Fox Corporation
Annual Report 2020

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FOX MARBLE HOLDINGS PLC ANNUAL REPORT & FINANCIAL STATEMENTS 2020 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 2 0 PAGE | 1 Index Index ................................................................................................................................................... 1 Introduction .......................................................................................................................................... 3 Chairman’s statement ............................................................................................................................. 4 Strategic Report ..................................................................................................................................... 6 Directors ............................................................................................................................................... 17 Report of the Directors ........................................................................................................................... 19 Corporate Governance Report .................................................................................................................. 23 Report of the Audit Committee................................................................................................................. 28 Statement of directors’ responsibilities in respect of the financial statements ................................................. 31 Independent auditor’s report to the members of Fox Marble Holdings Plc ...................................................... 32 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 ....................................................................................................................... 76 PAGE | 2 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 2 0 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 2 0 PAGE | 3 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 2020 • • • • • • • During the year the Group signed a number of significant new contracts to supply marble to large scale municipal and private projects in Kosovo. These include projects to supply stone to Suhareka and Podujeva town centres, as well as contracts to provide stone to large scale building developments, such as C&C apartments. These projects are expected to be completed over 2021 and 2022. Significant increase in factory processing rates with 29,737 square metres of slabs processed (2019 – 10,349 square metres) and over 24,000 square metres of tile and cut to size material processed (2019 – 8,882 square metres). Total production of 6,060 tonnes of marble at the Prilep Alpha and Cervenillë quarries (2019 – 14,370 tonnes) following stoppages due to COVID-19. Production was restarted in September 2020 in Cervenillë quarry due to demand for Grigio Argento material for the processed marble contracts. Revenue for the year of €0.7 million (2019 – €1.4 million). Revenue from the sale of processed marble increased 224% to €0.6 million (2019 – €0.1 million) driven by a number of large-scale contracts signed for projects in Kosovo. Revenue from the sale of block marble fell to €0.1 million from €1.2 million as a result of the impact of the COVID-19 pandemic on the marble market. Operating loss for the year of €2.6 million (2019 – loss of €2.3 million). Loss for the year of €2.8 million (2019 – loss of €2.5 million). Adjusted EBITDA of €1.4 million (2019 – €1.6 million). In June 2020, the Company completed a placing raising £0.8m before expenses to provide working capital in the face of the unfolding COVID-19 pandemic. Furthermore the Company reached agreement with the holders of £2.1 million of its cumulative unsecured loan notes (“CULNs”). Under this agreement the Company has replaced the eight existing series of CULNs with a new single class of CULN which have a maturity date of 1 December 2026 and are convertible at any date from 1 June 2020 at a conversion price of 5 pence per share. The interest rate of the new CULN is 2% per annum payable half yearly on 1 June and 1 December. The Company continues to carefully manage its working capital. Highlights year to date 2021 • • Contract signed for the next stage of the Podujeva project, and new projects in Kamenice and Mitrovice. The Company now has contracts in place to supply €1.6 million of processed material over 2021 and 2022. Appointment of Dentons Europe CS LLP and Samuel Wordsworth QC and secured funding to bring the €195 million arbitration case against the Republic of Kosovo to its conclusion. PAGE | 4 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 2 0 Chairman’s statement Dear Shareholders, It has been a very challenging year in exceptional circumstances, but I believe Fox Marble has demonstrated its resilience and agility, in protecting our employees and sustaining our operations. The marble industry, like many industries has been hit hard by the COVID-19 pandemic. The international block market which requires travel to physically inspect blocks, which formed the majority of our trade in 2019, suffered significant setbacks. In the face of these challenges Fox Marble has focused on securing working capital, restructuring its debt obligations, and growing its processed marble trade within Kosovo. Our primary focus during this period has been ensuring the health and wellbeing of our employees, customers and suppliers through observing strict Covid 19 protocols, including social distancing, hygiene measures and closure or limited working of operations during peak periods of infections. The factory capacity and sale of processed marble has been a significant highlight of this year. The Group has secured several large-scale municipal and non-municipal contracts within Kosovo. It has used targeted capital spending to increase rates of tile processing in the factory. Together these have increased sales of processed marble by over 200%. Since year end, the Group has continued to win new contracts in the region and now has a solid order book for the factory expected to be realised through 2021 and 2022. The sale of block marble has been significantly impeded by the COVID-19 pandemic and there continues to be significant downward