174207 Fox Marble Holdings - Annual Report Cover_174207 Fox Marble Holdings - Annual Report Cover 01/10/2020 19:44 Page 1
FOX MARBLE
HOLDINGS PLC
ANNUAL REPORT
& FINANCIAL STATEMENTS
Fox Marble Holdings Plc
15 Kings Terrace,
London, NW1 0JP
Tel: +44 (0) 207 380 0999
www.foxmarble.net
2019
174207 Fox Marble Holdings - Annual Report Cover_174207 Fox Marble Holdings - Annual Report Cover 01/10/2020 19:44 Page 3
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Index
Index ................................................................................................................................................... 1
Introduction .......................................................................................................................................... 3
Chairman’s statement ............................................................................................................................. 4
Strategic Report ..................................................................................................................................... 6
Directors ............................................................................................................................................... 18
Report of the Directors ........................................................................................................................... 20
Corporate Governance Report .................................................................................................................. 24
Report of the Audit Committee................................................................................................................. 29
Statement of directors’ responsibilities in respect of the financial statements ................................................. 32
Independent auditor’s report to the members of Fox Marble Holdings Plc ...................................................... 33
Consolidated Statement of Comprehensive Income..................................................................................... 39
Consolidated Statement of Financial Position.............................................................................................. 40
Consolidated Statement of Cash Flows ...................................................................................................... 41
Consolidated Statement of Changes in Equity ............................................................................................ 42
Statement of Financial Position of the parent company ............................................................................... 43
Statement of Changes in Equity of the parent company .............................................................................. 44
Notes to the consolidated and parent company financial statements ............................................................. 45
Notice of General Meeting ....................................................................................................................... 78
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Figure 1 – Residential Project, Pristina
Figure 2 – Tiles loaded for shipping
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Introduction
Fox Marble Holdings plc (“Fox Marble” or “Company”) is a marble company focused on the extraction and processing
of dimension stone from quarries in Kosovo and the Republic of North Macedonia. Established in 2011, Fox Marble
acquired the rights to over 300 million cubic metres of a range of premium quality marble. Fox Marble is the first
UK quoted company investing and operating primarily in Kosovo, and the first to be producing and marketing high
quality marble.
Fox Marble’s long-term goal is to expand its portfolio of quarries and production capacity, and to create a premium
marble brand through which Kosovo and the Balkan region is established as a major centre of marble production.
Highlights for the year ended 2019
•
•
•
Total production of 14,370 tonnes of marble at the Prilep Alpha and Maleshevë quarries (2018 – 13,094
tonnes).
Revenue for the year of €1.4 million (2018 – €1.4 million) with 6,830 tonnes of block material sold in
2019 (2018 – 5,059 tonnes).
Operating loss for the year of €2.27 million (2018 – €2.4 million). Loss for the year of €2.5 million (2018
€2.3 million).
Highlights year to date 2020
•
•
•
•
Sales agreements worth in excess of €1.8 million signed for processed marble to be supplied to projects
in Kosovo over 2020 and 2021 from our factory in Prilep. The agreements were signed in 2020 and are
expected to be supplied over 2020 and 2021.
Quarrying operations restarted in Prilep in August 2020 and in Cervenillë in September 2020.
New equipment supplied to factory to boost cut to size capacity. The factory has processed over
3,500 tonnes of marble to date in 2020, despite the Covid 19 restrictions put in place, compared to
slightly over 1000 tonnes processed in 2019.
The Company reached agreement with the holders of £2.1 million of its convertible loan notes, to replace
the existing loan notes with a new single class of loan note, which have a maturity date of
1 December 2026. The Loan Notes are convertible at a conversion price of 5p per share and an interest
rate of 2% per annum. In June 2020 the Company completed a placing to raise £0.8 million before
expenses to provide working capital.
•
Cash balance as at 15 September 2020 of €0.47 million.
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Chairman’s statement
Dear Shareholders,
Although much of this report is about the results for the financial year 2019 these now seem to relate to a previous
age. The Covid-19 pandemic has changed how the Company operates for the time being and our expectations of
the future have been delayed.
The Company continues to focus on three legs of strategy over the short to medium term:
• Factory sales of processed marble with a focus on growth in sales within Kosovo and the greater Balkans area;
• block sales to China and other large block markets; and
• growing our marble reserves base and opening new quarries.
The 2019 financial year saw sales of €1.4 million (2018 – €1.4 million). The Company maintained stable revenues
despite the loss of the production from the Maleshevë quarry in July 2019 which had formed over 40% of revenues
in 2018. Block sales from the Prilep quarry increased from €0.4 million in 2018 to €0.9 million. A significant focus
on operations at the factory and sales effort focusing on the local Kosovan and Balkan market, has been successful
with multiple new large-scale contracts signed. In December 2019 the Company signed a contract for the processing
of third party blocks and during 2020 to date the Company has signed three large scale contracts for the supply of
cut and finished marble from its own quarries.
The dispute over the Maleshevë quarry that begun in 2019 has prevented us from exploiting what was a significant
asset for the Company. The Arbitration case against the government of Kosovo continues to progress, along with the
civil case against the licence holder with whom we had an operating agreement. The Company will continue to seek
restitution through the courts.
The Covid-19 outbreak has slowed progress on the strategy in 2020, with the international block market having
stalled throughout most of 2020, and slower than expected sales through the factory as projects were delayed or
customers sought to manage their own response to the global pandemic. From a financial point of view, the 2020
year will not show the progress we had anticipated before the Covid-19 outbreak. Although we have taken measures
to secure cash flow and maximise sales, it is inevitable that we will emerge with lower sales than we had planned
and make losses for a large part of the year. The Company took steps in June 2020 to obtain substantial concessions
from our loan note holders and secure liquidity in the light of the impact of Covid 19 on sales and operations.
Despite all this significant progress has been made in securing large scale contracts through the factory with supply
starting in Q2 2020 and continuing into 2021. Quarrying at the Prilep quarry recommenced in August 2020 and in
Cervenillë in September 2020. The Company will continue to monitor working capital and closely monitor progress
on sales from the newly re-opened quarries.
Fox Marble continues to examine opportunities to grow its marble reserve base. The Company has secured a new
licence for a quarry site believed to contain Illirico Selene. This asset will provide potential for expansion as well as
broadening the Company’s resource base. Subject to a successful drilling programme and quarry plan, the Company
will look to develop this quarry during 2021.
I would like to thank all our employees who are very committed and hardworking, and, importantly have embraced
our vision to establish Kosovo and the Balkans as a major supplier of high quality marble worldwide.
Andrew Allner
Non-Executive Chairman
Reports
Pages 6-17 comprise the Strategic report and pages 20-23 the Report of the Directors all of which are presented in
accordance with the UK Companies Act. The liabilities of the Directors in connection with these reports shall be
subject to the limitations and restrictions provided by such law. These reports are intended to provide information
to shareholders and are not designed to be relied upon by any other party for any other purpose.
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Disclaimer
This Annual Report and Financial Statements may contain certain statements about the future outlook for Fox Marble
Holdings Plc and its subsidiaries. Although we believe our expectations are based on reasonable assumptions, any
statement about the outlook may be influenced by factors that could cause actual outcomes and results to be
materially different.
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Strategic Report
Our Vision
•
•
•
Establish Kosovo and the Balkans as a centre for marble, providing a core business on which to build
a new stone industry in the region
Build on the unique opportunities of a large resource, low costs of production, a highly trained
workforce and proximity to major markets to create a profitable business.
Bring premium quality marble to the global market in volume and at competitive prices.
Sales and marketing
Figure 3 – Tiles laid in Podujeva Project
Sales for the year ended 2019 were €1.4 million (2018 – €1.4 million). The fall in block sales of Illirico Selene
following the closure of operations in Maleshevë was offset by increased block sales from the Prilep quarry in
Macedonia. Sales from the factory increased significantly in the final quarter of the year, outpacing the previous
three quarters, following the appointment of a new factory manager and COO. Sales of processed marble are
expected to form an increasing proportion of sales from 2020 onwards.
Block sales
Block marble sales were €1.2 million (2018 – €1.0 million). Sales of block marble from the Maleshevë quarry fell to
€0.4 million (2018 – €0.6 million), as a result of the closure of the quarry in July 2019, however, increased
production in the Prilep quarry drove an increase in block marble sales of Alexandrian Blue and Alexandrian White
marble to €0.9 million (2018 – €0.4 million).
Block sales were significantly impacted by the Covid-19 outbreak. The prominence of China in the block marble
market meant that sales of block marble showed a sharp drop from the start of 2020. As international borders were
closed and the outbreak spread through Europe, the decision was made to temporarily close the quarry at Prilep for
the safety of staff and to preserve working capital until such point as buyers returned to market. The Prilep quarry
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was reopened in August 2020 and the board will continue to closely watch the progress on the block market through
the end of 2020 and into 2021.
Processed marble sales
The new sales team has generated increased interest in the products, and discussions with large natural stone
companies are ongoing to supply blocks for their project portfolios. The formal opening of the Company’s new
showroom and office in Pristina in April 2020 is a demonstration of Fox Marble’s confidence in the market growth
potential of the region, both for its own processed products as well as providing cutting services to third parties.
A number of new contracts were signed for processing services and processed marble which are expected to form
the backbone of sales through the end of 2020 and 2021.
•
•
•
•
In December 2019, the Company signed a contract for the processing of third-party blocks, which represents
an additional revenue stream for the Company. Under this new third-party agreement, Fox Marble will process
stone on behalf of Inter Stone LLC at the Company’s factory at Lipjan in Kosovo. The contract is for twelve
months and it is expected that Fox Marble will continue to process blocks of material each month. Following
this, the Company signed two further processing contracts in February 2020 with Egzoni Sh.P.K and Skifteri
Sh.P.K.
In April 2020 Fox Marble signed a contract to supply up to 20,000 square metres of paving to a local
municipality for the town square of Suhareka in Kosovo with the first 8000 square metres to be delivered by
September 2020. Material already specified and contracted under the first two stages of the project has a total
value in excess of €400,000, and once all 20,000 square metres have been supplied the project is expected to
be worth in excess of €750,000. Fox Marble has already supplied over 5000 sqm of material.
In June 2020 Fox Marble signed a contract to supply 35,000 square metres of cut and polished tiles to
CC Apartments LLC. CC Apartments LLC is engaged in developing several prestigious projects including
apartments in Kosovo, as well as Albania and surrounding countries. Fox Marble will be processing blocks of a
range of marble from its own quarries for this project and supplying this material from its factory in Kosovo
over the course of 2021 starting in January. The total value of the contract is in excess of €700,000.
In July 2020 Fox Marble signed a new contract to supply 20,000 square metres of cut and polished paving tiles
for installation in the town square for the Municipality of Podujeva in Kosovo. This contract has been entered
into with the contractors charged with developing and completing the town square which will be paved with
material exclusively supplied by Fox Marble. Fox Marble began supplying material for this project in
August 2020. The total value of this contract is around €700k over 2020 and 2021.
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Factory
A 5,400 square metre double skinned steel factory for the cutting and processing of blocks into polished slabs and
tiles has been erected on a 10-hectare site that the Company acquired in Lipjan in 2013, close to Pristina airport in
Kosovo. A new Factory Manager was appointed in 2019, Secundino Costas da Vila who is a natural Stone professional
with 30 years of experience in some of the top global companies.
Fox Marble is experiencing a developing local market for its processed material and range of products from cut and
polished tiles to stair pieces, door and window lintels to slabs, which is driving increased production at the factory.
In June 2020, the Company announced that it had acquired two additional automatic CNC cutting machines to be
installed in its factory in Kosovo. The two machines are manufactured by Simec Srl and Garcia Ramos SA and with
the existing Gravellona Machine Marmo CNC machine will double the capacity to cut tiles. The machines have
been installed and are now fully operational. This will help underpin the 3-year factory expansion plan currently being
developed by the recently appointed COO/GM Sales, in conjunction with the anticipated increased demand being
generated.
Figure 4 – Factory interior
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Quarry Operations
Prilep
The Company entered into an agreement to operate a quarry in Prilep, North Macedonia in 2013. The agreement
was for a period of 20 years with an irrevocable option to extend the period for a further 20 years thereafter. The
Prilep quarry contains a highly desirable white marble Alexandrian White and Alexandrian Blue. This is one of a small
cluster of quarries, in the Stara river valley, overlooked by the Sivec pass.
The introduction of a new quarry team at the site in November 2018 increased the total production for the quarry
to 11,547 tonnes (2018 – 5,816 tonnes).
On 8 October 2018, Fox Marble acquired Gulf Marble Investments Limited (Dubai) its investment partner in the Prilep
Alpha quarry in North Macedonia, including all the rights attached to that Company. Under the terms of the original
agreement to acquire the Prilep Alpha quarry in North Macedonia in 2013, Gulf Marble Investments Limited provided
the funds to acquire the licence to the site and capital investment amounting to €1.8 million, and then entered into
an operating agreement with Fox Marble to operate the quarry. In compensation Gulf Marble Investments Limited
was provided with a royalty amounting to 40% of the gross revenues received from the sale of its block marble from
the quarry.
Figure 5 – Quarry at Prilep
Through the acquisition of 100% of the share capital of Gulf Marble Investments Limited, Fox Marble has effectively
acquired the licence to the site eliminating the royalty of 40% of gross revenue that was payable to Gulf Marble
Investments Limited under the original agreement, as well as acquiring the capital equipment held by Gulf Marble.
Consideration for the acquisition was the issue of a convertible loan note with a carrying value of €1.785 million.
Following the completion of this transaction Fox Marble will be eligible to retain 65% of the gross revenue from the
sale of block marble from the quarry. A royalty of 35 % of gross revenue will remain payable to the original licence
holder of the quarry. The Company also has the rights to an additional quarry nearby, Prilep Omega, which it
acquired in 2014.
Quarrying was suspended at Prilep in April 2020 as a result of the un-folding Covid-19 crisis. It was re-opened in
August 2020.
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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) 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.
In 2016, the decision was made to focus quarry resources at the nearby Maleshevë quarry to accelerate development
to address expected demand. Quarry staff and equipment were therefore re allocated from this quarry. The quarry
was re-opened in September 2020 to address the anticipated upcoming demand for Argento Grigio from existing
and future contracts.
Figure 6 – Quarry at Cervenillë
Syriganë
The quarry at Syriganë is open across four benches. 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).
Growing marble reserves base and the opening of new quarries in Kosovo
The foundation of a successful and growing natural stone company is its reserves base. Fox Marble’s strategy is to
seek to grow this over the medium term, finding and aiming to open on average at least one new quarry a year in
opportunity rich Kosovo. For 2020, two new potential quarries were identified and after initial examination of the
resource the Company secured the licence over one new quarry site. Progress on developing the quarry is expected
to start in 2021, subject to an initial drilling programme. This will provide the opportunity to increase both block
sales and processed marble from the factory from the end of 2021 onwards.
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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, Fox Marble announced it had conditionally acquired the entire share capital of Green Power, for a
consideration of £1,000,000 to be satisfied by the issue of 13,000,000 new ordinary shares in the Company at a
price that equates to 7.69 pence per share. However prior to approval of the issue of shares at the AGM in
June 2019, Green Power announced their intention to breach the agreed acquisition contract and blocked Fox
Marble’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.pk 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 Fox Marble launched United National Commission on International Trade Law (UNCITRAL)
arbitration proceedings, against the Republic of Kosovo for damages in excess of €195 million, as a result of the
failure of the State to protect Fox Marble’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 Fox Marble being prevented from operating the Maleshevë quarry. Since the dispute
arose, Fox Marble 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), Fox Marble has been prevented from asserting its rights in
these matters.
Despite the cumulative weight of evidence, Fox Marble 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 Fox Marble. The
Company is represented by its legal advisers, Stephenson Harwood LLP, as well as its Kosovan lawyers.
Financing
Please refer to the Report of the Directors for the going concern assessment by the Directors.
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
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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.
In line with many other nations, Kosovo introduced a number of measures to try and curb the further spread of
COVID-19, including travel restrictions, school closures and closures of non-essential shops and venues. All flights
into Kosovo were cancelled on 16 March 2020, whilst land borders are also closed to non-Kosovo citizens. On
23 March 2020 all private businesses, apart from of some designated sectors, were also ordered to close. Since this
dates some restrictions have been lifted, however travel continues to be tightly controlled.
Fox Marble’s factory operations were permitted to continue, as it fell within a designated sector. The Company
continued to operate the factory, though with scaled back operations. Extra distancing procedures to protect our
workforce were implemented. Operations were slowly increased over the summer.
Demand for block marble fell significantly as a result of travel restrictions placed on China, the principal buyers of
the Company’s block marble, since January 2020. The spread of the virus into Europe and the resulting impact on
cross border travel and trade has magnified this effect. The Company elected to suspend production at the quarry
in order to keep operational cash flow neutral until the international block marble market returns to normality.
Operations at the Prilep quarry were re-started in August 2020.
Whilst quarrying operations are temporarily suspended, the Company will seek to eliminate all unnecessary
expenditure and the Board offered to not take any salary or fees until operations resume. Head Office staff in London
were placed on furlough through to June 2020.
Stone Alliance Project
In October 2016, Fox Marble announced that Stone Alliance LLC, a new company formed and 59% owned by Fox
Marble, signed a non-binding Memorandum of Understanding with the Parliament of Kosovo with the aim of creating
a world class new stone industry for Kosovo. The Company has been granted Commercial Advocacy by the Advocacy
Centre of the United States Department of Commerce, ensuring the company benefits from the active support of
the US Government. Through submission of exploration licences, Stone Alliance now has exclusive rights for a 40-
year period to 40 quarry sites offering a variety of marble and dimension stone. Stone Alliance intends to raise a
minimum €100m from external sources to facilitate the opening of 40 proposed marble quarries and factories over
a five year period in the region with a view to establishing Kosovo as a global presence in the stone industry, creating
in excess of 2,000 jobs.
Fox Marble’s role, in addition to being a major shareholder within the Stone Alliance project, will be as follows:
•
•
To provide expertise on technical matters, including quarry operations, gained from being the sole marble
quarry owner and operator in the region; in addition Fox Marble will provide management and strategic services
to Stone Alliance in the initial phases of the operations allowing Stone Alliance to progress more quickly in its
development. These services will be provided by Fox Marble at cost plus an agreed margin.
To provide the sales and marketing platform to sell Stone Alliance material. Fox Marble will provide access to
its customer database and use of the Fox Marble brand to facilitate the entry of the Stone Alliance product to
the market. Fox Marble will act as a sales agent and in return it will earn a commission on sales of the Stone
Alliance product.
•
The Chairman and CEO of Fox Marble Holdings Plc both sit on the board of Stone Alliance.
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Materials
Alexandrian White
is a predominantly white,
fine-grained sculpture-grade dolomitic marble. Quarried at
our Prilep Alpha quarry in North Macedonia, the grey
marking on this stone can vary from largely linear stripes
to an attractive dappling.
Grigio Argento ranges in colour from almost blue grey to
a warmer tone. It has an impressive dense quality and
attractive white
can be
quarried and processed to maximise or minimise the
presence and effect of fossils. This versatile stone comes
from our Cervenillë quarry in Kosovo.
to gold veining.
It
Alexandrian Blue New for 2019 this comes from the
same Prilep quarry as the Alexandrian White in North
Macedonia. The unusual and attractive blue grey banding
is far denser than in any of the Alexandrian White but the
white remains to establish the full tonal range on larger
pieces.
