2.7 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 GBP645,000 novated into the Company as part of the Acquisition of Eco Buildings Group Limited as noted above
Issue of Options
On the 2 June 2023 , the Company granted 2,272,725 Options to certain current and proposed Directors of the Company as detailed below:
Name Number of ordinary Exercise price Final Exercise
share under option Date
Andrew Allner 363,636 55p 3 years from admission
Dr Etrur Albani 363,636 55p 3 years from admission
Sanjay Bowry 454,545 55p 3 years from admission
Dominic Redfern 363,636 55p 3 years from admission
Christopher Gilbert 363,636 55p 3 years from admission
Fiona Evans 363,636 55p 3 years from admission
At 2 June 2023, the Company will have granted 1,748,017 Warrants to certain advisers of the Company, as detailed below:
Name Number of ordinary Exercise price Final Exercise
share under option Date
Spark ADvisory
Partners 700,701 1p 3 years from admission
TAvira FINANCIAL
LIMITED 247,316 55p 3 years from admission
Oliver Stansfield 800,000 30p 3 years from admission
Change of Directors
On the 2 June 2023 Sanjay Bowry, Dominic Redfern, Dr Etrur Albani and Dr Ahmet Shala were appointed as directors of the Company. Sanjay Bowry joins as new Chief Executive Officer and Dominic Redfern as Executive Vice Chairman. Dr Etrur Albani and Dr Ahmet Shala join as Non-executive directors. On the same date Christopher Gilbert and Roy Harrison resigned as directors of the Company.
Change of Name
On the 2 June 2023 the Company changed its name from Fox Marble Holdings Plc to Eco Buildings Group Plc.
16. Information
Copies of the Annual Report and Financial Statements will be posted to shareholders. Further copies will be available from Eco Buildings Group plc's registered office at 160 Camden High Street, NW1 0NE or on the Company's website at www.eco-buildingsplc.com
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi ed by their use of terms and phrases such as "believe", "could", "should" "envisage", "estimate", "intend", "may", "plan", "potentially", "expect", "will" or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors
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END
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(END) Dow Jones Newswires
October 18, 2023 02:00 ET (06:00 GMT)
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