pressure on pricing, as the industry deals with ongoing repercussions. Whilst we expect block sales to see some recovery in 2021 as travel opens up, we do not expect a return to pre-pandemic levels for some time. Lockdowns and travel restrictions put additional pressure on our operations as they went through the phases of temporary shutdowns and the subsequent re-opening and ramp-up of operations. Operating losses for the year increased to €2.6 million (2019 – €2.3 million), driven by lower sales and a higher than usual stock provision recognised of €0.9 million (2019 – €0.3 million), driven by pressure on pricing. Fox Marble continues to examine opportunities to grow its marble reserve base and is currently examining potential sites in Kosovo. COVID-19 restrictions as well as elections in Kosovo have slowed progress in assessing these sites, however the Group continues to keep an eye on its long-term development. Our Arbitration case brought against the government of Kosovo has progressed since December 2020 with the appointment of Dentons CS LLP as solicitors and Sam Wordsworth as QC. We expect to announce the appointment of our Arbitrator within the next few months, which will be a significant step in proceedings. The Stone Alliance project remains part of the Group’s long term plan, but progress on this matter is currently dependent on the outcome of the arbitration proceedings. Sales at the start of 2021 have continued to be affected by Covid-19 as well as recent elections in Kosovo that have delayed approval of municipal funds to projects, and have been lower than initial expectations. However, work on the municipal contracts announced so far began in earnest in May 2021 and we expect to see significant growth through the second half of the year. We have contracts for the supply of processed marble of €1.6 million in Kosovo alone, together with a strong pipeline of future opportunities. The Company will be carefully considering how capacity can be grown at the processing factory to allow us to take full advantage of these opportunities. Our cash position as at 30 May 2021 was €0.8 million, including €0.4 million of litigation funding. Through what has been a very tough year we continue to monitor and control working capital. The Board has carefully considered it responsibilities around assessment of going concern, and consider the going concern assumption is appropriate. In doing so the Board has considered its forecasts, the pipeline of sales and its ability to raise further funds if necessary. We note that the Company has a loan note of €1.8 million due by 8 August 2021 and to which the Company is currently in the process of negotiating an extension. We are confident that we can secure this concession, and that if such an extension cannot be secured we believe we have sufficient alternative options available to us to ensure that our obligations are met. Further details on the judgments involved can be found on page 21. 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 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 2 0 PAGE | 5 Reports Pages 6 to 16 comprise the Strategic report, pages 19 to 22 the Report of the Directors and pages 23 to 27 the Corporate Governance Report, 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. 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. PAGE | 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 2 0 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 ç Figure 1 – Podujeva Project Processed marble sales Sales of processed marble have increased to €0.6 million from €0.2 million in 2019, of which €0.45 million occurred in H2 2020. A number of new contracts were signed for processing services and processed marble which formed the backbone of sales through the end of 2020 and are expected to continue into 2021. • • The Suhareka square in Kosovo contract, announced on 14 April 2020, to supply up to 20,000 square metres of paving. 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, as announced on 13 May 2020. Fox Marble has supplied over 10,000 sqm of material since June 2020. To date the Company has supplied in excess of €0.3 million of material on this project. A contract to supply 20,000 square metres of cut and finished paving tiles for installation in the town square for the Municipality of Podujeva in Kosovo, announced on 30 July 2020. Fox Marble began supplying material for this project in August 2020 and has supplied over 4,000 square metres of material to date. The Company 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 2 0 PAGE | 7 received confirmation of Phase II of the project in January 2021, and the total value of this contract is around €700,000 over 2020 and 2021, as announced on 30 July 2020 and a further update announcement released by the Company on 4 February 2021. • • A contract to supply 35,000 square metres of cut and polished tiles to CC Apartments LLC, was announced on 23 June 2020. 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. The total value of the contract is in excess of €700,000. A contract to supply 6,500 square metres of cut and finished paving tiles for installation in the town square for the Municipality of Kamenica in Kosovo. 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. The total value of the contract is in excess of €160,000. Block sales Sales of block marble have fallen significantly in 2020 from €1.2 million in 2019 to €0.1 million in 2020 due to the impact of COVID-19 on block marble sales. 