Flora comes from the same quarry as the Grigio Argento
and Rosso Cait, this is both technically similar to them and
transitional between them in colour. The transitional
character of the stone yields a broad colour and pattern
range.
Breccia Paradisea is one of two fine and crystalline
breccias from Syriganë in northern Kosovo. It has red as
the highlight colour over the grey and white background it
shares with its twin, Etrusco Dorato. The gold of the
Etrusco lifts the other colours where it is present
Etrusco Dorato exhibits a dominant gold colour over a
grey and white field, complemented by the reds also to be
found in the Breccia Paradisea. Single slabs are striking.
Book matched they are stunning.
Rosso Cait is the red complement to Grigio Argento and
Flora and comes from the same quarry, Cervenillë. This
stone, which exhibits some colour and fossil marking
variation, works well as a highlight or bold statement
colour.
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Results and Dividends
Key Performance Indicators 2019 2018
Number of operational quarries 4 4
Quarry production (tonnes) 14,370 13,094
Revenue €1,422,872 €1,409,730
Average recorded selling price (blocks per tonne) €217 €210
Average recorded selling processed (per sqm) €28 €56
EBITDA (€2,022,027) (€2,324,762)
Operating loss for the year (€2,273,673) (€2,427,022)
Loss for the year (€2,533,540) (€2,264,975)
Expenditure on property, plant and equipment €649,015 €713,315
The Group recorded revenues of €1,422,872 in the year ended 31 December 2019 (2018 – €1,409,730). Revenues
for the year were consistent on prior year with increases in block sales from the Prilep quarry substituting for the
fall in revenues following the suspension of quarrying operations at Maleshevë. The Group incurred an operating loss
of €2,273,673 for the year ended 31 December 2019 (2018 – €2,427,022). The operating loss reflects the costs
incurred to bring the quarries and to a stage required for production of more consistent and larger block sizes and
develop the factory site. Additionally, the Group has invested in targeted marketing activity to increase sales. The
average recorded selling price per tonne remained consistent on prior year. The fall in the selling price per sqm for
processed material as focus was shifted to the Kosovan and Balkan market.
The Group incurred a loss after tax for the year ended 31 December 2019 of €2,533,540 (2018 – €2,264,975).
Reconciliation of EBITDA to Loss for the year
Year to Year to
31 December 31 December
2019 2018
€ €
Loss for the year (2,533,540) (2,264,976)
Plus/(less):
Net finance costs/(income) 259,867 (162,047)
Depreciation 207,850 90,365
Amortisation 43,796 11,896
EBITDA (2,022,027) (2,324,762)
The Company does not anticipate payment of dividends until its operations become significantly cash generative.
Sustainable development
Fox Marble aims to build and maintain relationships based on trust and mutual benefit with its stakeholders.
Preventing and managing social and environmental risks, while seeking opportunities for improvement, are critical
to maintaining the Group’s competitiveness and capacity to grow.
Risk
Fox Marble recognises that risk is inherent in its business activities. Its risks can have a financial, operational or
reputational impact. The Company’s system of risk identification, supported by established governance controls,
ensures that it effectively responds to such risks, whilst acting ethically and with integrity for the benefit of our
stakeholders.
Once identified, risks are evaluated to establish root causes, financial and non-financial impacts, and likelihood of
occurrence. Consideration of risk impact and likelihood is considered to create a prioritised risk register and to
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PAGE | 15
determine which of the risks should be considered as a principal risk. The effectiveness and adequacy of mitigating
controls are assessed. If additional controls are required, these will be identified, and responsibilities assigned.
The Group’s management is responsible for monitoring the progress of actions to mitigate key risks. The risk
management process is continuous; key risks are reported to the Audit Committee and at least once a year to the
full Board.
The following risk factors, which are not exhaustive, are particularly relevant to the Group’s business activities:
Operational risks
The activities of the Group are subject to the hazards and risks associated with natural resource companies. These
risks and uncertainties include, but are not limited to, environmental hazards, industrial accidents, geological
problems, unanticipated changes in rock formation characteristics, encountering unanticipated ground or water
conditions, land slips, flooding, levels of wastage, periodic interruptions due to the interruption of utilities, inclement
or hazardous weather conditions and other acts of God or unfavourable operating conditions.
Should any of these risks and hazards affect the Group’s operations, it may cause the cost of production to increase
to a point where it would no longer be economic to extract stone from the Group’s quarries, require the Group to
write-down the carrying value of one or more quarries, cause delays or a stoppage of mining and processing, result
in the destruction of mineral properties or processing facilities, cause death or personal injury and related legal
liability, any and all of which may have a material adverse effect on the Group.
Risks to personnel are mitigated through the implementation of robust health and safety training and practices,
supported by detailed procedures. Oversight of the Group’s procedures lies with the Board of Directors. The Group
has instilled a zero-tolerance attitude for safety incidents at all levels of operations, with rules incorporated into
operational procedures, safety manuals and all communications on safety. All significant incidents on site are
required to be reported to the Board of Directors. Other operational risks are mitigated using trained personnel,
detailed monitoring of operations on a technical and geological basis to ensure that issues are identified and
addressed promptly. No significant incidents were reported in the current or previous year.
Quarry development risk
Several of the Group’s quarries are at an early stage of development. As a result, there can be no assurance that
the colour, texture, quality and other characteristics of the marble slabs processed, and blocks mined from the
quarries will be consistent with the material that has been quarried to date. In addition, the mineralogical and
chemical composition, bulk density, hardness, water absorption and mechanical properties of marble quarried may
change as the resource is further exploited. If the marble extracted is of a lower quality than expected, then demand
for, and the realisable price of, the Group’s marble may be lower than expected.
The Group mitigates these risks with the use of highly trained quarry personnel and geologists, and the detailed
assessment of the resource including, where appropriate, drilling, technical surveys and third-party reviews. Further,
the Group maintains a broad portfolio of quarry projects and prospects with enough potential in terms of inferred
and indicated resources.
Production and sales risk
There can be no assurance that the Group will be profitable in the future. The Group expects to continue to incur
losses unless and until such time as some or all the quarries are at a level of development which allows the
production of commercially significant volumes of material and generation of sufficient revenues to fund continuing
operations.
The Group is at an early stage in the development of its sales and customer base. The Group’s level of historical
sales is low, and the volume of sales is anticipated to grow significantly. The Group has invested in the development
of its customer base through marketing initiatives to develop awareness of its brand and product.
To mitigate production risk, quarry operations have approved business plans and targets while working within strict
working capital controls and robust budgeting and cost control processes.
Environmental risks and hazards
All phases of the Group’s operations are subject to environmental regulation in Kosovo and North Macedonia.
Environmental legislation is evolving in a manner that may require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a
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heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance
that existing or future environmental regulation will not adversely affect the Group’s business, financial condition
and results of operations. Environmental hazards may exist on the properties on which the Group holds interests
that are unknown to the Group at present and that have been caused by previous or existing owners or operators
of the properties.
To mitigate this risk, the Group has developed and is rolling out policies and procedures to ensure environmental
standards are met in excess of current local legislation. The Group will continue to monitor evolving standards within
each of its operating environments.
Political and regulatory risk
The Group’s operating activities are subject to laws and regulations governing expropriation of property, health and
worker safety, employment standards, waste disposal, protection of the environment, mine development, land and
water use, mineral production, exports, taxes, labour standards, occupational health standards, toxic wastes, the
protection of endangered and protected species and other matters.
Kosovo has less developed legal systems than more established economies which could result in risks such as:
(i) effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation, or
in an ownership dispute, being more difficult to obtain; (ii) a higher degree of discretion on the part of governmental
authorities; (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations;
(iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or
(v) relative inexperience of the judiciary and courts in such matters.
To mitigate this risk the Group takes an active role in industry and other stakeholder engagement processes with
the local government.
In September 2019 Fox Marble launched an Arbitration claim against the government of Kosovo. Further information
on this action can be found on page 11.
Key personnel risk
Key personnel risk is the risk of losing either a member of the Board or one of the Group’s key quarrying or sales
professionals. This could have an adverse effect on the ability of the business to complete its operational plans.
To mitigate this risk, the Group’s management has put in place plans to ensure skills development and retention and
proactive recruitment processes are in place.
Capital risk
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital based on the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current
borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated
as ‘equity’ as shown in the consolidated balance sheet, plus net debt.
COVID-19
The outbreak of the recent global COVID-19 virus has resulted in business disruption and stock market volatility.
The extent of the effect of the virus, including its long-term impact, remains uncertain. The Group has implemented
extensive business continuity procedures and contingency arrangements to ensure that they are able to continue to
operate. The Group’s activities expose it to several risks including cash flow risk, liquidity risk and foreign currency
risk. Disclosure of management’s objectives, exposure and policies in relation to these risks can be found in note 22
to these financial statements.
Fox Marble does not expect to be significantly impacted by the expected departure of the United Kingdom from the
European Union, due to the location of its operations and most of its customer base being located outside the EC.
The Board will continue to monitor the situation in order to address and mitigate associated risks as they arise.
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Section 172(1) Statement – Promotion of the Company for the
benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit
of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
•
•
•
•
•
•
Consider the likely consequences of any decision in the long term,
Act fairly between the members of the Company,
Maintain a reputation for high standards of business conduct,
Consider the interests of the Company’s employees,
Foster the Company’s relationships with suppliers, customers and others, and
Consider the impact of the Company’s operations on the community and the environment.
The Company continues to progress the development of its existing projects in Kosovo and North Macedonia. The
application of the s172 requirements can be demonstrated in relation to the some of the key decisions made during
2019:
•
•
•
Continuing evaluation of existing license areas and assessment of potential new licence areas;
Undertaking feasibility studies as part of the assessment of new projects or significant capital expenditure; and
Continued assessment of corporate overheads, expenditure levels and wider market conditions.
As a mining Group operating in Kosovo and North Macedonia, the Board takes seriously its ethical responsibilities to
the communities and environment in which it works. We abide by the local and relevant UK laws on anti-corruption
& bribery. Wherever possible, local communities are engaged in the geological operations & support functions
required for field operations, providing much needed employment and wider economic benefits to the local
communities. In addition, we follow international best practise on environmental aspects of our work. Our goal is to
meet or exceed standards, in order to ensure we maintain our social licence to operate from the communities with
which we interact. The interests of our employees are a primary consideration for the Board. Personal development
opportunities are supported and a health and security support network is in place to assist with any issues that may
arise on our quarries.
Finally, I would like to thank all our staff and our Board colleagues for their unstinting efforts on behalf of Fox Marble.
On behalf of the board
Chris Gilbert
Chief Executive Officer
30 September 2020
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Directors
Andrew Allner, Non-Executive Chairman
Andrew is currently Non-Executive Chairman of Shepherd
Building Group plc and SIG plc. He was Non-Executive Chairman
of Marshalls plc, and Go-Ahead Group plc and Non-Executive
Director of CSR plc and Northgate plc and Senior Independent
Director and Chairman of the Audit Committee of AZ Electronic
Materials SA. Previously Andrew was Group Finance Director of
RHM plc, taking a lead role in its flotation on the London Stock
Exchange and its subsequent sale to Premier Foods plc. He was
CEO of Enodis plc and also served in senior executive positions
with Dalgety plc, Amersham International plc and Guinness plc.
He was a partner at PricewaterhouseCoopers LLP and is a
graduate of Oxford University. Andrew has been Non-Executive
Chairman since 2012 and also chairs the nomination committee
and sits on the remuneration committee.
Chris Gilbert, CEO
In 1992, Chris co-founded Infectious Records, an independent
record company which grew to be one of the most successful
independent record companies in the UK. Following this he
founded Auriga Networks, a satellite transmission company
which numbered among its clients NATO, the British and US
Army, BBC, Fox Television and CBS News. In addition, Chris
co-founded DarkStar Technologies, a high tech start up
providing internet security and data management services to
the entertainment industry. Chris co-founded Crosstown Songs,
a buy and build music publishing venture funded by Cargill
which became a major independent music publishing company
which was sold to KKR / Bertelsmann. Chris has been CEO since
the formation of the Company in 2011.
Fiona Hadfield, Finance Director
Fiona Hadfield is a chartered accountant. She previously worked
with Deloitte LLP. Fiona joined Crosstown Songs as Chief
Financial Officer, overseeing all financial aspects of the
company’s disposal of assets to KKR and Bertelsmann. Fiona is
a graduate of Oxford University. Fiona joined Fox Marble as
Finance Director in 2011.
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PAGE | 19
Sir Colin Terry KBE CB DL FREng, Non-Executive Director
Sir Colin spent 37 years in the Royal Air Force reaching the rank
of Air Marshal. He was Chief of Staff at RAF Logistics Command,
Chief Engineer (RAF) and Air Officer Commanding-in-Chief at
RAF Logistics Command, and RAF Board member for logistics.
He was Group Managing Director at Inflite Engineering and
Chair of the Engineering Council (UK) in addition to being a
senior advisor to both Safran and Alenia Aermacchi for several
years. In addition, Sir Colin was Non-Executive Chairman of
Meggit plc, and AviaMediaTech Ltd. Sir Colin is currently a Non-
Executive Chairman of Boxarr Ltd. He is the former Executive
Chairman of Centronic Group Ltd and former Non-Executive
Chairman of Centronic Ltd and a Non-Executive director of
Aveillant Limited. He is also a Fellow of the Royal Academy of
Engineering and of Imperial College, and a Deputy Lieutenant in
Buckinghamshire. Sir Colin has been a Non-Executive Director
of Fox Marble since 2012 and also chairs the audit committee
and sits on the remuneration and nomination committees.
Roy Harrison OBE, Non-Executive Director
A former Chief Executive of the Tarmac Group, Senior
Non-Executive Director at the BSS Group and President of the
Construction Products Association, Roy also served as
Non-Executive Chairman of the AIM listed Renew Holdings plc
and has held Non-Executive roles in a number of private
construction products companies. Roy is Chairman of the
Thomas Telford Multi Academy Trust having spent 25 years
establishing and running new or rescued Schools under the
Thomas Telford Banner.
Roy has been a Non-Executive Director of Fox Marble since 2012
and also chairs the remuneration committee and sits on the
audit and nomination committees.
Independent Auditors
Principal Bankers
PKF LittleJohn LLP
15 Westferry Circus,
Canary Wharf,
London E14 4HD
Nominated advisor
Cairn Financial Advisers LLP
Cheyne House
Crown Court
62-63 Cheapside
London EC2V 6AX
HSBC Bank plc
70 Pall Mall,
London
SW1Y 5EZ
Registrars
Computershare
The Pavilions,
Bridgwater Road,
Bristol
BS13 8AE
Advisers
Company Secretary
Ben Harber
60 Gracechurch Street,
London,
EC3V 0HR
Brokers
Brandon Hill Capital Ltd
1 Tudor Street,
London
EC4Y 0AH
Allenby Capital Ltd
5th Floor
5 St Helen’s Place
London
EC3A 6AB
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Report of the Directors
The Directors present their report and the audited financial statements of the Group and Company for the year ended
31 December 2019.
Principal Activities
The principal activity of Fox Marble Holdings plc (“Fox Marble” or “Company”) and its subsidiary and associate
companies (the “Group”) is the exploitation of marble quarry reserves in the Republic of Kosovo and the Republic of
North Macedonia.
A detailed business review of the year and future developments is included in the Chairman’s statement and
Strategic Report on pages 6–17.
Results and Dividends
The Group’s results are set out in the consolidated statement of comprehensive income on page 39. The audited
financial statements for the year ended 31 December 2019 are set out on pages 39–77.
The Group incurred an operating loss €2,273,673 for the year ended 31 December 2019 (2018 – €2,427,023). The
Group incurred a loss after tax for the year ended 31 December 2019 of €2,533,540 (2018 – €2,264,976).
The Company does not anticipate payment of dividends until the operations become significantly cash generative.
Further detail is included in the Strategic Report on pages 6–17.
Directors
The Directors of Fox Marble Holdings plc who served during the year and up to the date of signing the financial
statements were:
Andrew Allner
Chris Gilbert
Fiona Hadfield
Roy Harrison OBE
Sir Colin Terry KBE CB DL
Directors’ interests in the share capital of the Company
The interests of the directors who held office during the year ended 31 December 2019 in the shares of the Company
are given below.
As at 31 December As at the date
Director 2019 of this report
Andrew Allner 2,518,997 2,518,997
Chris Gilbert 21,384,456 21,384,456
Fiona Hadfield – –
Roy Harrison 10,088,554 10,088,554
Sir Colin Terry 959,587 959,587
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PAGE | 2 1
Significant Shareholders
Fox Marble Holdings plc has been notified as 28 September 2020 of the following interests in excess of 3% of its
issued share capital:
Number of % of issued
ordinary shares share capital
Andrew Muir 38,734,685 12.56%
Dr Etrur Albani 22,472,254 7.29%
Mr Chris Gilbert 21,384,456 6.93%
Shailesh Patil 19,047,619 6.18%
Spreadex Ltd 14,139,325 4.59%
Artemis Investment Management LLP 13,495,807 4.38%
Miton UK Microcap Trust PLC 13,190,339 4.28%
Mr Dominic Redfern 12,038,888 3.90%
Nigel Luckett 10,000,000 3.24%
The Group does not provide any third-party qualifying indemnity provisions or qualifying pension scheme indemnity
provisions.
Strategic Report
The Company has chosen, in accordance with Section 414C of the Companies Act 2006, to set out the following
information in the Strategic Report which would otherwise be required to be contained in the Directors’ Report:
• Financial risk management objectives;
• Indication of exposure to principal risks;
• Disclosures required by s172 of the Companies Act 2006;
• Future developments of the business.
The Impact of COVID-19 on the Group
Since March 2020, the Board has made preparations to mitigate the impact of COVID-19 on the business through
several action plans and mitigation strategies. These will continue to be monitored and updated as required.
The Impact of Brexit on the Group
The Board has considered the extent of challenges to our business model and operations arising from the withdrawal
of the United Kingdom from the European Union (“Brexit”). The Board does not envisage Brexit having a significant
impact on the Group, based on the location of its operations and most of its customer base being located outside
the EC.
The Board will continue to follow the development of the UK’s negotiations with the European Union and evaluate
the impact on the Group accordingly.
Supplier payment policy
The Group’s current policy concerning the payment of trade creditors is to follow the CBI’s Prompt Payers Code
(copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The Group’s current policy concerning the payment of trade creditors is to:
• settle the terms of payment with suppliers when agreeing the terms of each transaction;
• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts;
and
• pay in accordance with the Group’s contractual and other legal obligations.
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Events after the reporting period
On 27 May 2020, the Company announced its intention to raise £0.8 million (before expenses) by the placing of
45,714,292 new Ordinary Shares at a price of 1.75 pence per share to existing and new investors. In connection
with the placing 22,857,146 warrants were issued to the placees at a price 3.5 pence which may be exercised for
18 months following the date of Admission. The Warrants will not be admitted to trading on AIM or any other stock
market and are not transferable.
The Company has reached agreement with the holders of £2.1 million of its CULNs. Under this agreement the
Company will replace the eight existing series of CULNs with a new single class of CULN which will have a maturity
date of 1 December 2026 and will be convertible at any date from 1 June 2020 at a conversion price of 5p per share.
The interest rate of the new CULN is 2% per annum payable half yearly on 1 June and 1 December.