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. The Prilep quarry was reopened in August 2020 and the board will continue to watch the progress on the block market closely. As travel restrictions lift in 2021, the Group expects to see growth in block sales. However, the impact of the COVID- 19 pandemic has caused significant pressure on pricing, as marble companies try to offload excess stock and raise working capital. Furthermore, the disruption to global shipping, which has significantly increased the cost of shipping, has dampened the demand for marble blocks. As such whilst we expect to see growth in the sales of block marble in 2021, we do not expect a return to normality for some time. Figure 2 – Finishing work in the factory PAGE | 8 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 2 0 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. In 2020, Fox Marble has focused on developing the 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 were manufactured by Simec Srl and Garcia Ramos SA and with the existing Gravellona Machine Marmo CNC machine has doubled 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 COO/GM Sales. The machines, and procedural improvements implemented have helped drive an increase in processing volumes from 2019 to 2020. The factory processed 29,737 square metres of slabs in 2020 (2019 – 10,349 square metres) and over 24,000 square metres of tile and cut to size material processed (2019 – 8,882 square metres). We continue to examine ways to increase levels of production and operating efficiency through 2021, despite COVID- 19 related restrictions. Figure 3 – Prilep Quarry 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 highly desirable white marbles, Alexandrian White and Alexandrian Blue. This is one of a small cluster of quarries, in the Stara river valley, overlooked by the Sivec pass. Quarrying operations were stopped in April 2020 as a result of the unfolding COVID 19 crisis. It was re-opened in August 2020, though to a limited level. Production in 2020 was 4,955 tonnes (2019 – 11,520 tonnes). A royalty of 35% of gross revenue is payable to the original licence holder of the quarry. The Company also has the rights to an additional adjacent quarry, Prilep Omega, which it acquired in 2014. The Company has not yet developed this quarry. 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 2 0 PAGE | 9 Cervenillë This site was the first of our quarries to be opened in November 2012. It is being exploited across three separate locations (Cervenillë A, B & C) from which red (Rosso Cait), red tinged grey (Flora) and light and darker grey (Grigio Argento) marble is being produced in significant quantities. The polished slabs from this quarry have sold well. The most noteworthy sales included those to St George PLC (Berkeley Homes) for the prestigious Thames riverside Chelsea Creek development in London. 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. Production was re-started in September 2020 to address the anticipated upcoming demand for Grigio Argento from existing and future contracts. Production in 2020 was 1,112 tonnes (2019 – Nil). Figure 4 – 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. PAGE | 10 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 2 0 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 Company’s 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.P.K. for breach of contract and damages, in addition to the wider Arbitration case launched against the Government of Kosovo, as announced in September 2019. Further details on the arbitration claim can be found below. Arbitration Proceedings On 4 September 2019, 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. On the 16 December 2020 the Company announced that it had engaged the services of Dentons CS Europe LLP to act on the Company’s behalf in its circa €195 million claim against the Republic of Kosovo. Dentons have agreed a fee arrangement which enables Fox Marble to bring the Arbitration through to its conclusion. The Company announced the appointment of the eminent British Barrister and Queens Counsel, Samuel Wordsworth QC of Essex Court Chambers on the 19 May 2021. He will work with Dentons Europe CS LLP, the world’s largest law firm by number of lawyers, in support of the Company’s €195M claim against the Republic of Kosovo. Financing Please refer to the Report of the Directors for the going concern assessment by the Directors. 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 2 0 PAG E | 11 COVID-19 Response The spread of Coronavirus (COVID-19) continues to have a significant impact across industries worldwide, including the marble extraction and processing market, given the changeable international travel and working restrictions in place in many countries. The Board’s highest priority is the continued wellbeing of its employees, customers and stakeholders both in the UK and Kosovo. Given the continued uncertainty on the potential impact and duration of the COVID-19 pandemic, the Board has taken pre-emptive steps not only to ensure the well-being of those affected, but also to best position the Company for future operations. 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. To date 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 quarries during 2020 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, and at Cervenillë in September 2020, prior to the normal winter stoppage. Whilst quarrying operations were temporarily suspended, the Company sought to eliminate all unnecessary expenditure and the Board offered to not take any salary or fees until operations resumed. 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 having been 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. Progress on the Stone Alliance is on hold pending the resolution of the arbitration proceedings. PAGE | 12 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 2 0 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 to gold veining. It 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. 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. 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 2 0 PAGE | 13 Results Key Performance Indicators 2020 2019 Number of operational quarries 4 4 Quarry production (tonnes) 6,060 14,370 Revenue €715,900 €1,422,872 Average recorded selling price (blocks per tonne) €120 €217 Average recorded selling processed (per sqm) €28 €28 EBITDA (€2,435,315) (€2,022,027) Operating loss for the year (€2,637,872) (€2,273,673) Loss for the year (€2,804,371) (€2,533,540) Expenditure on property, plant and equipment €89,503 €649,015 The Group recorded revenues of €715,900 in the year ended 31 December 2020 (2019 – €1,422,872). Revenues for the year fell as a direct result of the Covid-19 pandemic’s effect on block sales, partially offset by significant growth in the sale of processed marble. The Group incurred an operating loss of €2,637,872 for the year ended 31 December 2020 (2019 – €2,273,673). The operating loss reflects the fall in block revenues due to the impact of the COVID-19 pandemic. In addition, the Company has recognised an