Prior period adjustment
Upon review of the IAS 38 standard with respect to the intangible asset for the licence at the Prilep Omega quarry
with a carrying value of €1.2 million, it was determined amortisation should not have started. The standard states
that the asset must be in the location and condition necessary for it to be capable of operating in the manner
intended by management before amortisation of the asset is started. Due to the fact the quarry will require a period
of development prior to reaching commercial levels of production, it was determined that it did not meet this
requirement and therefore the accumulated amortisation of the intangible asset has been adjusted accordingly. The
impact of the adjustment is discussed in further detail in note 4.
Corporate Governance
The Board of Directors is committed, to developing and applying high standards of corporate governance appropriate
to the Company’s size and stage of development. The Board of Directors seeks to apply the QCA Code, revised in
April 2019 as devised by the Quoted Companies Alliance. These disclosures can be found in the Corporate
Governance Report.
Internal controls and financial risk management
The Board acknowledges its responsibility for maintaining appropriate internal control systems and procedures to
safeguard the Group’s assets, employees and the business of the Group. The directors have recognised the changing
requirements of the Group as it has developed from a private company start-up through re-registration as a public
company and admission to trading on AIM, to a growing multi-asset operating Group.
The Board has established and operates a policy of continuous review and development of appropriate financial,
operational, compliance and risk management controls, which cover expenditure approval, authorisation and
treasury management, together with operating procedures consistent with the accounting policies of the Group.
The internal control system is designed to manage rather than eliminate the risk of failure to achieve business
objectives and can provide reasonable but not absolute assurance against material misstatement or loss. The Board
has approved the Group’s current operating and capital budget and performance against budget is monitored and
reported to the Board on a monthly basis. The directors confirm that the effectiveness of the internal control system
during the accounting year has been reviewed by the Board. Steps are underway to reinforce as needed all processes
and systems as the Company grows. The Board does not consider it necessary to establish an internal audit function
considering the current size of the Group.
Environmental policy
The Group is aware of the potential impact that its subsidiary companies may have on the environment. The Group
ensures that it complies with all local regulatory requirements and seeks to implement a best practice approach to
managing the environmental aspects of its operations based on ISO 14001.
Health and Safety
Quarrying and stone processing will always carry risks. Protecting the safety of employees and contractors is of
fundamental importance. A safe and healthy workforce contributes to an engaged, motivated and productive
workforce that mitigates operational stoppages. Safety is also considered a principal risk. The Group’s aim is to
achieve and maintain a high standard of workplace safety. In order to achieve this objective the Group provides
training and support to employees and sets demanding standards for workplace safety. There were no significant
incidents or significant near misses in 2019. Throughout 2019, all operations continued to implement safety plans,
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PAGE | 2 3
with a focus on effective management required to manage significant safety risks, learning and identifying potential
hazards, and promoting accountability. These will remain priorities in 2020, with the aim of ensuring that each of
our sites follows a consistent approach.
Independent Auditors
Each of the Directors at the date of the approval of this report confirms that:
–
–
so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are
unaware; and
the Director has taken all the steps that they ought to have taken as a director in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditors are aware of that
information.
PKF Littlejohn LLP have indicated their willingness to be reappointed at the Annual General Meeting.
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 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.
The forecasts assume that production at the Prilep and Cervenillë quarries will continue, which were reopened
respectively in August and September 2020. It further assumes that production at the factory will continue to
operate and that recently installed machinery will drive an increase in the rate of production. The forecast assumes
existing contracts held by the Company will be fulfilled on a timely basis. Further the forecasts assume that sales of
block marble will resume over the final quarter of 2020, in line with the reopening of international borders. 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 key risks and uncertainties that could impact the financial performance of the Company. These
include the fact that levels of production at Cervenillë and Prilep can be impacted by unforeseen delays due to
inclement weather or equipment failure; lower than expected quality of material being produced by the quarries;
and delays in the fulfilment of the Company’s order book. The continued progression of the Covid-19 may have a
further detrimental impact on sales, and the resumption of block sales to the international block market may be
slower than expected.
As at 15 September 2020 the Company has €0.47 million in cash.
If the cash receipts from sales are lower than anticipated the Company has identified that it has available to it a
number of other contingent actions, in addition to those noted above, 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.
Signed, on behalf of the Board of Directors
Chris Gilbert
Director
30 September 2020
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Corporate Governance Report
The Board of Fox Marble Holdings plc had adopted the QCA Corporate Governance Code (‘the Code’) as its code of
corporate governance. The Code is published by the Quoted Companies Alliance (‘QCA’) and is available at
www.theqca.com. The key governance related matter that occurred during the financial year ended 31 December
2019 was the response of the Board to dispute around Maleshevë quarry.
Corporate Governance Report
The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation
of how the Company applies each of the principles:
Principle One
Business Model and Strategy
The Board has concluded that the highest medium and long-term value can be delivered to its shareholders by the
adoption of a single strategy for the Company. The principal activity of the Group is the exploitation of marble quarry
reserves in the Republic of Kosovo and the Republic of North Macedonia.
The Board implements this strategy by meeting on a regular basis to discuss the strategic direction of the Company,
and progress in achieving against its aims. Details on the Company’s strategy can be found in the strategic report
on page 6.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
Fox Marble has a Board of Directors with experience in understanding the needs and expectations of its shareholder
base. It supplements this board with professional advisers in the form of Public Relations company, NOMAD, Broker,
Auditor and Company Secretary who provide advice and recommendations in various areas of its communications
with shareholders. Fox Marble engages with shareholders in the following way:
•
•
•
The Company website has been designed as a hub to provide information to shareholders and communicate
with them. The website is regularly reviewed to ensure the information is up to date and relevant. The website
contains copies of all Company communications and public documents.
The Company provides regular updates to the market via the Regulatory News Service.
The Company’s Annual Report provides required information regarding historical performance, strategy and
objectives of the Company. An Annual General Meeting is held to which all shareholders are invited and may
engage with the Board of Directors.
•
Contact details for the Company are provided on the Company website along with public documents.
Principle Three
Considering Wider Stakeholder and Social Responsibilities
The Board recognises that the long-term success of the Company is reliant upon the efforts of the employees of the
Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of
processes and systems to ensure that there is close oversight and contact with its key resources and relationships.
For example, employees are encouraged to raise any concerns they may have with relevant management and are
also provided with independent contact should they not want to engage directly with their managers. The
mechanisms for feedback from shareholders have been considered under point (2) above. Feedback from customers
is at present informal. Sales agents will contact customers on an ad hoc basis following completion of a sale or
project and provide verbal feedback where necessary to senior management. Feedback from regulators is provided
via the regular framework of reporting and inspections that are carried out.
These feedback processes help to ensure that the Company can respond to new issues and opportunities that arise
to further the success of the Company.
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Principle Four
Risk Management
Fox Marble recognises that risk is inherent in all of its business activities. Its risks can have a financial, operational
or reputational impact. The Company’s system of risk identification, supported by established governance controls,
ensures that it effectively responds to such risks, whilst acting ethically and with integrity for the benefit of all of
our stakeholders. Once identified, risks are evaluated to establish root causes, financial and non-financial impacts,
and likelihood of occurrence. Consideration of risk impact and likelihood is taken into account to create a prioritised
risk register and to determine which of the risks should be considered as a principal risk. The effectiveness and
adequacy of mitigating controls are assessed. If additional controls are required, these will be identified, and
responsibilities assigned. The Company’s management is responsible for monitoring the progress of actions to
mitigate key risks. The risk management process is continuous; key risks are reported to the Audit Committee and
at least once a year to the full Board.
The Directors have established procedures, as represented by this statement, for the purpose of providing a system
of internal control. An internal audit function is not considered necessary or practical due to the size of the Company
and the close day to day control exercised by the executive Directors. However, the Board will continue to monitor
the need for an internal audit function.
Principle Five
A Well-Functioning Board of Directors
The Board has five directors, three of whom are non-executive. The Board is responsible for the management of the
business of the Company, setting its strategic direction and establishing appropriate policies. It is the directors’
responsibility to oversee the financial position of the Company and monitor its business and affairs, on behalf of the
shareholders, to whom they are accountable. The primary duty of the Board is to act in the best interests of the
Company and stakeholders at all times. The Board also addresses issues relating to internal controls and risk
management.
The non-executive directors, Andrew Allner, Roy Harrison and Sir Colin Terry, bring a wide range of skills and
experience to the Company, as well as independent judgment on strategy, risk and performance. The independence
of each non-executive director is assessed at least annually, and all of the non-executive directors are considered to
be independent at the date of this report.
It is the Group’s policy that the roles of the Chairman and CEO are separate, with their roles and responsibilities
clearly divided and recorded. A summary of their roles is as follows:
•
•
•
The Chairman is responsible for leadership of the Board, ensuring its effectiveness and setting its agenda. The
Chairman facilitates the effective contribution and performance of all Board members whilst identifying any
development needs of the Board. He also ensures that there is enough and effective communication with
shareholders to understand their issues and concerns.
The CEO is responsible for executing the strategy agreed by the Board and developing the Group objectives
through leadership of the senior executive team. He will recommend to the Board any investment or new
business opportunities which meet this strategy. He also ensures that the Group’s risks are adequately
addressed, and appropriate internal controls are in place. The CEO is responsible for meeting with shareholders
and ensuring effective communication.
The CEO is responsible for the day to day management of the Company, and for maintaining the highest ethical
standards and integrity in the interest of the shareholders, employees, customers and the wider community.
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The following table shows the directors’ attendance at scheduled Board meetings, which they were eligible to attend
during the 2019 financial year:
Attendance at
Attendance at Audit Committee
Director Board Meetings Meetings
Andrew Allner 9/9
Chris Gilbert 9/9
Fiona Hadfield 9/9
Roy Harrison OBE 9/9 2/2
Sir Colin Terry KBE CB DL 8/9 2/2
As at the date hereof the Board comprised, the Non-Executive Chairman Andrew Allner, the CEO Chris Gilbert, the
Finance Director Fiona Hadfield and two Non-Executive Directors, Roy Harrison and Sir Colin Terry. Biographical
details of the current Directors are set out within Principle Six below. Executive and Non-Executive Directors are
subject to re-election at intervals of no more than three years. The letters of appointment of all Directors are
available for inspection at the Company’s registered office during normal business hours.
Principle Six
Appropriate Skills and Experience of the Directors
The Board of Fox Marble has been assembled to allow each director to contribute the necessary mix of experience,
skills and personal qualities to deliver the strategy of the company for the benefit of the shareholders over the
medium to long term. Full details of the Board Members and their experience and skills can be found on page 18 of
these financial statements.
Together the Board of Directors provide relevant quarrying and mining sector skills, the skills associated with running
large public companies, technical skills, country experience and technical and financial qualifications to assist the
Company in achieving its stated aims.
The Directors keep their skillsets up to date through as required through the range of roles they perform and
consideration of technical and industry updates.
The Board has sought external advice in regard to Arbitration against the government of Kosovo. Other than this
matter the Board has not sought any significant matter, apart from advice sought in the normal course of business
from our auditors, lawyers and tax compliance advice. No external advisers have been engaged by the Board of
Directors. The key advisers to the Company are listed on page 19 of these financial statements.
The role of Company Secretary is fulfilled by Ben Harber and supports and advises the Board in its function.
The Board shall review annually the appropriateness and opportunity for continuing professional development
whether formal or informal.
Principle Seven
Evaluation of Board Performance
Fox Marble has yet to carry out a formal assessment of board effectiveness, given its stage of development as an
entity. The Board are considering how this first assessment will be carried out. The board will keep this under
consideration and put in place procedures when it is felt appropriate.
The Company’s policy is to maintain levels of compensation for the Group that are comparable and competitive with
peer group companies, so as to attract and retain individuals of the highest calibre, by rewarding them as
appropriate for their contribution to the Group’s performance. The Company may take independent advice in
structuring remuneration packages of directors and employees.
The terms of each executive director’s appointment are set out in their service agreements which are effective for
an indefinite period but may be terminated in accordance with specified notice periods of between six and twelve
months. Each service agreement sets out details of basic salary, fees, benefits-in-kind and share option grants. The
directors do not participate in any group pension scheme and their remuneration is not pensionable.
The executive directors are eligible to participate in discretionary bonus arrangements. Bonuses are payable in cash
and are awarded by the Board, upon recommendations by the Remuneration Committee. Details of the Directors’
compensation are set out in the notes to the financial statements.
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The terms of appointment of the non-executive directors are set out in their letters of appointment which are
effective for renewable three-year terms but may be terminated in accordance with specified notice periods. The
non-executive directors’ do not participate in any group pension scheme and their remuneration is not pensionable.
Details of non-executive directors’ compensation are set out below.
The basic salary of each executive director is established by reference to their responsibilities. The fees paid to
non-executive directors are determined by the Board and reviewed periodically to reflect current rates and practice
commensurate with the size of the Company and their roles.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the
Company as a whole and that this will impact the performance of the Company. The Board is very aware that the
tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way
that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure
that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express
their views and expectations for the Company in a manner that encourages open dialogue with the Board. A large
part of the Company’s activities is centred upon what needs to be an open and respectful dialogue with employees,
clients and other stakeholders.
Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to
successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and
seeks to ensure that this flows through all that the Company does. The Directors consider that at present the
Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and
constructive challenge. The Company has adopted, with effect from the date on which its shares were admitted to
AIM, a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities
are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect
in 2016.
Principle Nine
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of
the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has
adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman
is responsible for the effectiveness of the Board, while management of the Company’s business and primary contact
with shareholders has been delegated by the Board to the Chief Executive Officer.
The terms of reference of the board committees are reviewed regularly and are available on the Company’s website
www.foxmarble.net.
Remuneration Committee
The Remuneration Committee consists of Andrew Allner, Sir Colin Terry and Roy Harrison (Committee Chairman). It
is responsible for reviewing the performance of the senior executives and for determining their levels of
remuneration. The Committee makes recommendations to the Board, within agreed terms of reference regarding
the levels of remuneration and benefits including participation in the Company’s share plan.
Nomination Committee
The Nomination Committee meets as required to consider the composition of and succession planning for the Board,
and to lead the process of appointments to the Board. The Committee Chairman is Andrew Allner. The other
members of the Committee are Chris Gilbert, Roy Harrison and Sir Colin Terry.
Audit Committee
The Audit Committee consists of two non-executive Directors: Roy Harrison and Sir Colin Terry (Committee
Chairman). Andrew Allner attends the Committee meetings by invitation. The Audit Committee meets at least three
times a year to consider the annual and interim financial statements and the audit plan. The Audit Committee is
responsible for ensuring that appropriate financial reporting procedures are properly maintained and reported upon,
reviewing accounting policies and for meeting the auditors and reviewing their reports relating to the financial
statements and internal control systems. The report of the Audit Committee can be found on page 29.
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Non-Executive Directors
The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and
which have been observed throughout the year. In accordance with the Companies Act 2006, the Board complies
with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise
independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest;
a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or
arrangement.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts
have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all
shareholders are encouraged to attend the Company’s Annual General Meeting Historical annual reports and other
governance-related material, notices of all general meetings over the last five years can be found on the website.
There have been no votes where a significant proportion of votes (e.g. 20% of independent votes) have been cast
against a resolution at any general meeting.
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Report of the Audit Committee
This report details how the Audit Committee has met its responsibilities under its Terms of Reference in the last
twelve months. The Audit Committee focused particularly on the appropriateness of the Group’s financial
statements. The Committee has satisfied itself, and has advised the Board accordingly, that the 2019 Annual Report
and Financial Statements are fair, balanced and understandable, and provide the information necessary for
shareholders to assess the Group’s performance, business model and strategy. The significant issues that the
Committee considered in relation to the financial statements and how these issues were addressed are set out in
this Report.
One of the Audit Committee’s key responsibilities is to review the Group’s risk management and internal controls
systems, including in particular internal financial controls. During the year, the Committee carried out a robust
assessment of the principal risks facing the company and monitored the risk management and internal control
system on an on-going basis. The Committee also reviewed the effectiveness of both the external audit process as
part of the continuous improvement of financial reporting and risk management across the Group.
The Board has established an Audit Committee to monitor the integrity of the Company’s financial statements and
the effectiveness of the Group’s internal financial controls. The Committee’s role and responsibilities are set out in
the Committee’s terms of reference which are available from the Company and are displayed on the Group’s website.
The Terms of Reference are reviewed annually and amended where appropriate. During the year the Committee
worked with management, the external auditors, and other members of the Board in fulfilling these responsibilities.
Committee membership and meetings
The Audit Committee consists of two independent non-executive Directors: Roy Harrison and Sir Colin Terry
(Committee Chairman). Andrew Allner attends the committee meetings by invitation. The biographies of each can
be found on pages 18-19. The Board considers that the Committee as a whole has an appropriate and experienced
blend of commercial, financial and industry expertise to enable it to fulfil its duties. The Committee met three times
during the year ended 31 December 2019 and all members of the Committee attended each meeting.
Each committee meeting was attended by the Group CEO and the Group Financial Director. The external auditors
may also attend these meetings as required. The Company Secretary is the secretary of the Audit Committee.
The chairman of the Audit Committee also met with the external audit lead partner outside of committee meetings
as required throughout the year.
The Audit Committee report deals with the key areas in which the Audit Committee plays an active role and has
responsibility. These areas are as follows:
1) Financial Reporting and related primary areas of judgement;
2) The External Audit process; and
3) Risk Management and Internal controls.
Financial Reporting and related primary areas of judgement
The Committee is responsible for monitoring the integrity of the Group’s financial statements and reviewing the
financial reporting judgements contained therein. The financial statements are prepared by a finance team with the
appropriate qualifications and expertise.
The Committee confirmed to the Board that the Annual Report and Financial Statements, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
In respect of the year to 31 December 2019, the Committee reviewed:
• the Group’ s Interim Report for the six months to 30 June 2019; and
• the Preliminary Announcement and Annual Report and Financial Statements to 31 December 2019.
In carrying out these reviews, the Committee:
• reviewed the appropriateness of Group accounting policies and monitored changes to and compliance with
accounting standards on an on-going basis;
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• discussed with management and the external auditors the critical accounting policies and judgements that
had been applied;
• discussed a report from the external auditors at that meeting identifying the significant accounting and
judgemental issues that arose in the course of the audit;
• considered the management representation letter requested by the auditors for any non-standard issues;
• discussed with management future accounting developments which are likely to affect the financial
statements; and
• considered key areas in which estimates, and judgement had been applied in preparation of the financial
statements.
The primary areas of judgement considered by the committee in relation to the Group’s 2018 financial statements,
and how they were addressed by the committee are set out below.
Significant risks considered by the Committee
in relation to the financial statements
Corresponding actions taken by the Committee
to address the issues
Impairment Assessment
Amortisation of intangible asset.
Group’s ability to continue as a going concern
Valuation of Inventory
The Committee reviewed the key judgements, operating and
economic assumptions which underlie the assessment of
whether there are indications that assets may be impaired.
The external auditor reviewed management’s assessment
and discussed this review with the Committee.
Upon review of the IAS 38 standard with respect to the
intangible asset for the licence at the Prilep Omega quarry
with a carrying value of €1.2 million, it was determined
amortisation should not have started. The standard states
that the asset must be in the location and condition
necessary for it to be capable of operating in the manner
intended by management before amortisation of the asset is
started. Due to the fact the quarry will require a period of
development prior to reaching commercial levels of
production, it was determined that it did not meet this
requirement and therefore the accumulated amortisation of
the intangible asset has been adjusted accordingly. The
impact of the adjustment is discussed in further detail in note
4. The external auditor reviewed management’s assessment
and discussed this review with the Committee.
The Committee reviewed the Group’s going concern
statement set out in the Report of the Directors’. In
considering the assessments made, the Committee paid
attention to the robustness of the stress testing scenarios.
The external auditor reviewed management’s assessment
and discussed this review with the Committee.
The Committee reviewed the calculations and assumptions
provided by management which support the valuation of
inventory. The Committee reviewed the judgements around
the expected net realisable value of the inventory in
conjunction with
is
comfortable with the carrying value of inventory.
forecast sales. The Committee
External Audit Process
The Audit Committee has responsibility for overseeing the Group’s relationship with the external auditor including
reviewing the quality and effectiveness of their performance, their external audit plan and process, their
independence from the Group, their appointment and their audit fee proposals. Prior to commencement of the 2019
year-end audit, the Committee approved the external auditor’s work plan and resources and agreed with the
auditor’s various key areas of focus, including impairment, inventory and going concern. During the year the
Committee met with the external auditor without management being present. This meeting provided the opportunity
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for direct dialogue and feedback between the Committee and the auditor. The Audit Committee considers the
requirements and guidance for auditor rotation on an annual basis and makes recommendations as appropriate to
the Company.
The Committee is responsible for ensuring that the external auditor is objective and independent. PKF Littlejohn LLP
was appointed in 2019, following a formal tender process in which several leading global firms submitted tenders
and presentations. This was the last formal tender process carried out by the Group. The Committee received
confirmation from the auditor that they are independent of the Group under the requirements of the Financial
Reporting Council’s Ethical Standards for Auditors. The auditors also confirmed that they were not aware of any
relationships between the Group and the firm or between the firm and any persons in financial reporting oversight
roles in the Group that may affect their independence.
In order to further ensure independence, the Committee has a policy on the provision of non-audit services by the
external auditor that seeks to ensure that the services provided by the external auditor are not, or are not perceived
to be, in conflict with auditor independence. By obtaining an account of all relationships between the external auditor
and the Group, and by reviewing the economic importance of the Group to the external auditor, the committee
ensured that the independence of the external audit was not compromised. During the year the committee reviewed
and updated its policy on the engagement of external auditors and the provision of non-audit services in order to
bring it into full compliance with the EU audit reform legislation. An analysis of fees paid to the external auditor,
including non-audit fees, is set out in Note 6 to the 2019 Annual Report.
Risk Management and Internal controls
The Audit Committee has been delegated the responsibility for monitoring the effectiveness of the Group’s system
of risk management and internal control by the Board. The Audit Committee monitors the Group’s risk management
and internal control processes through detailed discussions with management and executive Directors, and the
external audit reports, as part of both the year-end audit, all of which highlight the key areas of control weakness
in the Group. All weaknesses identified by the external audit are discussed by the Committee with Group
management and an implementation plan for the targeted improvements to these systems is put in place. As part
of its standing schedule of business, the Committee carries out an annual risk assessment of the business to formally
identify the key risks facing the Group
This report was approved by the Board of Directors and signed on its behalf by:
Sir Colin Terry
Chairman of the Audit Committee
30 September 2020
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Statement of directors’ responsibilities in respect of the financial
statements
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and parent company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS
101 “Reduced Disclosure Framework”, and applicable law). Under company law the directors must not approve the
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group
and parent company and of the profit or loss of the group and parent company for that period. In preparing the
financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable IFRSs as adopted by the European Union have been followed for the group financial
statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the
company financial statements, subject to any material departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
group and parent company will continue in business.
The directors are also responsible for safeguarding the assets of the group and parent company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
group and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of
the group and parent company and enable them to ensure that the financial statements comply with the Companies
Act 2006.
The directors are responsible for the maintenance and integrity of the parent company’s website. Legislation in the
United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions.
Chris Gilbert
Director
30 September 2020
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Independent auditor’s report to the members of Fox
Marble Holdings Plc
Opinion
We have audited the financial statements of Fox Marble Holdings plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2019 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the
Consolidated Statement of Changes in Equity, the Statement of Financial Position of the parent company, the
Statement of Changes in Equity of the parent company and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in the preparation of the
group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 December 2019 and of the group’s and the parent company’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and parent company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report
to you where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the date when the financial statements are
authorised for issue.
Our application of materiality
The materiality applied to the group financial statements was €120,000 (2018: €127,000) based on thresholds of
1.5% of net assets. This represented a change from previous year in respect of the basis of calculation used by
predecessor auditor, which was 1% of total assets. The net asset benchmark was concluded as most relevant to
shareholders and investors for a mining group with projects in different stages of development and with external
borrowings. The performance materiality for the group was €72,000.
The materiality applied to the parent company financial statements was €108,000 (2018: €120,650) based on a
threshold of 1.5% of net assets but capped at 90% of group materiality. This also represented a change from
previous year in respect of the basis of calculation used by predecessor auditor, which was 1% of total assets. The
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net asset benchmark was concluded as most relevant to shareholders and investors for a non-trading parent
undertaking. The performance materiality of the parent company was €64,800.
Whilst materiality for the group financial statements as a whole was set at €120,000, component materiality for the
significant components in Kosovo and the UK was set at €90,000 and €102,000 respectively based upon a stratified
proportional allocation of the maximum aggregate component materiality level. Performance materiality was set at
60% for the significant components equating to €54,000 and €61,200 respectively.
An overview of the scope of our audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial
statements. In particular, we looked at areas involving significant accounting estimates and judgement by the
directors and considered future events that are inherently uncertain. We also addressed the risk of management
override of internal controls, including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
The accounting records of the parent company and all subsidiary undertakings are centrally located and audited by
us based upon materiality or risk. The key audit matters addressed, and how these were addressed are outlined
below. The Kosovan component was audited by a component auditor under our instruction. The group audit team
instructed the component auditor as to the significant risk areas to be covered and determined component
materiality. There was regular interaction with the component auditor during all stages of the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Valuation of inventory (refer Note 3 and 16)
Inventory has a carrying amount of €3.9m in the
financial statements as at 31 December 2019.
The recoverability of inventory is reliant on the net
realisable value which reflects future demand and
market trends which are difficult to anticipate.
There is a risk that the carrying value of inventory
is materially misstated with regards to valuation.
We consider this to be a key audit matter given the
financial significance (Inventory represents
28.9% of the Group’s total assets at 31 December
2019) and that management use judgement and
estimation in arriving at the valuation.
How the scope of our audit responded to the
key audit matter
We have obtained and reviewed management’s
assessment of inventory valuation. Our work included
the following:
• Arranged attendance (by component auditors) at
an inventory count in significant quarries in Kosovo
and North Macedonia post year end which included
an audit of the reconciling items between the year-
end inventory position and inventory held at the
time of the count. This excludes the Maleshevë
quarry which is referenced in the key observations
paragraph below;
• Critically reviewed the weighted average cost of
inventory and challenged management estimations
and judgements inherent in the calculation;
• Reviewed the net realisable value of inventory with
reference to management’s cost by testing
contractually agreed selling prices and forecasted
sales;
• Reviewed management’s revenue order book for
additional assurance that the demand for the
inventory exists as well as a review of
management’s ability to forecast by referring to
previous forecast models compared to actual;
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Valuation of inventory (refer Note 3 and 16)
How the scope of our audit responded to the
key audit matter
• Assessed management’s provisioning methodology
and re-performed the assessment to ensure the
provision is not understated; and
• Review of the component auditor working papers
component audit
to our
responses
and
instructions.
Key observation – Maleshevë quarry
Inventory with a carrying value of €953,000 is held at
the Group’s Maleshevë quarry site, which as described
in notes 16 and 31 to these financial statements, has
not been accessible to the group since July 2019. The
last inventory count performed by management was in
March 2019. In accordance with applicable audit
standards we designed alternative procedures in order
to conclude on the quantities and valuation of
inventory held at that site. Our alternative procedures
included:
•
•
•
•
obtaining the results of the last management
inventory count at that site, performed in March
2019;
a review of the reconciliation between that count
and the count performed by an independent
assessor in October 2019 as part of ongoing civil
litigation;
obtaining an opinion from the group’s legal
representative; and
observing
neighbouring land.
inventory held at the site
from
• On the basis of the alternative procedures
performed we consider management’s treatment
to be reasonable and the related disclosures
appropriate.
PAG E | 3 6 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
Carrying value of intangible assets (refer Note 13)
Intangible assets have a carrying amount of
financial statements as at
in
€2.8m
31 December 2019.
the
Intangible assets relate predominantly to mining
rights and licences in respect of the Prilep Alpha
and Omega quarries in North Macedonia. The
recoverability of these assets is determined with
reference to the Group’s ability to successfully
operate the quarries.
Management have performed a review for
impairment indicators in respect of intangible
assets.
There is a risk that the valuation of intangible
assets is materially misstated with regards to
valuation. We consider this to be a key audit
matter because of the financial significance
(intangible assets represent 20.8% of the Group’s
total assets at 31 December 2019) and that
management use judgement and estimation in
arriving at the valuation.
How the scope of our audit responded to the
key audit matter
We have obtained and reviewed the Directors
intangible assets which
impairment review of
considered
indicators of
listed as
the areas
impairment. Our work included the following:
• Obtaining the impairment assessment prepared by
management and reviewing for reasonableness;
• Obtaining the current licences and ensuring that
they remain valid;
• A review of the indicators of impairment listed in
IAS 36 for evidence of impairment;
• A review of the working papers and reporting
deliverables of component auditors;
• A site visit by the component auditors to review for
physical evidence of impairment indicators;
• An assessment of the amortisation of intangible
asset in accordance with the relevant standard
which resulted in a prior year adjustment; and
• A review of the disclosures made in the financial
statements for accuracy.
Key observation – prior period adjustment
We challenged management on their accounting policy
to amortise intangible assets which related to the Prilep
Omega quarry. This resulted in a prior period
adjustment which is described further in note 4 to the
financial statements. We found this to be in line with
applicable accounting standards and the related
disclosures appropriate.
Carrying value of net investment in subsidiaries
(refer Note 27)
How the scope of our audit responded to the
key audit matter
The parent company’s net
in
subsidiaries at 31 December 2019 is €18,252,932.
investment
The carrying value of the net investment in
subsidiaries is ultimately dependent on the value
of the underlying assets. Many of the underlying
assets are at an early stage of their lifecycle
making it difficult to determine their value.
Valuations for these sites are therefore based on
judgments and estimates made by the Directors –
which leads to a risk of misstatement.
We have obtained and reviewed the Directors
impairment review of the underlying assets. Our work
included:
• Reviewing the impairment indicators listed in IAS
36 and challenging management’s assessment of
the underlying assets.
• Reviewing the audit working papers of certain
components to assess impairment considerations
of exploration assets made by their auditors; and
• Discussing with management the basis
for
impairment or non-impairment of investment in
subsidiaries and loans receivable from subsidiaries.
Key observation
As a result of their assessment, management
recognised an impairment charge of €9,468,513
(2018: nil). We consider Management’s estimates and
judgements to be reasonable and the related
disclosures appropriate.
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PAG E | 3 7
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the group
and parent company financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our
audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation
of the group and parent company financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the
group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
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A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
15 Westferry Circus
Jonathan Bradley-Hoare (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor London E14 4HD
30 September 2020
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PAGE | 3 9
Consolidated Statement of Comprehensive Income
For the year ended 31 December
Revenue
Cost of sales
Gross profit
Note 2019 2018
(restated)
€ €
6 1,422,872 1,409,730
7 (814,626) (887,356)
608,246 522,374
Administrative and other operating expenses
7 (2,881,919) (2,949,396)
Operating loss
Finance costs
Finance income
Loss before taxation
Taxation
Loss for the year
7 (2,273,673) (2,427,022)
9 (517,638) (119,507)
10 257,771 281,554
(2,533,540) (2,264,975)
11 – –
(2,533,540) (2,264,975)
Other comprehensive income
– –
Total comprehensive loss for the year
attributable to owners of the parent company
(2,533,540) (2,264,975)
Earnings per share
Basic earnings per share
12 (0.01) (0.01)
Diluted earnings per share
12 (0.01) (0.01)
The notes on pages 45 to 77 are an integral part of these financial statements.
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Consolidated Statement of Financial Position
Note
As at As at As at
31 December 31 December 1 January
2019 2018 2018
(restated) (restated)
€ € €
13
14
15
15
16
22
17
18
11
18
20
20
21
2,836,942 2,880,739 1,338,666
5,088,344 4,844,752 4,754,087
– – 56,307
7,925,286 7,725,491 6,149,060
1,182,685 889,299 985,647
3,928,397 3,807,140 3,319,467
578,417 438,270 542,287
5,689,499 5,134,709 4,847,401
13,614,785 12,860,200 10,996,461
1,199,376 1,184,855 1,373,096
1,929,696 88,970 1,739,025
3,129,072 1,273,825 3,112,121
84,504 84,504 –
220,721 – –
2,524,721 3,683,990 1,702,453
2,829,946 3,768,494 1,702,453
5,959,018 5,042,319 4,814,574
7,655,767 7,817,881 6,181,887
3,220,221 2,700,688 2,284,476
31,793,870 29,941,977 26,424,202
(27,479,114) (24,945,575) (22,646,505)
85,247 85,247 84,171
35,543 35,543 35,543
7,655,767 7,817,881 6,181,887
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Deferred tax liability
Lease Commitments
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Called up share capital
Share premium
Accumulated losses
Share based payment reserve
Other reserve
Total equity
The notes on pages 45 to 77 are an integral part of these financial statements.
The financial statements on pages 39 to 77 were approved and authorised for issue by the Board on 29 September
2020 and are signed on its behalf.
Chris Gilbert
Director
30 September 2020
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Consolidated Statement of Cash Flows
For the year ended 31 December
Cash flows from operating activities
Loss before taxation
Adjustment for:
Finance costs
Finance income
Note 2019 2018
€ €
(2,533,540) (2,264,975)
9 517,638 119,507
10 (257,771) (281,554)
Operating loss for the year
(2,273,673) (2,427,022)
Adjustment for:
Amortisation
Depreciation
13 43,796 11,896
14 648,133 90,365
Foreign exchange losses on operating activities
– 6,522
Equity settled transactions
21 – 1,076
Provision for impairment of receivables
15 162,578 124,643
Provision for inventory
Changes in working capital:
16 392,412 251,552
Increase in trade and other receivables
15 (455,965) (6,081)
Increase in inventories
16 (513,669) (206,942)
Increase/(decrease) in accruals
17 124,116 (31,266)
Decrease in trade and other payables
17 (109,593) (156,975)
Net cash used in operating activities
(1,981,865) (2,342,231)
Cash flow from investing activities
Expenditure on property, plant & equipment
14 (649,715) (499,847)
Expenditure on rights of use assets
(23,736) –
Interest on bank deposits
10 1,437 838
Net cash used in investing activities
(672,014) (499,009)
Cash flows from financing activities
Proceeds from issue of shares (net of issue costs)
20 2,371,425 3,137,538
Proceeds from the issue of long-term debt (net of issue costs)
18 609,696 1,314,030
Repayment of debt
18 – (1,604,278)
Interest paid on loan note instrument
18 (187,096) (102,705)
Net cash generated from financing activities
2,794,026 2,744,585
Net increase/(decrease) in cash and cash equivalents
140,147 (96,655)
Cash and cash equivalents at beginning of year
438,270 542,287
Exchange losses on cash and cash equivalents
– (7,362)
Cash and cash equivalents at end of year
22 578,417 438,270
In the year ended 31 December 2018 the Group acquired Gulf Marble Limited Investments for non-cash
consideration consisting of the issue of a loan note with a nominal value of €1,785,000. Further details can be found
in note 26. In the year ended 31 December 2018 €796,450 of debt was settled through the issue of equity. Further
details can be found in note 18.
The notes on pages 45 to 77 are an integral part of these financial statements.
PAG E | 42 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
Consolidated Statement of Changes in Equity
Note
Share
Capital
Share
Premium
Share based
payment
reserve
Other Accumulated Total
Reserve losses equity
21
€
23
€
€
22
€ € €
Balance at 1 January 2018
2,284,476
26,424,202
84,171
35,543 (22,823,182) 6,005,210
Prior year adjustment
–
–
–
– 176,677 176,677
Share capital issued
416,212
3,517,775
Balance at 1 January 2018
(restated)
Loss and total comprehensive
loss for the year
Transactions with owners
Share options charge
Adjustment on adoption
of IFRS 9 (Note 28)
Balance at
31 December 2018
and at 1 January 2019
Loss and total comprehensive
loss for the year
Transactions with owners
2,284,476
26,424,202
84,171
35,543 (22,646,505) 6,181,887
–
–
–
–
–
– (2,264,975) (2,264,975)
1,076
–
– – 1,076
– – 3,933,987
(34,094) (34,094)
2,700,688
29,941,977
85,247
35,543 (24,945,574) 7,817,881
(2,533,540) (2,533,540)
Share options charge
–
–
– – –
Share capital issued
519,533
1,851,893
–
– – 2,371,426
Balance at
31 December 2019
3,220,221
31,793,870
85,247
35,543 (27,479,114) 7,665,765
The notes on pages 45 to 77 are an integral part of these financial statements.
Other reserves of €35,543 (2018 – €35,543) arose on acquisition of Fox Marble Limited by Fox Marble Holdings Plc
in October 2011 which was accounted for as a Common Control transaction.
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PAG E | 4 3
Statement of Financial Position of the parent company
As at 31 December
Note 2019 2018
€ €
Assets
Non-current assets
Investments
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Lease Liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Accumulated losses
Share based payment reserve
Total equity
27 18,252,932 25,730,880
14 235,883 –
18,488,815 25,730,880
15 296,803 114,730
22 545,587 256,344
842,390 371,074
19,331,205 26,101,954
17 398,056 325,440
18 1,929,697 88,970
2,327,753 414,410
18 2,524,722 3,683,990
19 220,721 –
2,745,443 3,683,990
5,073,196 4,098,400
14,258,009 22,003,554
20 3,220,221 2,700,688
20 31,793,870 29,941,977
(20,841,329) (10,724,358)
21 85,247 85,247
14,258,009 22,003,554
The notes on pages 45 to 77 are an integral part of these financial statements.
The Company has elected to take advantage of the exemption under section 408 of the Companies Act 2006 not to
present the parent company statement of comprehensive income. The loss for the year for the Company is
€10,116,971 (2018 – €245,998).
The financial statements on pages 45 to 77 were approved and authorised for issue by the Board on 29 September
2020, and signed on its behalf.
Chris Gilbert
Director
30 September 2020
Company number: 07811256
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Statement of Changes in Equity of the parent company
Note
Share based
Share
Capital
Share
Premium
payment Accumulated Total
reserve losses equity
20
€
21
€
€ € €
Balance at 1 January 2018
2,284,476
26,424,202
84,171 (10,478,360) 18,314,489
Loss and total comprehensive
loss for the year
Transactions with owners
Share capital issued
Share options charge
Balance at 31 December 2018
and at 1 January 2019
Loss and total comprehensive
loss for the year
Transactions with owners
–
–
– (245,998) (245,998)
416,212
3,517,775
– – 3,933,987
–
–
1,076 – 1,076
2,700,688
29,941,977
85,247 (10,724,358) 22,003,554
–
–
– (10,116,971) (10,116,971)
Share capital issued
519,533
1,851,893
– – 2,371,426
Balance at 31 December 2019
3,220,221
31,793,870
85,247 (20,841,329) 14,258,009
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Notes to the consolidated and parent company financial
statements
1. General information
The principal activity of Fox Marble Holdings 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.