additional provision of €926,762 on the stock held by the Group due to the impact of the market disruption caused by the pandemic on block pricing. The average recorded selling price per sqm for processed material remained consistent with the prior year. The fall in the selling price per sqm for block material has been driven by the disruption of COVID 19 on the international block market. The Group incurred a loss after tax for the year ended 31 December 2020 of €2,804,371 (2019 – €2,533,540). Reconciliation of EBITDA to Loss for the year Year to Year to 31 December 31 December 2020 2019 € € Loss for the year before tax (€2,924,086) (2,533,540) Plus/(less): Net finance costs/(income) 286,214 259,867 Depreciation 158,751 207,850 Amortisation 43,807 43,796 EBITDA (2,435,315) (2,022,027) Plus/(less): Inventory provision 927,841 392,412 Share option charge 21,355 – (1,486,119) (1,629,615) 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. PAGE | 14 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 2 0 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 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 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 2 0 PAG E | 15 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 73. 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 21 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 EEC. The Board will continue to monitor the situation in order to address and mitigate associated risks as they arise. PAGE | 16 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 2 0 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 licence 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 4 June 2021 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 2 0 PAG E | 17 Directors Andrew Allner, Non-Executive Chairman Andrew is currently Non-Executive Chairman of Shepherd Building Group Ltd and SIG PLC. He was Non-Executive Chairman of Marshalls plc, and Go-Ahead Group plc and Non- Executive Director and Chairman of the Audit Committee 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. PAGE | 18 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 2 0 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 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 2 0 PAG E | 19 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 2020. 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 to 16. 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 2020 are set out on pages 39 to 74. The Group incurred an operating loss €2,637,872 for the year ended 31 December 2020 (2019 – €2,273,673). The Group incurred a loss after tax for the year ended 31 December 2020 of €2,804,371 (2019 – €2,533,540). 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 to 16. 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 2020 in the shares of the Company are given below. As at 31 December As at the date Director 2020 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 PAGE | 2 0 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 2 0 Significant Shareholders Fox Marble Holdings plc has been notified as of 28 May 2021 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 10.22% Premier Miton Group Plc 27,665,169 7.30% Dr Etrur Albani 22,472,254 5.93% Mr Chris Gilbert 21,384,456 5.64% Shailesh Patil 19,047,619 5.03% Artemis Investment Management LLP 13,495,807 3.56% Mr Dominic RN Redfern 12,038,888 3.18% Spreadex Ltd 11,422,305 3.06% 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 EU. The Board will continue to 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. 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 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 2 0 PAGE | 21 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 2020. Throughout 2020, all operations continued to implement safety plans, 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 2021, 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; PAGE | 2 2 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 2 0 (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. In August 2021 the Company is due to repay the existing €1.8 million Gulf Loan Note. The Company is already in discussion as to securing an extension to this loan note and is confident that it can secure such a concession, however at this point the arrangements have not yet been finalised. 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. Furthermore, the forecasts assume that sales of block marble will resume during 2021, 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 scenarios which management have considered that could impact the financial performance of the Company. These include: (a) The Company may not be able to secure an extension to the Gulf Marble Loan note, and the loan note may become payable in full or in part in August 2021. (b) 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; (c) Fulfilment of the Company’s order book could be delayed, or the payment of amounts due under such contracts could be delayed. (d) The continued progression of the Covid-19 may have a further detrimental impact on sales or on operations, and (e) The resumption of block sales to the international block market may be slower than expected. As at 31 May 2021 the Company had €0.8 million in cash including €0.4 million of restricted funds related to litigation funding. 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. On 1 May 2021, the Company entered into a facility arrangement of £1,000,000 at an interest rate of 9% per annum arranged by Brandon Hill Capital Limited, which may be drawn down at the Company’s request. This facility expires on 31 May 2022, and is undrawn at 31 May 2021. In addition to this the Company has agreed a further facility of £700,000 with a non-related party high net worth individual, that can be used if required. 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 4 June 2021 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 2 0 PAG E | 23 Corporate Governance Report The Board of Fox Marble Holdings plc has 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 2020 was the response of the Board to ongoing impact of COVID 19 on the business and wider industry. 