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. Fox Marble Holdings plc shares are admitted to trading on the London Stock Exchange’s AIM market.
2. Basis of Preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and the requirements of the Companies Act 2006 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 financial assets and liabilities which are recorded at fair value through the profit and loss relate to the
conversion option on the existing loan notes.
In publishing the parent company financial statements together with the Group financial statements, the Company
has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual
statement of comprehensive income and related notes that form a part of these approved financial statements.
The parent company financial statements of Fox Marble Holdings plc have been prepared in accordance with Financial
Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared
under the historical cost convention, as modified by the revaluation of land and buildings and derivative financial
assets and financial liabilities measured at fair value through profit or loss, and in accordance with the Companies
Act 2006, as applicable to Companies using FRS 101.
The preparation of the parent company’s financial statements in conformity with FRS 101 requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the
company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in note 3.
The following exemptions from the requirements of IFRS have been applied in the preparation of the parent company
financial statements, in accordance with FRS 101:
•
•
•
•
•
•
•
•
•
Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average
exercise prices of share options, and how the fair value of goods or services received was determined).
IFRS 7, ‘Financial Instruments: Disclosures’.
Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used
for fair value measurement of assets and liabilities).
Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect
of: (i) paragraph 79(a)(iv) of IAS 1; (ii) paragraph 73(e) of IAS 16 Property, plant and equipment; (iii)
paragraph 118(e) of IAS 38 Intangible assets (reconciliations between the carrying amount at the beginning
and end of the period)
The following paragraphs of IAS 1, ‘Presentation of financial statements’: 10(d), (statement of cash flows) 16
(statement of compliance with all IFRS), 38A (requirement for minimum of two primary statements, including
cash flow statements), 38B-D (additional comparative information), 111 (cash flow statement information), and
134-136 (capital management disclosures)
IAS 7, ‘Statement of cash flows’
Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement
for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet
effective)
Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into
between two or more members of a group.
PAG E | 46 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
The accounting policies set out below have been applied consistently across the Group and to all periods presented
in these financial statements.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate those of Fox Marble Holdings plc (the Company) and its subsidiaries. The
parent company financial statements present information about the Company as a separate entity and not about its
group.
The consolidated financial statements incorporate the financial information of Fox Marble Holdings plc and its
subsidiaries Fox Marble Limited, Fox Marble Kosova Sh.P.K., H&P Sh.P.K., Granit Shala Sh.P.K., Rex Marble Sh.P.K.,
Fox Marble Asia Limited, Gulf Marble Investments Limited, Fox Marble FZC and Stone Alliance LLC.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and can
affect those returns through its power over the entity. Further to this, subsidiaries are entities for which the Group
has the power to govern the financial and operating policies and consistent accounting policies have been adopted
across the Group. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for
business combinations by the Group.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement
of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Associates and joint ventures are all entities over which the group has significant influence but not control. This is
generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates and
joint ventures are accounted for using the equity method of accounting, after initially being recognised at cost.
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of
the investment. Where the group’s share of losses in an equity-accounted investment equals or exceeds its interest
in the entity, including any other unsecured long-term receivables, the group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the
extent of the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been
changed where necessary to ensure consistency with the policies adopted by the group.
Revenue Recognition
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.
Revenue is derived principally from the sale of block and processed marble and is measured at the fair value of
consideration received or receivable, after deducting discounts, value added tax and other sales taxes. A sale is
recognised when control has been transferred. This is usually when title and insurance risk have passed to the
customer and the goods have been delivered to a contractually agreed location.
The identification of performance obligations includes a determination of whether the goods and services provided
are distinct. Where the contract involves the provision of multiple elements, such as the provision of marble and
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PAGE | 4 7
processing services management applies a judgement in determining whether services are distinct. Where the
provision of goods/services is distinct revenue is recognised separately for each element.
An assessment of the timing of revenue recognition is made for each performance obligation. Revenue is recognised
at a point in time for all revenue transactions where control of goods provided is transferred to the customer.
Revenue is also recognised at a point in time for all contracts that involve multiple elements when the agreed output
is produced. The Group does not normally enter into contracts which involve the recognition of revenue over time.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured, regardless of when the payment is being made. The Group assesses its revenue
arrangements against specific criteria in order to determine if it is acting as principal or agent.
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average
basis. The production cost of inventory includes direct materials, direct labour and an appropriate proportion of
depreciation and production overheads. Net realisable value is based on estimated selling prices less any estimated
costs to be incurred to completion and disposal.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost
of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of
property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged
to profit or loss in the period in which it is incurred. In situations where it can be clearly demonstrated that the
expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an
item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is
capitalised as an additional cost of that asset or as a replacement.
Depreciation of quarrying equipment and infrastructure for quarries under development is calculated using the Hours
of Use (‘HOU’) method to write off the cost of the assets proportionately to their use in the development of the
quarry site.
Depreciation of quarrying equipment and infrastructure for fully developed quarries is calculated using the Units of
Production (‘’UOP’’) method to write off the cost of the assets proportionately to the extraction of material from the
quarries. Fully depreciated assets are retained in the accounts until they are no longer in use and no further charge
for depreciation is made in respect of these assets.
Depreciation of processing equipment and infrastructure is calculated using the UOP method to write off the cost of
the assets proportionately to the production of processed slabs in the factory. Fully depreciated assets are retained
in the accounts until they are no longer in use and no further charge for depreciation is made in respect of these
assets.
Depreciation of items of property, plant and equipment, other than quarrying & processing equipment and
infrastructure, is calculated on the straight-line basis to write off the cost of each item of property, plant and
equipment to its residual value over its estimated useful life.
The estimated useful lives of property, plant and equipment are as follows:
•
•
•
•
•
Quarry Plant and machinery – 5–15 years
Factory Plant and Machinery – 5–20 years
Leasehold improvements – Period of the lease
Office equipment – 3–5 years
Land – indefinite
Where parts of an item of property and equipment have different useful lives, the cost of that item is allocated on
a reasonable basis among the parts and each part is depreciated separately. Land is not depreciated.
Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at the
end of each reporting period.
PAG E | 48 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year
the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant
asset.
Leases
The Group recognises a right-of-use asset and corresponding liability at the date at which a leased asset is made
available for use by the Group, except for short-term leases (defined as leases with a lease term of 12 months or
less) and leases of low-value assets. For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease.
Lease liabilities are measured at the present value of the future lease payments, excluding any payments relating
to non-lease components. Future lease payments include fixed payments, in-substance fixed payments, and variable
lease payments that are based on an index or a rate, less any lease incentives receivable. Lease liabilities also take
into account amounts payable under residual value guarantees and payments to exercise options to the extent that
it is reasonably certain that such payments will be made.
The payments are discounted at the rate implicit in the lease or, where that cannot be readily determined, at an
incremental borrowing rate.
Right-of-use assets are measured initially at cost based on the value of the associate lease liability, adjusted for any
payments made before inception, initial direct costs and an estimate of the dismantling, removal and restoration
costs required in the terms of the lease.
The Group presents right-of-use assets in ‘property, plant and equipment’ in the consolidated statement of financial
position. Subsequent to initial recognition, the lease liability is reduced for payments made and increased to reflect
interest on the lease liability (using the effective interest method).
The related right-of-use asset is depreciated over the term of the lease or, if shorter, the useful economic life of the
leased asset. The lease term shall include the period of an extension option where it is reasonably certain that the
option will be exercised. Where the lease contains a purchase option the asset is written off over the useful life of
the asset when it is reasonably certain that the purchase option will be exercised.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
•
•
•
The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which
case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease
payments using the initial discount rate (unless the lease payments change is due to a change in a floating
interest rate, in which case a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case
the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. Leases
for which the Group is a lessor are classified as finance or operating leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership to the lessee
and classified as an operating lease if it does not.
Intangible Assets
All costs associated with exploration and evaluation including the costs of acquiring exploration and exploitation
licences, annual licence fees, rights to explore, topographical, geological and geophysical studies of extracting a
dimensional stone resource, are capitalised as intangible exploration and evaluation assets until such time as when
the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. After initial
recognition they are subsequently measured at cost.
The costs are allocated to quarry locations within a licence area. Each area is treated as a cash-generating unit
(“CGU”) because the underlying geology and risks and rewards of exploration within a quarry are similar.
If an exploration project is successful, the related expenditures will be transferred to intangible or tangible assets
and be amortised over the estimated life of the reserves or life of the licence whichever is less on a straight-line
basis. The asset is amortised once it is in the location and condition necessary for it to be capable of operating in
the manner intended by management. The amortisation is included within operating loss in the statement of
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PAG E | 4 9
comprehensive income. Where a project does not lead to the discovery of commercially viable quantities of
dimensional stone resources and is relinquished, abandoned, or is of no further commercial value to the Group, the
related costs are written off to profit or loss.
The recoverability of capitalised exploration costs is dependent upon the discovery of economically viable reserves,
the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable
production or proceeds from the extraction thereof.
Intangible assets not related to exploration and evaluation are measured initially at fair value and amortised over
their estimated useful lives. Intangible assets relating to quarries in operation are assessed annually for indicators
of impairment in accordance with IAS 36.
Impairment of exploration and evaluation assets and property, plant and equipment
Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable,
an asset is reviewed for impairment. An asset’s carrying value is written down to its estimated recoverable amount
(being the higher of the fair value less costs to sell and value in use) if that is less than the asset’s carrying value.
Impairment losses are recognised in profit or loss.
Impairment reviews for intangible exploration and evaluation assets and property, plant and equipment are carried
out based on quarry sites with each area representing a single CGU. An impairment review is undertaken when
indicators of impairment arise but typically when one of the following circumstances applies:
•
•
•
•
•
unexpected geological occurrences that render the resources uneconomic;
title to the asset is compromised;
variations in dimensional stone prices that render the project uneconomic;
variations in foreign currency rates; or
the Group determines that it no longer wishes to continue to evaluate or develop the field.
Non-financial assets which have suffered impairment are reviewed for possible reversal of the impairment at each
reporting period.
Investments
Investments in subsidiaries, associates and joint ventures are recorded at cost in the parent company’s Statement
of Financial Position. They are tested for impairment when there is objective evidence of impairment. Any
impairment losses are recognised in profit or loss in the period in which they occur.
Financial instruments
Financial assets and financial liabilities are recognised when the Group has become a party to the contractual
provisions of the instrument.
Financial assets
Trade and other receivables
Trade and other receivables are classified as loans and receivables and are initially recognised at fair value. They are
subsequently measured at their amortised cost using the effective interest method less any provision for
impairment.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables
and contract assets have been grouped based on shared credit risk characteristics and the days past due.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and demand
deposits.
For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at
banks, including term deposits, which are not restricted as to use.
Financial liabilities and equity
Convertible loan notes
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all its liabilities.
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Interest-bearing loans (including loan notes) are recorded initially at their fair value, net of direct transaction costs.
Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable
on settlement, redemption or conversion, are recognised in profit or loss over the term of the instrument using the
effective rate of interest.
Instruments where the holder has the option to redeem for a variable amount of cash a pre-determined quantity of
equity instruments are classified as a derivative liability. The derivative element is fair valued at each period and any
changes in fair value are recognised in profit or loss.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for
similar non-convertible debt to the instrument. The difference between this amount and the interest paid is added
to the carrying value of the convertible loan note.
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently at amortised cost using the effective
interest method.
Equity settled transactions
The Group has applied the requirements of IFRS 2 Share-Based Payments for all grants of equity instruments.
The Group has entered into equity settled share-based payments as consideration for services received. Equity
settled share-based payments are measured at fair value at the date of issue.
The Group has measured the fair value by reference to the equity instruments issued as it is not possible to measure
reliably the fair value of the services received. In the absence of market prices, fair value has been based on the
Directors’ valuation of the Company as at the issue date.
Income tax
The tax expense represents the sum of the tax payable for the period and deferred tax.
The tax payable is based on taxable profit for the year. The Group’s liability for current tax is calculated by using tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit
and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary differences
can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset
is realised, or the liability is settled based upon rates enacted and substantively enacted at the reporting date.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there is
an intention to settle the balances on a net basis.
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The financial statements are
presented in Euros (€) which is the Company’s functional and the Group’s presentation currency. The Euro/Sterling
exchange rate at 31 December 2019 was 1.1815 (31 December 2018 – 1.1079). The average Euro/Sterling
exchange rate for the year ended 31 December 2018 was 1.139 (31 December 2018 – 1.1301).
Transactions in currencies other than the functional currency are initially recorded at the exchange rate prevailing
on the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities
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PAGE | 5 1
carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date
when the fair value was determined. Gains and losses arising on retranslation are included in profit or loss for the
period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other
comprehensive income when the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into the Group’s
presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated
at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in
which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are
transferred to the Group’s translation reserve, except to the extent that they relate to non-controlling interests, and
are recognised as income or as expenses in the period in which the operation is disposed of, or when control,
significant influence or joint control is lost.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
Business Combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises
the:
•
•
•
•
•
fair values of the assets transferred;
liabilities incurred to the former owners of the acquired business;
equity interests issued by the group;
fair value of any asset or liability resulting from a contingent consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. The group recognises any
non-controlling interest in the acquired entity, on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity; and
The acquisition date fair value of any previous equity interest in the acquired entity, over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms
and conditions.
Acquisitions costs are included in the profit and loss unless they specifically relate to the issue of shares in connection
with a business combination.
Critical accounting estimates and areas of judgement
The preparation of consolidated financial statements under IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The key areas of judgement and critical accounting estimates are explained below.
Impairment assessment
The Group assesses at each reporting date whether there are any indicators that its assets and cash generating units
(CGUs) may be impaired. Operating and economic assumptions, which could affect the valuation of assets using
discounted cash flows, are updated regularly as part of the Group’s planning and forecasting processes. Judgement
is therefore required to determine whether the updates represent significant changes in the service potential of an
asset or CGU and are therefore indicators of impairment or impairment reversal.
PAG E | 52 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
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
Engineering 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 engineering 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 €6,125 at 31 December 2019 (2018 – €262,459).
The main assumptions used in the valuation of the derivative conversion option as at 31 December 2019 were:
underlying share price of £0.0245 (31 December 2018: £0.0738), EUR/GBP spot rate of 1.1815 (31 December 2018:
1.10), historic volatility of 53% (31 December 2018: 44%) and risk free rate of 1.9% (31 December 2018: 0.68%)
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.
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PAGE | 5 3
New standards and interpretations not yet adopted
(a) New standards, amendments and interpretations
The Group has applied the following new standards and interpretations for the first time for the annual reporting
period commencing 1 January 2019:
•
•
•
•
•
IFRS 16 Leases.
IFRIC 23 Uncertainty over Income Tax Treatments.
Amendments to IFRS 2 – classification and measurement of share based payments transactions
Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures.
Annual Improvements to IFRS Standards 2015-2017 Cycle (Amendments to IFRS 3, IFRS 11, IAS 12 and IAS
23).
On 1 January 2019, the Group adopted the provisions of IFRS 16 – Leases using the modified retrospective
approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 January
2019 where material. Accordingly, the comparative information presented for 2018 has not been restated.
IFRS 16 has been applied to one new lease which was adopted during the financial year. In the Statement of
Financial Position the right-of-use asset is recorded in non-current assets as part of property, plant and equipment
and the lease liability is split between current liabilities for the portion due within 12 months and non-current
liabilities for the remainder.
To determine the split between principal and interest in the lease the incremental borrowing rate of the Group was
applied. This method was adopted as the Group was not able to ascertain the implied interest rate in the lease.
The Group has applied the exemption not to recognise right-of-use assets and liabilities for leases with less than
12 months of lease term when applying IFRS 16 to leases previously classified as operating leases under IAS 17.
None of the other amendments listed above had any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
No other new standards, amendments or interpretations, effective for the first time for the financial year beginning
on or after 1 January 2019 have had a material impact on the group or parent company. At the date of authorisation
of these financial statements, the following key standards and amendments were in issue but not yet effective. The
Group has not applied these standards in the preparation of these financial statements.
•
•
•
•
•
Amendments to IAS 1 and IAS 8 Definition of Material.
Amendments to IFRS 3 Definition of a Business.
Amendments to References to the Conceptual Framework in IFRS Standards.
Amendments to IAS 1 Classification of Liabilities as Current or Non-Current.
IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
The adoption of the above standards and interpretations is not expected to lead to any changes to the Group’s
accounting policies or have any other material impact on the financial position or performance of the Group.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a
material impact on the Group.
4. Prior period adjustment
Fox Marble reviews the expected useful lives of intangible assets with finite lives on a regular basis. Upon review of
the intangible asset in respect of Prilep Omega with a carrying value of €1.2 million, it was determined amortisation
should not have started because the quarry is not in the location and condition necessary for it to be capable of
operating in the manner intended by management. The Prilep Omega quarry requires additional development before
it will enter production and therefore the amortisation of the intangible asset has been adjusted accordingly.
The impact of the adjustment on the Group’s consolidated income statement, consolidated statement of
comprehensive income, consolidated statement of financial position and consolidated statement of cash flows is
presented in the following tables.
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For the Adjustment For the
year ended year ended
31 December 31 December
2018 2018
As previously
reported As restated
€ € €
1,409,730 – 1,409,730
(887,356) – (887,356)
522,374 – 522,374
Revenue
Cost of sales
Gross profit
Administrative and other operating expenses
(2,980,800) 31,403 (2,949,396)
Operating loss
Finance costs
Finance income
Loss before taxation
Taxation
Loss for the year
(2,458,426) 31,403 (2,427,022)
(119,507) – (119,507)
281,554 – 281,554
(2,296,379) 31,403 (2,264,975)
– – –
(2,296,379) 31,403 (2,264,975)
As at
As at
31 December 31 December 31 December
2018
As at
2018
2018
As previously
reported Adjustment As restated
€
€
€
As at As at As at
1 January 1 January 1 January
2018 2018 2018
As previously
reported Adjustment As restated
€ € €
Intangible assets
Property, plant and equipment
Trade and other receivables
2,672,658
4,844,752
208,080
–
–
2,880,739
4,844,752
1,161,989 176,677 1,338,666
4,754,087 4,754,087
56,307 56,307
Total non-current assets
7,517,410
208,080 7,725,491 5,972,383 176,677 6,149,060
Trade and other receivables
Inventories
Cash and cash equivalents
Total current assets
889,299
3,807,140
438,270
5,134,709
–
–
–
–
889,299
3,807,140
438,270
985,647 – 985,647
3,319,467 – 3,319,467
542,287 – 542,287
5,134,709
4,874,401 – 4,874,401
Total assets
12,652,119
208,080 12,860,200 10,819,784 176,677 10,996,461
Trade and other payables
Borrowings
1,184,855
88,970
Total current liabilities
1,273,825
Deferred tax liability
Borrowings
84,504
3,683,990
Total non-current liabilities
3,768,494
–
–
–
–
–
–
1,184,855
88,970
1,373,096 – 1,373,096
1,739,025 – 1,739,025
1,273,825
3,112,121 – 3,112,121
84,504
3,683,990
– – –
1,702,453 – 1,702,453
3,768,494
1,702,453 – 1,702,453
Total liabilities
5,042,319
– 5,042,319 4,814,574 4,814,574
Net assets
7,609,800
208,080 7,817,881 6,005,210 176,677 6,181,887
Equity
Called up share capital
Share premium
Accumulated losses
Share based payment reserve
Other reserve
2,700,688
29,941,977
(25,153,655)
85,247
35,543
2,700,688
29,941,977
2,284.476 – 2,284.476
26,424,202 – 26,424,202
208,080 (24,945,574) (22,823,182) 176,677 (22,646,505)
84,171 – 84,171
35,543 – 35,543
85,247
35,543
Total equity
7,609,800
208,080 7,817,881 6,005,210 176,677 6,181,887
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For the Adjustment For the
year ended year ended
31 December 31 December
2018 2018
As previously
reported As restated
€ € €
(2,296,379) 31,403 (2,264,975)
119,507 – 119,507
(281,554) – (281,554)
Cash flows from operating activities
Loss before taxation
Adjustment for:
Finance costs
Finance income
Operating loss for the year
(2,458,426) 31,403 (2,427,023)
Adjustment for:
Amortisation
Depreciation
Foreign exchange losses on operating activities
Equity settled transactions
Provision for impairment of receivables
Provision for inventory
43,299 31,403 11,896
90,365 – 90,365
6,522 – 6,522
1,076 – 1,076
124,643 – 124,643
251,552 – 251,552
Changes in working capital:
Increase in trade and other receivables
Increase in inventories
Increase/(decrease) in accruals
Decrease in trade and other payables
(6,081) – (6,081)
(206,942) – (206,942)
(31,266) – (31,266)
(156,975) – (156,975)
Net cash used in operating activities
(2,342,233) – (2,342,233)
5. 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 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 period to 31 December 2021.
If the cash receipts from sales are lower than anticipated the Company has identified that it has available to it a
number of other contingent actions, in addition to those noted above, 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.
6. 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 Fox Marble Holdings plc are in the Republic of Kosovo and the Republic of North Macedonia. All
sales of the Group 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 €8,127,917 (2018 – €7,725,491), €4,262,651 (2018 – €4,481,511)
relates to Property, Plant and Machinery acquired for the exploitation of assets in Kosovo and €588,902 (2018 –
€362,612) 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
PAG E | 56 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
North Macedonia of €2,674,866 (2018 – €2,716,304) and exploration and evaluation expenditure incurred in Kosovo
of €77,572 (2018 – €79,930).
Property, Plant and Machinery
Intangible assets
Kosovo
31 December
2019
4,262,651
77,572
Macedonia Other Total
31 December 31 December 31 December
2019 2019 2019
588,902 236,791 5,088,344
2,674,866 84,504 2,836,942
Total non-current assets
7,925,286
31 December
2018
31 December 31 December 31 December
2018 2018 2018
Property, Plant and Machinery
Intangible assets
4,481,511
79,931
362,612 629 4,844,752
2,716,304 84,504 2,880,739
Total non-current assets
7,725,491
The Group incurs certain costs in the United Kingdom in relation to head office expenses. In the year under review
included in the operating costs for the year of €2,881,919 (2018 – €2,949,396) were costs incurred in the United
Kingdom of €1,385,145(2018 – €1,314,226). Net interest cost of the Group of €259,867 (2018 – income of
€162,047) is incurred in the United Kingdom.
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
2019 2018
€ €
Revenue by territory
Europe 883,271 845,877
Middle East 148,976 260,783
China 390,625 209,616
India – 93,454
Total revenue 1,422,872 1,409,730
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
2019 2018
€ €
Revenue by product
Sale of block marble 1,219,618 1,043,313
Sale of processed marble 168,807 353,265
Provision of processing services 34,447 13,152
Total revenue 1,422,872 1,409,730
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
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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
2019 2018
€ €
Contractual basis 745,201 941,349
Non-contractual basis 677,671 468,381
Total revenue 1,422,872 1,409,730
The following table sets out financial assets and liabilities that relate to sales contracts the Group has entered into
Group Year ended Year ended
31 December 31 December
2019 2018
€ €
Trade receivables 142.216 276,073
Contract Liabilities (Advances received from customers) 313,582 307,743
7. Expenses by nature
Group Year ended Year ended
31 December 31 December
2019 2018
(restated)
€ €
Operating loss is stated after charging/(crediting):
Cost of materials sold 814,626 887,356
Inventory provision 392,412 251,552
Fees payable to the Company’s auditors 76,050 104,860
Legal & professional fees 293,972 191,796
Consultancy fees and commissions 400,458 470,998
Staff costs 690,074 803,340
Operating lease rental 16,424 47,679
Other head office costs 147,304 166,031
Travelling, entertainment & subsistence costs 106,194 136,292
Depreciation 207,850 90,365
Amortisation 43,796 12,972
Quarry operating costs 172,564 170,285
Foreign exchange (loss)/gain (19,205) 25,492
Marketing & PR 47,690 48,614
Testing, storage, sampling and transportation of materials 94,858 265,805
Provision for bad debts 162,578 124,643
Sundry expenses 48,900 38,673
Cost of sales, administrative and other operational expenses 3,696,545 3,836,752
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The analysis of auditors’ remunerations is as follows:
Group Year ended Year ended
31 December 31 December
2019 2018
€ €
Fees payable to the Company’s auditors and its associates for services to the group
Audit of UK parent company 16,711 23,041
Audit of consolidated financial statements 44,834 61,819
Audit of overseas subsidiaries 14,505 20,000
Audit of UK subsidiaries –
Total audit services 76,050 104,860
8. Directors and Employees
The employee benefit expenses during the year were as follows:
Group 2019 2018
€ €
Wages and salaries 615,764 702,894
Social security costs 74,310 100,446
690,074 803,340
Company 2019 2018
€ €
Wages and salaries 136,768 135,609
Social security costs 9,684 8,968
146,452 144,577
The monthly average number employed during the year, including the Executive Directors, was:
Group 2019 2018
Directors 5 5
Administration 9 9
Quarry and factory operations 55 69
69 83
Company 2019 2018
Directors 3 3
3 3
Key management personnel, as defined by IAS 24 “Related Party Disclosures”, have been identified as the Board of
Directors. Detailed disclosures of Directors’ individual remuneration, Directors’ transactions and Directors’ interests
and share options, for those Directors who served during the year, are set out below. The aggregate amount of
Directors remuneration for the year was as follows:
Group 2019 2018
€ €
Salary 299,179 296,645
Consultancy fees 77,046 76,393
Aggregate emoluments payable to directors 376,225 373,038
Company 2019 2018
€ €
Salary 136,768 135,609
Consultancy fees – –
Aggregate emoluments payable to directors 136,768 135,609
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PAGE | 5 9
The Board of Directors’ remuneration is settled in GBP and is therefore subject to foreign exchange movements upon
translation to EUR. None of the Company’s directors exercised share options during the years ended 31 December
2019 and 2018.
The highest paid director’s emoluments were as follows
Group 2019 2018
€ €
Total amount of emoluments payable 148,279 147,023
Remuneration in respect of Directors was as follows:
Year ended 31 December 2019
Executive directors
Chris Gilbert(1)
Fiona Hadfield
Non-Executive directors
Andrew Allner(2)
Sir Colin Terry(2)
Roy Harrison(2)
Year ended 31 December 2018
Executive directors
Chris Gilbert(1)
Fiona Hadfield
Non-Executive directors
Andrew Allner(2)
Sir Colin Terry(2)
Roy Harrison(2)
Salary Consultancy Fees Total
€ € €
71,233 77,046 148,279
91,178 – 91,178
162,411 77,046 239,457
68,384 – 68,384
34,192 – 34,192
34,192 – 34,192
136,768 – 136,768
299,179 77,046 376,225
Salary Consultancy Fees Total
€ € €
70,630 76,393 147,023
90,406 – 90,406
161,036 76,393 237,429
67,805 – 67,805
33,902 – 33,902
33,902 – 33,902
135,609 – 135,609
296,645 76,393 373,038
(1) Executive Director Chris Gilbert agreed to utilise fifty per cent of his remuneration (net of tax) to subscribe for
Ordinary Shares in the Company. The balance of €80,780 due from the 1 January 2017 to 28 February 2018 is
accrued by the Company and not yet paid.
(2) The Non-Executive Directors of the Company agreed to utilise their fees (net of tax) to subscribe for Ordinary
Shares in the Company. Remuneration for the period from 1 January 2019 to 31 December 2019 is accrued in
the accounts and will be used to subscribe for shares in 2020. The Board of Directors’ remuneration is settled
in GBP and is therefore subject to foreign exchange movements upon translation to EUR.
9. Net finance costs
2019 2018
€ €
Finance costs
Interest expense on borrowings 343,952 119,507
Net foreign exchange loss on loan note instrument 171,235 –
Interest payable on lease liabilities 2,451 –
517,638 119,507
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10. Net finance income
2019 2018
€ €
Finance income
Movement in the fair value of derivative (note 18) 256,335 277,962
Net foreign exchange gain on loan note instrument – 2,754
Interest income on bank deposits 1,436 838
257,771 281,554
11. Taxation
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted
average tax rate applicable to losses of the Group as follows:
2019 2018
€ €
Reconciliation of effective tax rate
Loss before income tax (2,533,540) (2,264,976)
Tax calculated at domestic tax rates applicable to profits in the respective
countries at a weighted average rate of 14.1% (2018 – 15.48%) 357,247 349,586
Tax effect of expenses that are not deductible in determining taxable profit (48,790) (52,813)
Capital allowances in excess of depreciation and amortisation 1,297 130
Tax effect of income not included in determining taxable profit 5,128
Deferred tax asset not recognised in respect of losses (404,740) (397,141)
Total tax expense for the year – –
The standard rate of corporation tax in the UK remained 19% with effect from 1 April 2017. Accordingly, the
Company’s losses for this accounting year are taxed at an effective rate of 19% (2018 – 19%).
The tax computations of Fox Marble Holdings plc Group show it has tax losses carried forward of €19,548,868
(2018 – €18,520,836). However due to the uncertainty of the timing of future profits, no deferred tax asset has
been recognised in these financial statements.
The deferred tax asset not recognised by the Group at 31 December 2019 is €3,214,464 (2018 – €2,784,059).
Group
2019 2018
€ €
The balance comprises temporary differences attributable to:
Intangible assets recognised on acquisition 84,504 84,504
84,504 84,504
A deferred tax liability arose on the acquisition of Gulf Marble Limited (UAE) in the year ended 31 December 2018
as a result of the fair valuation of the intangible asset acquired as part of the business combination. See note 27 for
further detail on the acquisition.
12. Earnings per share
2019 2018
€ €
Loss for the year used for the calculation of basic EPS (2,533,540) (2,264,975)
Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 230,948,303 214,022,550
Effect of potentially dilutive ordinary shares – –
Weighted average number of ordinary shares for the purpose of diluted EPS 230,948,303 214,022,550
Earnings per share:
Basic (0.01) (0.01)
Diluted (0.01) (0.01)
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.
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PAGE | 61
13. Intangible assets
Group:
Cost
As at 1 January 2018
Addition
As at 31 December 2018,1 January
2019 and 31 December 2019
Accumulated amortisation
As at 1 January 2018
Amortisation charge
As at 31 December 2018 and as at
1 January 2019
Charge for the year
As at 31 December 2019
Net Book Value
As at 1 January 2018
As at 31 December 2018
As at 31 December 2019
Capitalised
Mining rights exploration and
and licences evaluation Total
(restated) expenditure (restated)
€ € €
1,256,376 92,866 1,349,242
1,469,464 – 1,553,968
Goodwill
€
–
84,504
84,504
2,725,840 92,866 2,903,210
–
–
–
–
–
– 10,576 10,576
9,537 2,360 11,897
9,537 12,936 22,473
41,438 2,358 43,796
50,975 15,294 66,269
–
84,504
84,504
1,256,376 82,290 1,338,666
2,716,304 79,930 2,880,738
2,674,866 77,572 2,836,942
Capitalised exploration and evaluation expenditure represent rights to the mining of decorative stone reserves in the
Pejë, Syriganë and Cervenillë quarries in Kosovo. The Group was granted in 2011 rights of use by the local
municipality for twenty years over land in the Syriganë and Rahovec region through acquisition of the issued share
capital of Rex Marble SH.P.K and H&P SH.P.K.
On 16 August 2014 the Company entered into a sub-lease arrangement with New World Holdings (Malta) Limited in
relation to the Omega Alexandrian White marble quarry at Prilep in North Macedonia. This new quarry site is adjacent
to the Company’s existing operations in Prilep. The consideration for the sub-lease was €1,256,376 (£1,000,000)
and a subsequent 40% gross revenue royalty obligation. The sub-lease has an initial term of 20 years, which is
extendable by the Company for a further twenty years. The sub-lease grants the Company the exclusive right to
quarry, process, remove and sell marble from the quarry. The Company will pay for and provide all the equipment
and staff required to operate this quarry. The quarry is not yet operational.
On 8 October 2018 the Company acquired Gulf Marble Investments Limited (UAE). As part of this acquisition the
Group acquired the direct sub licence to the Prilep Alpha quarry and eliminated the 40% gross revenue royalty
payable under the original agreements. The Group has recognised an intangible asset with a provisional fair value
of €1,469,464 which will be amortised over the remaining period of the licence. Further detail on this acquisition can
be found in note 28. The acquisition gave rise to a technical deferred tax liability and a corresponding entry to
goodwill of €84,504 in accordance with IFRS 3.
Intangible assets relating to quarries not yet in operation are treated as exploration and evaluation assets and
assessed for impairment in accordance with IFRS 6 Exploration and evaluation of mineral resources. The Group has
assessed intangible assets for indicators of impairment and concluded there are no indicators of impairment arising
in the current year.
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.
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14. Property, plant and equipment
Group:
Quarry
Plant &
Machinery
€
Factory
Plant &
Machinery
€
Rights of
use asset
€
Office
Equipment
and
Land and Leasehold
buildings improvements Total
€ € €
2,988,900 3,040,590
390,722
322,593
–
–
160,000 30,488 6,219,978
– – 713,315
3,311,493 3,431,312
50,306
3,909,266 3,481,618
597,773
–
242,710
242,710
160,000 30,488 6,933,293
– 936 891,725
160,000 31,424 7,825,018
1,393,784
526,490
44,949
93,459
1,920,274
530,593
2,450,867
138,408
110,056
248,464
–
–
–
6,827
6,827
– 27,158 1,465,891
– 2,701 622,650
– 29,859 2,088,541
– 657 648,133
– 30,516 2,736,674
Cost
As at 1 January 2018
Additions
As at 31 December 2018 and
as at 1 January 2019
Additions(1)
As at 31 December 2019
Accumulated depreciation
As at 1 January 2018
Depreciation charge(2)
As at 31 December 2018
and as at 1 January 2019
Depreciation charge(2)
As at 31 December 2019
Net Book Value
As at 1 January 2018
As at 31 December 2018
As at 31 December 2019
1,595,116
1,391,219
2,995,641
3,292,904
1,458,399 3,233,154
–
–
235,883
160,000 3,330 4,754,087
160,000 629 4,844,752
160,000 908 5,088,344
(1)
Included in additions of €713,315 in the year ended 31 December 2018 are €213,469 of assets acquired as
result of the acquisition of Gulf Marble Investments Limited. See note 26 for further details.
(2) Depreciation on plant and machinery is included in the cost of inventory to the extent it is directly related to
production of that inventory. In the year ended 31 December 2019 €461,170 of depreciation was included in
the cost of inventory produced (2018 €532,284).
The Group has assessed property, plant and equipment for indicators of impairment and concluded there are no
indicators of impairment arising in the current year. Included in property, plant and equipment is €161,000 of assets
that are currently located at the Maleshevë quarry site. Access to the quarry site has been under dispute since July
2019, as disclosed further in Note 30. Due to the dispute with Green Power Sh.P.K the Company were unable to
physically inspect the assets as at 31 December 2019 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.
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Company:
Rights of
use asset Total
€
Cost
As at 1 January 2019 – –
Additions 242,710 242,710
As at 31 December 2019 242,710 242,710
Accumulated depreciation
As at 1 January 2019 – –
Depreciation charge 6,827 6,827
As at 31 December 2019 6,827 6,827
Net Book Value
As at 31 December 2018 – –
As at 31 December 2019 235,883 235,883
Right-of-use assets
From 1 January 2019, the Group has adopted IFRS 16 Leases. Refer to notes 2 for the accounting policy. The
right-of-use assets recognised on adoption of the new leasing standard are reflected in the underlying asset classes
of property, plant and equipment.
15. Trade and other receivables
Group: 2019 2018
€ €
Current assets
Trade receivables 223,540 449,249
Less: provision for impairment in receivables (81,324) (84,871)
Trade receivables (net) 142,216 364,378
Deposits on capital equipment 148,750 148,750
Accrued Revenue 91,300 –
Deposits 55,000 55,000
Other receivables 286,071 166,549
Prepayments 161,816 89,008
VAT recoverable 94,901 65,614
Amounts due from related party 202,631 –
1,182,685 889,299
Company: 2019 2018
€ €
Current assets
Prepayments 48,540 43,046
Other receivables 233,520 57,611
VAT recoverable 14,743 14,073
296,803 114,730
Included in other receivables as at 31 December 2019 are other receivables of €58,957 (2018 – €55,300) relating
to the issue of share capital made by the Company on 31 August 2011. Included in this balance are amounts due
from directors of €26,573 (2018 – €48,106).
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade
receivables are recognised initially at the amount of consideration that is unconditional unless they contain
significant financing components, when they are recognised at fair value. The Group holds the trade receivables with
the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost
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using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss
allowance are provided in note 24.
As at 31 December 2019 €202,631 (2018 – Nil) is due from Fox Marble FZC, a company in which the Company holds
controls 34% of the issued share capital.
Information about the impairment of trade receivables and the Group’s exposure to credit risk, foreign currency risk
and interest rate risk can be found in note 24.
Trade receivables are disclosed net of a provision for bad and doubtful debts. The provision for bad and doubtful
debts is based on specific risk assessment and reference to past default experience. Further details are included in
note 24.
Included in receivables for the Group are receivables denominated in GBP of €309,763 (2018 – €147,065). There
are nil receivables denominated in USD (2018 – nil). Included in receivables for the Company are receivables
denominated in GBP of €296,803 (2018 – €100,656). All GBP denominated receivables have been translated to Euro
at the exchange rate prevailing at 31 December 2019. All other receivables are Euro denominated. The directors
consider that the carrying amount of trade and other receivables approximates their fair value.
Included in receivables for the Group are deposits on capital equipment of €148,750 (2018 – €148,750). These
relate to additional equipment for the factory site which the Group expects to install within the next twelve months.
Included in amounts due from related parties is €202,631 due from Fox Marble FZC a company in which Fox Marble
Holdings plc holds 34% of the issued share capital.
16. Inventories
Group: 2019 2018
€ €
Block Marble 3,458,722 3,302,805
Slab Marble 362,674 443,532
Tiles and cut to size 107,001 60,803
3,928,397 3,807,140
The cost of inventories recognised as an expense and included in cost of sales amounted to €784,567 (2018 –
€799,591). In the current year the Group has recognised a provision of €392,412 (2018 – €251,552) in relation to
inventory. The cumulative provision against inventory held in stock at 31 December 2019 is €1,155,159 (2018 –
€762,747).
Included in inventories is €953,000 of block marble that is currently located at the Maleshevë quarry site. Access to
the quarry site has been under dispute since July 2019, as disclosed further in Note 30. Due to the dispute with
Green Power Sh.P.K the Company were unable to perform a stocktake as at 31 December 2019 year end. The stock
was 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 the stock in any way. The Company is confident of its rights over this stock and the
enforcement of those rights, and that the value of this stock is recoverable.