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 ways: • • • 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. PAGE | 24 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 2 0 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. The following table shows the directors’ attendance at scheduled Board meetings, which they were eligible to attend during the 2020 financial year: Attendance at Attendance at Audit Committee Director Board Meetings Meetings Andrew Allner 8/8 2/2 Chris Gilbert 8/8 2/2 Fiona Hadfield 8/8 2/2 Roy Harrison OBE 7/8 2/2 Sir Colin Terry KBE CB DL 7/8 2/2 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 2 0 PAG E | 25 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 pages 17 and 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 advice on 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 18 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. 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. PAGE | 2 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 2 0 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 28. 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. 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 2 0 PAGE | 27 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. PAGE | 2 8 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 2 0 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 2020 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 17 and 18. 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 two times during the year ended 31 December 2020 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 2020, the Committee reviewed: • • the Group’ s Interim Report for the six months to 30 June 2020; and the Preliminary Announcement and Annual Report and Financial Statements to 31 December 2020. 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 2 0 PAGE | 29 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; 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 2020 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 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. 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 2020 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 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. PAGE | 30 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 2 0 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 2020 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 4 June 2021 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 2 0 PAGE | 3 1 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 accounting standards in conformity with the requirements of the Companies Act 2006and 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 international accounting standards in conformity with the requirements of the Companies Act 2006have 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 4 June 2021 PAGE | 32 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 2 0 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 2020 which comprise 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 significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006. 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 2020 and of the group’s and parent company’s loss for the year then ended; the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006; 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 In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting is described within the key audit matters section of this report. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality The materiality applied to the group financial statements as a whole was €110,500 (2019: €120,000) based on thresholds of 1.5% of net 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 €66,300 (2019: €72,000). The threshold used for reporting unadjusted differences to the audit committee was €5,525 (2019: €6,000). 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 2 0 PAG E | 3 3 The materiality applied to the parent company financial statements was €99,450 (2018: €108,000) based on a threshold of 1.5% of net assets but capped at 90% of group materiality. The 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 €59,670. Whilst materiality for the group financial statements as a whole was set at €110,500, component materiality for the significant components in Kosovo and the UK was set at €84,300 and €91,250 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 €50,580 and €54,750 respectively. Our approach to the 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. In addition to going concern, described in the Material uncertainty related to going concern section above, we determined the matters described below to be the key audit matters to be communicated in our report. PAGE | 34 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 2 0 Key audit matter How our scope addressed this matter Going concern (refer Note 3 and 4) In their assessment of whether the going concern basis of accounting should be applied in preparing these financial statements, management have considered a number of events and conditions which are disclosed within note 4 to these financial statements. There is a risk that these events and conditions, individually or collectively, may cast significant doubt on the group's or parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our work included: • • • • • • • checking the mathematical accuracy of the spreadsheet used to model future financial performance, agreed the underlying cash flow projections to management-approved forecasts, recalculating liquidity headroom for the base case scenario; reviewing the sales order book and reconciling to the assumptions used in preparing the forecasts; evaluating the assumptions used in the sensitised forecasts for a reduction in factory operations, continued disruption to block sales and increased quarry costs; assessing the impact of the mitigating factors available to management in respect of the ability to restrict expenditure, re-negotiate the terms of borrowings and to raise additional funds; obtaining commitments from Brandon Hill and a high net worth individual to provide a short term facility (see key observation below); verification of receipt of the post year end fund raise and vouching of the cash balance at 31 May 2021 to bank statements; and assessing whether management has adequately disclosed the conditions which cast significant doubt on the ability of the Group and Company to continue as a going concern in the financial statements. Key observation We noted the Gulf Marble convertible loan notes fall due within the going concern period and while management consider they will successfully re- negotiate the repayment terms to a date more than 12 months from the date of approval of these financial statements, they have not yet reached such agreement with the note holders. In the event that an agreement is not reached, the group has mitigated the impact on going concern by reaching agreement with their brokers, Brandon Hill Capital, and a high net worth individual to provide a short term facility of £1million and €800k respectively, which will enable the group to satisfy the repayment of the loan notes when they fall due. In addition, the directors will consider implementing the other mitigating actions as disclosed in note 4 if required. 