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PAGE | 6 5
17. Trade and other payables
Group: 2019 2018
€ €
Trade payables 353,840 447,690
Contract Liabilities – Advances received from customers 313,582 307,743
Amounts due to related parties 313,706 230,211
Other payables 5,582 11,201
Accruals 190,900 151,873
Other tax and social security payable 21,766 36,137
1,199,376 1,184,855
Company: 2019 2018
€ €
Trade payables 99,940 132,687
Amounts due to related parties 212,670 132,948
Accruals 85,446 59,805
398,056 325,440
Amounts due to related parties are considered further in note 24.
Included in trade and other payables of the Group are GBP denominated payables of €701,989 (2018– €571,172)
and USD denominated payables of €328,273 (2018 – €307,743). All other trade and other payables are Euro
denominated. All GBP denominated payables have been translated to Euro at the exchange rate prevailing at 31
December 2019.
All trade and other payables of the Company are GBP denominated and have been translated to Euro at the exchange
rate prevailing at 31 December 2019. All trade and other payables at 31 December 2019 are due within one year
and are non-interest bearing. The directors consider that the carrying amount of trade and other payables
approximates their fair value.
18. Borrowings
Group and Company: 2019 2018
€ €
Current borrowings
Convertible loan notes held at amortised cost 1,924,821 85,259
Derivative over own equity at fair value 4,875 3,711
1,929,696 88,970
Non-current borrowings
Convertible loan notes held at amortised cost 2,523,471 2,871,292
Other borrowings held at amortised cost – 553,950
Derivative over own equity at fair value 1,250 258,748
2,524,721 3,683,990
a. Series 3 Loan Note
On 28 June 2017, the Company issued a convertible loan note with a value of £440,000 (“Series 3 Loan Note”) to
a non related party. This new Series 3 Loan Note has an interest rate of 8% per annum, in line with the Series 1
Loan Note issued to Amati Global Investors Limited. The Loan Note was due for conversion or repayment on
31 August 2020 with a conversion price set at 10p.
As at 31 December 2019, the Series 3 Loan Note held at amortised cost had a balance of €521,885 (31 December
2018 – €489,235). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019 the derivative had a value of €520 (31 December 2018 – €16,818).
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.
b. Series 4 Loan Note
On 28 December 2017, the Company issued a convertible loan note with a value of £160,000 (“Series 4 Loan Note”)
to a non related party. This new Series 4 Loan Note has an interest rate of 8% per annum, in line with the Series 1
PAG E | 6 6 F O X M A R B L E H O L D I N G S P L C A N N U A L R E P O R T & F I N A N C I A L S T A T E M E N T S 2 0 1 9
Loan Note issued to Amati Global Investors Limited. The Loan Note was due for conversion or repayment on
31 August 2020 with a conversion price set at 10.5p.
As at 31 December 2019, the Series 4 Loan Note held at amortised cost had a balance of €185,514 (31 December
2018 – €174,202). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019 the derivative had a value of €180 (31 December 2018 – €7,918).
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.
c. Series 5 Loan Note
On 19 January 2018, the Company issued a convertible loan note with a value of £75,000 (“Series 5 Loan Note”) to
a non related party. This new Series 5 Loan Note has an interest rate of 8% per annum. The Loan Note was due for
conversion or repayment on 19 January 2020 with a conversion price set at 10.5p.
As at 31 December 2019, the Series 5 Loan Note held at amortised cost had a balance of €91,073 (31 December
2018 – €85,258). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019, the derivative had a value of €84 (31 December 2018 – €3,711).
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.
d. Series 6 Loan Note
On 30 July 2018, the Company issued a convertible loan note with a value of £300,000 (“Series 6 Loan Note”) to a
non related party. This new Series 6 Loan Note has an interest rate of 8% per annum. The Loan Note was due for
conversion or repayment on 30 July 2020 with a conversion price set at 10.5p.
As at 31 December 2019, the Series 6 Loan Note held at amortised cost had a balance of €353,229 (31 December
2018 – €331,310). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019, the derivative had a value of €338 (31 December 2018 – €24,121).
The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3
derivative on the basis that the valuation includes one or more significant inputs not based on observable market
data.
e. Series 7 Loan Note
On 30 September 2018, the Company issued a convertible loan note with a value of £300,000 (“Series 7 Loan Note”)
to a non related party. This new Series 7 Loan Note has an interest rate of 8% per annum. The Loan Note was due
for conversion or repayment on 30 September 2020 with a conversion price set at 10.5p.
As at 31 December 2019, the Series 7 Loan Note held at amortised cost had a balance of €357,529 (31 December
2018 – €335,044). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019, the derivative had a value of €338 (31 December 2018 – €27,223).
The fair value has been assessed using a Black Scholes methodology.
f. Convertible Loan Notes 2020
As consideration for the acquisition of Gulf Marble Investments Limited Fox Marble 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 is 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 2019, the Gulf Loan Note held at amortised cost had a balance of €1,676,062 (31 December
2018 – €1,541,502). The Stockholders’ option to convert the loan has been treated as an embedded derivative and
measured at fair value. As at 31 December 2019, the derivative had a value of €382 (31 December 2018 –
€182,669). 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.
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g. Series 8-10 Loan Note
On 4 February 2019, the Company issued a convertible loan note with a value of £700,000 (“Series 8-10 Loan Note”)
to a non-related party. This new Series 8-10 Loan Note has an interest rate of 8% per annum. The Loan Note was
due for conversion or repayment on 4 February 2021 with a conversion price set at 10.5p.
As at 31 December 2019, the Series 8-10 Loan Notes held at amortised cost had a balance of €847,396. The
Stockholders’ option to convert the loan has been treated as an embedded derivative and measured at fair value.
As at 31 December 2019, the derivative had a value of €868. The fair value has been assessed using a Black Scholes
methodology.
h. Other Borrowings
In September 2019, the Company entered a short-term borrowing arrangement with a value of £345,000 (“Other
Borrowings”). The interest rate was 1% per calendar month with a repayment date of the 31 March 2020.
As at 31 December 2019 the carrying value of these loans was €407,618. On the 27 May 2020 holders of £225,000
of these borrowings agreed to exchange them with Series 11 Loan notes as described below.
i. Series 11 Loan Note
On the 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 to 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 30 June 2026 with a conversion
price of 5p.
The directors consider that the carrying amount of borrowings approximates their fair value at 31 December 2019.
19. Leases
From 1 January 2019, the Group has adopted IFRS 16 Leases. Refer to Note 2 for the accounting policy. The lease
liabilities recognised on adoption of the new leasing standard are reflected in long term liabilities. The Group also
has certain leases with lease terms of 12 months or less and leases of assets with low values. The Group applies the
“short-term lease” and “lease of low-value assets” recognition exemptions for these leases. Set out below are the
carrying amounts of lease liabilities and the movements during the period.
Group:
Year ended Year ended
31 December 31 December
2019 2018
€ €
At 1 January –
Additions 218,270 –
Interest expense 2,451 –
At 31 December 220,721 –
Carrying Contractual
cash flows
Amount
€
€
6 months
or less
€
6-12
months 1-2 years 2-5 years
€ € €
Lease Liability
220,721
266,576
23,384
28,061 112,243 102,888
A discount rate of 10% was used for calculating the present value of future cash flows as this represents the
Company’s cost of capital Municipal rights of use as at 31 December 2018 and 31 December 2019 are as follows
Area
Cervenillë
Syriganë
Area
m2’000
Lease Period Payment
start date
Municipal rights of use
2,000
04/02/2011 10 years
€0.5 per cubic metre extracted
Municipal rights of use
540
18/03/2011 20 years
€0.5 per cubic metre extracted
Municipal rights of use relate to the Group’s rights over land on which the quarry sites are located.
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20. Share capital
Group and Company:
2019
Number
2018
Number
Share
capital
2019
€
Share Share Share
capital premium premium
2018 2019 2018
€ € €
Issued, called up and fully paid
Ordinary shares of £0.01 each
At 1 January
Issued in the year
At 31 December
217,885,322 181,344,851
36,540,471
262,657,882 217,885,322
44,772,560
2,700,688
519,532
3,220,221
2,284,476 29,941,977 26,424,202
416,212 1,851,893 3,517,775
2,700,688 31,793,870 29,941,977
On the 4 February 2019 the Company issued 13,263,121 shares at a price 9.5 per share. On the 19 December 2019
the Company issued 31,509,439 shares at a price of 2.7 per share. As part of these share issues €31,969 was
capitalised into share premium.
21. Share based payment reserve
Group and Company: Year ended Year ended
31 December 31 December
2019 2018
€ €
At 1 January 85,247 84,171
Equity settled share-based payment charge – 1,076
At 31 December 85,247 85,247
On 12 June 2017 Beaufort Securities Limited was granted performance warrants, in each case subject to the
mid-price of the ordinary shares trading above the exercise price for a consecutive period of more than 3 months.
These warrants may be exercised for a period of up to 3 years from their date of issue.
The Company has a set up a Discretionary Share Option Plan (DSOP) for the benefit of employees. The Company
granted options over an aggregate of 120,000 Ordinary Shares at the IPO Placing Price of 20p to Fiona Hadfield
under the terms of the DSOP on 31 August 2012. The options vested after three years. Fair value of the options has
been evaluated using a Black Scholes model.
Date of Issue
Exercise price Granted Outstanding
Performance Warrants
Beaufort Securities Limited
Beaufort Securities Limited
Share options
DSOP Share scheme
12 July 2017
12 July 2017
15p 100,000 100,000
20p 75,000 75,000
31 August 2012
20p 120,000 120,000
On the 17 June 2020 22,857,146 warrants were issued with an exercise price of 3.5p as part of the placing
completed on that date. Further details are included in note 31.
22. Capital and financial risk management
Capital risk management
The group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
The capital structure of the Group consists of equity attributable to equity holders comprising issued share capital,
reserves and retained earnings as disclosed in the Statement of Changes in Equity.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital based on the gearing ratio and net debt/cash. This
ratio is calculated as total borrowings divided by total capital. Net debt is calculated as total borrowings less cash
and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial
position plus total borrowings.
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The gearing ratios at 31 December 2019 and 31 December 2018 are as follows:
Group Year ended Year ended
31 December 31 December
2019 2018
€ €
Total borrowings (note 18) (4,454,418) (3,772,960)
Less cash and cash equivalents 578,417 438,270
Net debt (3,876,002) (3,334,690)
Total equity 7,655,765 7,817,881
Total capital 12,110,183 11,590,841
Gearing ratio 36.78% 32.55%
Company Year ended Year ended
31 December 31 December
2019 2018
€ €
Total borrowings (note 18) (4,454,418) (3,772,960)
Less cash and cash equivalents 545,587 256,344
Net debt (3,908,831) (3,516,616)
Total equity 23,726,327 22,003,554
Total capital 28,180,745 25,776,514
Gearing ratio 15.81% 14.64%
Reconciliation of movement in Net Debt
Group
Cash and cash equivalents
Borrowings
Net debt
Company
Cash and cash equivalents
Borrowings
Net debt
Financial risk management
Balance at
1 January 2019
€
Balance at
Foreign
Exchange
Non cash 31 December
Difference movements Cash Flow 2019
€ € €
€
438,270
(3,772,960)
(3,334,690)
–
(171,235)
(171,235)
– 140,147 578,417
(87,617) (422,606) (4,454,418)
(87,617) (282,460) (3,876,002)
Balance at
1 January 2019
€
Balance at
Foreign
Exchange
Non cash 31 December
Difference movements Cash Flow 2019
€ € €
€
256,344
(3,772,960)
(3,516,616)
–
(171,235)
(171,235)
– 289,243 545,587
(87,617) (422,606) (4,454,418)
(87,617) (133,363) (3,908,831)
The Group is exposed to several financial risks through its normal operations, the most significant of which are
credit, foreign exchange and liquidity risks.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise the potential adverse effects on the Group’s financial performance. Risk management is carried out by the
board of directors. The board has established polices and principles for overall risk management covering specific
areas such as foreign exchange risk, credit risk and investment of excess liquidity.
Credit risk
Credit risk is managed on a group basis. The Group is responsible for managing and analysing the credit risk for
each of their new clients before standard payment and delivery terms and conditions are offered. Credit risk arises
from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit exposures to
wholesale and retail customers, including outstanding receivables and committed transactions. For banks and
financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. If wholesale
customers are independently rated, these ratings are used. If there is no independent rating, risk control assesses
the credit quality of the customer, considering its financial position, past experience and other factors. Sales to retail
customers are settled in cash. Management does not expect any losses from non-performance by these
counterparties.
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The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit
risk at the reporting date was €1,598,094 (2018 – €1,238,561). Financial assets are assessed for impairment
annually and a provision for bad debt of €81,324 has been recognised in 2019 (2018 – €73,866).
The Group has two types of financial assets that are subject to the expected credit loss model:
•
•
trade receivables for sales of inventory
cash and cash equivalents
The Group was required to revise its impairment methodology under IFRS 9 for each of these classes of assets.
While cash and cash equivalents are subject to the impairment requirements of IFRS 9, the identified impairment
loss was immaterial.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables
and contract assets have been grouped based on shared credit risk characteristics and the days past due. The
expected loss rates are based on the payment profiles of sales over a period of 24 month before 31 December 2018
or 1 January 2018 respectively and the corresponding historical credit losses experienced within this period.
The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables. The group has identified the GDP and the
unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and
accordingly adjusts the historical loss rates based on expected changes in these factors.
On that basis, the loss allowance as at 31 December 2019 and 31 December 2018 was determined as follows for
both trade receivables:
31 December 2019
Expected loss rate
Gross Carrying Amount
Loss allowance
31 December 2018
Expected loss rate
Gross Carrying Amount
Loss allowance
More than
30 days
past due
More than More than
60 days 90 days
past due past due Total
16%
€4,843
€791
22% 39% 36%
€5,060 €196,176 €223,540
€1,133 €77,490 €81,324
More than
30 days
past due
16%
€148,323
€24,223
More than More than
60 days 90 days
past due past due Total
21% 23% 19%
€2,972 €225,826 €449,249
€638 €52,138 €84,871
Current
11%
€17,461
€1,910
Current
11%
€72,128
€7,872
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a
repayment plan with the group, and a failure to make contractual payments for a period of greater than 120 days
past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating
profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
As at 31 December 2019 the Group holds €578,417 in cash and cash equivalents (2018 – €438,270). The Group
mitigates banking sector credit risk through the use of banks with no lower than a single A rating.
As at 31 December 2019 the Company holds €545,587 in cash and cash equivalents (2018 – €256,344). The
Company mitigates banking sector credit risk through the use of banks with no lower than a single A rating.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the Euro and GBP. Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities.
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There is exposure to movements in the GBP/EUR exchange rate as a portion of the cash held by the group is
denominated in GBP and the Group’s borrowing facilities are GBP denominated.
Group 31 December 31 December
2019 2018
€ €
Cash denominated in EUR 26,875 52,298
Cash denominated in GBP 551,482 262,785
Cash denominated in USD 59 9,082
Cash denominated in AED – 114,105
578,417 438,270
Company
Cash denominated in EUR 98 97
Cash denominated in GBP 545,489 256,247
545,587 256,344
As at 31 December 2019 if the currency has weakened/strengthened by 10% against the GBP with all other variables
constant, post-tax profit would have been €325,132 higher/lower, mainly as a result of the foreign exchange
gains/losses on translation of the GBP denominated convertible loan note and GBP denominated receivables and
payables (2018 – €249,188). Similarly, the Company has calculated the impact of a 10% increase or decrease in
the GBP/EUR exchange rate would have a €193,214 (2018 – €178,231) impact on the net assets of the Company,
with all other variables held constant. A 10% variation in the foreign exchange rate is considered appropriate as it
reflects a maximum volatility in the exchange rates over the given period.
For the Company, as at 31 December 2019 if the currency has weakened/strengthened by 10% against the GBP with
all other variables constant, post-tax profit would have been €89,410 higher/lower, mainly as a result of the foreign
exchange gains/losses on translation of the GBP denominated convertible loan note and GBP denominated
receivables and payables (2018 – €71,783). Similarly, the Company has calculated the impact of a 10% increase or
decrease in the GBP/EUR exchange rate would have a €173,210 (2018 – €167,301) impact on the net assets of the
Company, with all other variables held constant. A 10% variation in the foreign exchange rate is considered
appropriate as it reflects a maximum volatility in the exchange rates over the given period.
The Group manages foreign exchange risk through natural hedging of its cash deposits against existing GBP/EUR
commitments and by monitoring exchange rate fluctuations and forecast cash flows to examine the need for any
formal hedging arrangement.
Liquidity risk
Cash flow forecasting is performed in the operating entities of the group and aggregated by group finance. Group
finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet
operational needs.
Surplus cash held by the operating entities over and above the balance required for working capital management is
transferred to the group treasury.
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on
the remaining period at the balance sheet date to the contractual maturity date.
The following are the contractual maturities of financial liabilities for the Group as at 31 December 2019 based upon
contractual cash flows:
31 December 2019
Carrying Contractual
cash flows
Amount
€
€
6 months
or less
€
6-12 1-2 2-5
months years years
€ € €
Borrowings
Trade and other payables
4,454,418
1,199,377
5,078,033
1,199,377
626,889
1,199,377
2,076,353 2,374,790
31 December 2018
Carrying Contractual
cash flows
Amount
€
€
6 months
or less
€
6-12 1-2 years 2-5 years
months
€ € €
Borrowings
Trade and other payables
3,772,960
1,148,718
92,048
4,068,574
1,148,718
1,148,718
4,921,678 5,217,292 1,240,766
175,141 3,243,742 557,643
– – –
175,141 3,243,742 557,643
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For the Company as at 31 December 2019 and 2018, contractual liabilities with regards to convertible loan notes
are the same as for the Group. Trade and other payables’ contractual cash flows payable in 6 months or less as at
31 December 2019 are €398,056 (2018 – €325,440).
Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an
appropriate liquidity risk management framework for the management of the Group’s short-, medium-, long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash
flows, and by matching the maturity profiles of financial assets and liabilities.
Interest rate risk
As at 31 December 2019, the Company holds borrowings of €1,785,000 with variable interest rate
(2018 – €1,785,000). The 2020 Convertible Loan Note carry an interest rate of Libor plus 1.5% payable annually in
arrears. All other borrowings are under fixed interest rates. For each one hundred basis point rise in market interest
rates at 31 December 2019 there would be an increase in loss before tax by approximately €17,850
(2018 – €17,850).
Fair Values
The directors have reviewed the financial statements and have concluded that, there are no significant differences
between the book values and the fair values of the financial assets and financial liabilities of the Group and Company
as at 31 December 2019 and 2018.
23. Interests in other undertakings
%
Ownership
Date acquired/
Incorporated
Registered Office
Place of
incorporation
Principal
activity
Interest in subsidiary undertakings
Fox Marble Limited
100%
3 August 2012
Fox Marble Kosova Sh.P.K
100%
11 December 2012
Rex Marble Sh.P.K
100%
3 August 2012
H&P Sh.P.K
100%
3 August 2012
160 Camden High
Street, NW1 0NE
Garibaldi 1/2,
Pristina:,
Bulevardl Ddshmoret
e Kombit, Nr.72lA-7,
Pristina
Bill Klinton n36,
Pristina
England & Wales
Operating Company
Kosovo
Operating Company
Kosovo
Kosovo
Holding of licences
& rights
Holding of licences
& rights
Holding of licences
& rights
Granit Shala Sh.P.K
100%
3 August 2012
Banje, Istog
Kosovo
Fox Marble Asia Limited
51%
7 November 2016
Stone Alliance LLC
59%
13 April 2015
Gulf Marble Investments
Limited
Gulf Marble Investments
Limited
100%
8 October 2018
100%
8 October 2018
Fox Marble FZC
34%
2 September 2018
Fox Marble India Private
Limited
49%
18 October 2018
England & Wales
Dormant
United States
Dormant
United Arab Emirates
Holding of licences
& rights
England & Wales
Dormant
United Arab Emirates
Sales activity
India
Sales activity
160 Camden High
Street, NW1 0NE
1209 Orange street,
Wilmington,
Delaware 19801
PO Box 37172,
Dubai, UAE
160 Camden High
Street, NW1 0NE
PO Box 932, Emirate
of Ajman
2A Floor, Grd Plot-
759 A Jyoti Sadan,
Sitaladevi Temple
Road, Mahim
All the shareholdings in subsidiary and associate undertakings comprise ordinary shares. Fox Marble Kosova Sh.P.K,
Rex Marble Sh.P.K, H&P Sh.P.K and Granit Shala Sh.P.K are held via the Company’s shareholding in Fox Marble
Limited. Interest in Gulf Marble Investments Limited (UK) is held via the Company’s shareholding in Gulf Marble
Investments Limited (UAE). All subsidiary undertakings are included in the consolidation.
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There are no significant restrictions on the Company’s ability to access or use the assets and settle the liabilities of
the group, to transfer cash or assets from other entities within the group or other requirements that may restrict
dividends and other capital distributions being paid, or loans and advances being made or repaid, to (or from) other
entities within the Group.
Fox Marble Limited is exempt from the requirements of the Companies Act 2006 relating to the audit of individual
accounts by virtue of s479A of the Companies Act 2006 for the year ended 31 December 2019.
Non-controlling interests
There are no non-controlling interests in subsidiary undertakings that are considered material to the group in the
year ended 31 December 2019 (2018 – nil), as the entities remain dormant. There were no transactions with
non-controlling interests in the year ended 31 December 2019 (2018 – nil).
24. Related party transactions
The executive directors are also considered key management as defined by IAS 24 ‘Related Party Disclosures
(revised 2009)’. The remuneration of key management is considered in note 8. The consultancy fees paid as
compensation to Chris Gilbert is in part paid via Rockmasters Limited a company wholly owned by him. The balance
outstanding to Rockmasters Limited at 31 December 2019 is €7,976 (2018 – nil).
As at 31 December 2019 the Group has accrued €285,583 due to directors of the Company in respect of fees due
to them (2018 – €213,727). As at 31 December 2019 the Company has accrued €212,670 due to directors of the
Company in respect of fees due to them (2018 – €132,948). As at 31 December 2019 there is €4,890 payable
(2018 – €16,843) to directors of the Company as repayment for corporate and travel expenses incurred on behalf
of the Company.
The Company only financial statements of Fox Marble Holdings plc include amounts receivable from its subsidiary
undertaking Fox Marble Limited of €14,541,805 (2018 – €22,019,753). Amounts provided to Fox Marble Limited
relate to the provision of funding for operations and capital expenditure.
The Company and Group have receivables from directors and former directors of the Company of €26,572
(2018 – €48,106) relating to the issue of share capital on the 31 August 2011. Included in trade and other
receivables is €202,631 due from Fox Marble FZC, a related party in which Fox Marble Holdings Plc owns 34% of the
issued share capital.
Included in borrowings due to the Company is £75,000 due to Andrew Muir who is related party of the Company by
virtue of his shareholding in the Company.
On the 4 April 2019 the Company announced that it had conditionally acquired Green Power Sh.P.K and Scope
Sh.P.K. More details on these transactions can be found in note 26. Florije Rrustemi has a beneficial interest in Green
Power and Scope. Florije Rrustemi is the wife of Naim Rrustemi – a director of Fox Marble Kosovo Sh.P.K (“FMK”).
FMK is a wholly owned subsidiary of Fox Marble Limited (“FML”) and FML is a wholly owned subsidiary of the
Company. The Transactions are therefore related party transactions pursuant to the AIM Rules. The Directors of the
Company, none of whom have an interest in the Transactions believe that the terms of the Transactions, having
consulted with the Company’s nominated adviser, are fair and reasonable insofar as shareholders are concerned.
This transaction was subsequently suspended and is now the subject of litigation, as discussed in note 30.
25. Commitments
(a) Capital commitments
Capital expenditure contracted for but not yet incurred at the end of the reporting year was nil (2018 – Nil).
As at 31 December 2019 the Group had capital equipment deposits of €148,750 (2018 – €148,750) which are
expected to be capitalised into property plant and equipment in 2020.
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(b) Lease commitments
The Group leases office space and warehousing showroom space under non-cancellable operating lease agreements.
Lease terms are between one and five years. The future aggregate minimum lease payments under non-cancellable
operating leases are as follows:
Year ended Year ended
31 December 31 December
2019 2018
€ €
Expiring within one year 26,609
Expiring within one to five years 225,625 –
225,625 26,609
26. Business Combinations
Gulf Marble Investments Limited
On 8 October 2018 the Company acquired 100% of the share capital of Gulf Marble Investments Limited (Dubai) its
joint venture partner based in the Prilep Alpha Quarry in North Macedonia, including all the rights attached to that
Company.
On 4 July 2013 Fox Marble announced the acquisition of quarry rights in Prilep Alpha in North Macedonia. Under the
terms of the original agreement, Gulf Marble Investments Limited provided the funds to acquire the licence to the
site and capital investment amounting to €1.8 million, and then entered into an operating agreement with Fox Marble
to operate the quarry. In compensation Gulf Marble Investments Limited was provided with a royalty amounting to
40% of the gross revenues received from the sale of its block marble from the quarry.
Through the acquisition of 100% of the share capital of Gulf Marble Investments Limited, Fox Marble has acquired
the direct sub-licence to the Prilep alpha quarry eliminating the 40% gross revenue royalty that was payable under
the original agreement, as well as all the assets and capital equipment held by Gulf Marble investments Limited.
As consideration for the acquisition Fox Marble has issued an Unsecured Convertible Loan Note (“Loan Note”) in the
amount of €1.785 million. 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 is repayable from the 1 October 2020.
The Loan Note carries an interest rate of Libor plus 1.5% payable annually in arrears. Further details are included
in note 18. At inception the fair value of this loan is €1,682,933.
The acquisition has been accounted for under IFRS 3 ‘Business Combinations’ using the acquisition method.
Fair value
€
Fair value of consideration issued
Loan note issued 1,516,410
Embedded derivative 166,523
1,682,933
The assets and liabilities recognised as a result of the acquisition are as follows:
Fair value
€
Plant and equipment 213,469
Goodwill 84,504
Intangible asset – mining licence (note 13) 1,469,464
Deferred tax liability (84,504)
Net assets acquired 1,682,933
The intangible asset relates to the mining licence owned by Gulf Marble Investments Limited (Dubai). To determine
the fair value of the mining licence management used a discounted cash flow model to estimate the expected future
cash flows of the quarry, based on the estimates of future production and sales prices, operating costs and forecast
capital expenditures over the remaining period of the licence. A post tax discount rate of 10% has been applied to
discount future cash flows.
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The goodwill arising on the completion of the transaction, amounting to €84,504 (2018 – €84,504) is equal to the
technical deferred tax liability which arises on the difference between the assigned fair value of the acquired assets
and liabilities on consolidation and their fair value tax base in accordance with IFRS 3.
Acquisition-related costs of €13,489 (2018 – €13,489) are included in administrative expenses in the income
statement and in operating cash flows in the statement of cash flows.
The acquired business contributed a net loss of €41,438 (2018 – €9,327) to the group for the period from 8 October
2018 to 31 December 2018. If the business had been acquired at 1 January 2018 the impact on revenue would be
nil and the net loss would have been €37,308.
Provisional fair values recorded and disclosed in the year ended 31 December 2018 and no changes to those figures
have been made in the year ended 31 December 2019.
Green Power Sh.P.K and Scope Sh.P.K
On 4 April 2019 Fox Marble, announced that it had conditionally agreed to acquire Green Power Sh.P.K (“Green
Power”) the licence holder of the Maleshevë quarry and Scope Sh.P.K. (“Scope”), a company through which Fox
Marble has entered into two hire purchase agreements (the “Acquisitions” or “Transactions”).
Fox Marble had conditionally acquired the entire share capital of Green Power, for a consideration of £1,000,000 to
be satisfied by the issue of 13,000,000 new ordinary shares in the Company at a price that equates to 7.69 pence
per share. The Company had conditionally agreed to acquire the entire issued share capital of Scope for a
consideration of £300,000 to be satisfied by the issue of 3,000,000 new ordinary shares in the Company at a price
that equates to 10 pence per share.
The acquisitions were conditional, inter alia, on shareholders approving certain resolutions at the 2019 Annual
General Meeting of the Company relating to authorities to issue new ordinary shares in the Company.
On 26 June 2019, the sellers of Green Power Sh.P.K (“Green Power”) and Scope Sh.P.K (“Scope”) reneged on the
agreement for Fox Marble to purchase these assets. Since this date the Company has begun civil litigation against
the owners of Green Power and Scope to enforce the agreement. Further more as announced on the 4 September
2019 the launched an arbitration claim in the London Court of International Arbitration (“LCIA”) for damages in
excess of €195 million against the Republic of Kosovo, as a result of their clear failure to protect Fox Marble’s rights
over their Maleshevë quarry.
As at 31 December 2019 the Company has not accounted for the acquisition of either Green Power or Scope, pending
resolution of the litigation referred to above.
27. Investments
Company: 2019 2018
€ €
Shares in subsidiary undertakings 3,711,127 3,711,127
Loans to subsidiary undertakings 14,541,805 22,019,753
18,252,932 25,730,880
An impairment charge of €9,468,513 in the carrying value of the investment in Fox Marble Limited was recognised
in the year ended 31 December 2019 (2018 – nil).
28. Changes in accounting policies
This note explains the impact of the adoption of IFRS 9 on the group’s financial statements in the year ended
31 December 2018. IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of
financial assets and hedge accounting.
The adoption of IFRS 9 from 1 January 2018 resulted in changes in accounting policies and adjustments to the
amounts recognised in the financial statements. The new accounting policies are set out in note 3 above. In
accordance with the transitional provisions of IFRS 9, comparative figures have not been restated and a simplified
modified retrospective has been adopted which means that the impact of adoption has been reflected in opening
retained earnings at 1 January 2018.
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2018
€
Closing retained earnings at 31 December (22,823,182)
Increase in provision for trade receivables (34,094)
Opening retained 1 January (22,857,276)
Further details on the provision for trade receivables is found in note 22.
IFRS 15 was adopted in full from 1 January 2018 but did not result in any adjustments to the financial statements.
IFRS 16 was adopted in full from 1 January 2019 but did not result in any adjustments to the financial statements.
The exemption from retrospective application was taken in the adoption of IFRS 16.
29. Controlling Parties
There is no controlling party. Chris Gilbert and Dr Etrur Albani are deemed to be acting in concert for the purposes
of the City Code, and who as at 28 September 2020 control 14.22 % of the share capital of the Company.
30. Contingent Liabilities
The Company has launched Civil Proceedings against the owners of Green Power Sh.P.K in Kosovo for breach of
contract for the sale of Green Power and the pre-existing operating contract for the M3 quarry.
Should the Company be unsuccessful in asserting its rights over the M3 quarry it will incur a direct loss of €119,424,
due to investments made in the power installation at the M3 quarry with a carrying value in the accounts of €64,424,
and deposit paid for quarry reconditioning of €55,000.
On 4 September 2019 Fox Marble launched United National Commission on International Trade Law (UNCITRAL)
arbitration proceedings, against the Republic of Kosovo for damages in excess of €195 million, as a result of the
failure of the State to protect Fox Marble’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 Fox Marble being prevented from operating the Maleshevë quarry. Since the dispute
arose Fox Marble 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), Fox Marble has been prevented from asserting its rights in
these matters.
Despite the cumulative weight of evidence, Fox Marble 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 Fox Marble.
The Company is represented by its legal advisers, Stephenson Harwood LLP, as well as its Kosovan lawyers.
Mermeren Kombinat AD launched proceedings against the Company claiming that the Company’s use of the name
of Sivec for the marble produced at its quarries in Prilep, North Macedonia was in breach of trademark they held.
On 14 June 2017, the Intellectual Property and Enterprise Court held that the use of the name SIVEC by Fox Marble
Holdings plc was an infringement of Mermeren Kombinat AD’s EU trade mark. Damages awarded are still being
assessed by the Court but are not expected to be material.
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31. Events after the reporting period
On 27 May 2020, the Company announced its intention to raise £0.8 million (before expenses) by the placing of
45,714,292 new Ordinary Shares at a price of 1.75 pence per share to existing and new investors. In connection
with the placing 22,857,146 warrants were issued to the placees at a price 3.5 pence which may be exercised for
18 months following the date of Admission. The Warrants will not be admitted to trading on AIM or any other stock
market and are not transferable.
The Company has reached agreement with the holders of £2.1 million of its CULNs. Under this agreement the
Company will replace the eight existing series of CULNs with a new single class of CULN which will have a maturity
date of 1 December 2026 and will be convertible at any date from 1 June 2020 at a conversion price of 5p per share.
The interest rate of the new CULN is 2% per annum payable half yearly on 1 June and 1 December.
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Notice of General Meeting
NOTICE IS HEREBY GIVEN that General Meeting of Fox Marble Holdings plc (“the Company”) will be held at its
registered offices of 160 Camden High Street, London NW1 0NE at 9.00am on 29 October 2020 to consider, and if
thought fit, to pass the following ordinary resolution.
1. To receive the annual report and financial statements for the year ended 31 December 2019.
By order of the Board
Ben Harber
Company Secretary
30 September 2020
Registered office: 160 Camden High Street, NW1 0NE, London, United Kingdom
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Notes
1. Right to attend, speak and vote
If you would like to attend, speak and vote at the GM you must be on the Company’s register of members at 9.00 am
on 29 September 2020. This will allow us to confirm how many votes you have on a poll. Changes to the entries in
the register of members after that time, or, in the event of any adjournment, close of business on the date which is
48 hours (excluding non-working days) before the time of any adjourned meeting, shall be disregarded in
determining the rights of any person to attend, speak or vote at the AGM.
2. Appointment of proxies
If you are a member of the Company you may appoint one or more proxies to exercise all or any of your rights to
attend, speak and vote at the meeting on your behalf. You may only appoint a proxy using the procedures set out
in these notes and in the notes on the proxy form, which you should have received with this notice of meeting.
A proxy need not be a member of the Company but must attend the meeting to represent you. Details of how to
appoint the Chairman of the meeting or another person as your proxy using the proxy form are set out in the notes
on the form. If you wish for your proxy to speak on your behalf at the meeting you will need to appoint your own
choice of proxy (not the Chairman) and give your instructions directly to them.
You may appoint more than one proxy in relation to the AGM provided that each proxy is appointed to exercise the
rights attached to a different share or shares which you hold. If you wish to appoint more than one proxy you may
photocopy the proxy form or alternatively you may contact the Company Secretary, Ben Harber, 60 Gracechurch
Street, London EC3V 0HR.
3. Appointment of proxy using hard copy proxy form
The notes to the proxy form explain how to direct your proxy, how to vote on each resolution or withhold their vote.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or
against the resolution. If you do not indicate on the proxy form how your proxy should vote, they will vote or abstain
from voting at their discretion. They will also vote (or abstain from voting) as they think fit in relation to any other
matter which is put before the meeting.
To appoint a proxy using the proxy form, the form must be completed, signed and received by the Company
Secretary no later than 48 hours (excluding non-working days) before the meeting. Any proxy forms (including any
amended proxy forms) received after the deadline will be disregarded.
The completed form may be returned by any of the following methods:
•
•
Sending or delivering it to Ben Harber at 60 Gracechurch Street, London EC3V 0HR
Scanning it and sending it by email to ben.harber@shma.co.uk
If the shareholder is a company, the proxy form must be executed under its common seal or signed on its behalf by
an officer or attorney. Any power of attorney or any other authority under which the proxy form is signed (or a duly
certified copy of such power or authority) must be included with the proxy form.
4. Appointment of proxy by joint members
In the case of joint holders, where more than one joint holder purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of
the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being
the most senior).
5. Changing your instructions
To change your proxy instructions simply submit a new proxy form using the methods set out above. The amended
instructions must be received by the Company Secretary by the same cut-off time noted above. Where you have
appointed a proxy using a hard copy proxy form and would like to change the instructions using another hard copy
proxy form, please contact the Company Secretary on telephone number +44 (0) 207 264 4366. If you submit more
than one valid proxy form, the one received last before the latest time for the receipt of proxies will take precedence.
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6. Termination of proxy appointments
In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice
clearly stating your intention to revoke your proxy appointment to Ben Harber 60 Gracechurch Street, London
EC3V 0HR. Alternatively you may send the notice by email to ben.harber@shma.co.uk In the case of a member
which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an
officer or attorney. Any power of attorney or any other authority under which the revocation notice is signed (or a
duly certified copy of such power or authority) must be included with the revocation notice.
In either case, your revocation notice must be received by the Company Secretary no later than 48 hours (excluding
non-working days) before the meeting. If your revocation is received after the deadline, your proxy appointment will
remain valid. However, the appointment of a proxy does not prevent you from attending the meeting and voting in
person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically
be terminated.
7. Communications with the Company
Except as provided above, members who have general queries about the meeting should telephone the Company
Secretary on +44 (0) 207 264 4366 (no other methods of communication will be accepted). You may not use any
electronic address provided either in this notice of general meeting; or any related documents (including the
Chairman’s letter and proxy form), to communicate with the Company for any purposes other than those expressly
stated.
8. Issued shares and total voting rights
As at 5.00pm, on the day immediately prior to the date of posting of this notice of meeting, the Company’s issued
share capital comprised of 308,372,214 ordinary shares of 1p each. Each ordinary share carries the right to one vote
and therefore, the total number of voting rights in the Company at that time was 308,372,214.
Explanation of Resolutions
The Company’s General Meeting will be held at 9.00 am on 29 October 2020 at their registered office 160 Camden
High Street, London, NW1 0NE. The Notice of Meeting is set out on page 78 of this document. Details of resolutions
to be considered at the meeting are given below.
Resolutions 1 is proposed as an ordinary resolution, which means that for the resolution to be passed, more than
half (50%) of the votes cast must be in favour of the resolution.
Annual report and accounts (resolution 1)
Shareholders will be asked to receive and adopt the audited financial statements of the Company for year ended
31 December 2019 and the Directors’ Report and Auditors’ Report on those accounts, which have been posted to
shareholders with this Notice.
Fox Marble Holdings Plc Annual Report
& Financial Statements
2019
sterling 174207
174207 Fox Marble Holdings - Annual Report Cover_174207 Fox Marble Holdings - Annual Report Cover 01/10/2020 19:44 Page 3
174207 Fox Marble Holdings - Annual Report Cover_174207 Fox Marble Holdings - Annual Report Cover 01/10/2020 19:44 Page 1
FOX MARBLE
HOLDINGS PLC
ANNUAL REPORT
& FINANCIAL STATEMENTS
Fox Marble Holdings Plc
15 Kings Terrace,
London, NW1 0JP
Tel: +44 (0) 207 380 0999
www.foxmarble.net
2019