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 2 0 PAG E | 3 5 Valuation of inventory (refer Note 3 and 15) Inventory has a carrying amount of €3.0m in the financial statements as at 31 December 2020. 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 25.1% of the Group’s total assets at 31 December 2020) 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; • Assessed management’s provisioning methodology and re-performed the assessment to ensure the provision is not understated; and • Review of the relevant component auditor working papers and responses to our component audit instructions who validated the cost inputs to the weighted average cost calculation to source documentation. Key observation - Maleshevë quarry Inventory with a carrying value of €835,369 is held at the Group’s Maleshevë quarry site, which as described in notes 15 and 27 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 to be reasonable and the related disclosures appropriate. treatment PAGE | 36 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 2 0 Carrying value of intangible assets (refer Note 12) Intangible assets have a carrying amount of €2.8m in the financial statements as at 31 December 2020. 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 23% of the Group’s total assets at 31 December 2020) 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 IFRS 6 for exploration assets and IAS 36 for producing assets for evidence of impairment; • A review of the relevant 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; and • A review of the disclosures made in the financial statements for accuracy. In assessing the group’s ability to successfully operate the quarries to which the intangible assets relate, we have considered the financial resources required to do this. We draw attention to the material uncertainty related to going concern paragraph which states that the group is negotiating the repayment terms of convertible loan notes which fall due within the going concern period. If the group does not have available resources to develop the quarries into production, the require an intangible assets may associated impairment. These financial statements do not include the adjustments that would result if the group is not able to develop the quarries into production. Carrying value of net investment in subsidiaries (refer Note 25) How the scope of our audit responded to the key audit matter The parent company’s net in subsidiaries at 31 December 2020 is €19,282,372. 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 Director’s impairment review of the underlying assets. Our work included: • Reviewing the impairment indicators listed in IFRS 6 and 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. 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 2 0 PAGE | 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 contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 statement of directors’ responsibilities, 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 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. PAGE | 38 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 2 0 Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, application of audit knowledge and experience of the sector. Our audit procedures were designed to ensure the audit team considered whether there were any indications of non- compliance by the group and parent company with those laws and regulations. The group and parent company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation, mining legislation, and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. In addition, the group and parent company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: health and safety; various regulation around the mining and general environmental protection legislation; fraud; bribery and corruption; export control; Consumer Rights Act; and employment law recognising the nature of the group and parent company’s activities. Auditing standards limit the required audit procedures to identify non- compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. The identified actual or suspected non-compliance was not sufficiently significant to our audit to result in our response being identified as a key audit matter. We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the recognition of revenue, posting of unusual journals and manipulating the group’s alternative performance profit measures and other key performance indicators to meet externally communicated targets. As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non- compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. 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 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 2 0 PAGE | 3 9 Consolidated Statement of Comprehensive Income For the year ended 31 December Revenue Cost of sales Gross profit Note 2020 2019 € € 5 715,900 1,422,872 6 (559,358) (814,626) 156,542 608,246 Administrative and other operating expenses 6 (2,794,414) (2,881,919) Operating loss Finance costs Finance income Loss before taxation Taxation credit Loss for the year 6 (2,637,872) (2,273,673) 8 (456,786) (517,638) 9 170,572 257,771 (2,924,086) (2,533,540) 10 119,715 – (2,804,371) (2,533,540) Other comprehensive income – – Total comprehensive loss for the year attributable to owners of the parent company (2,804,371) (2,533,540) Earnings per share Basic earnings per share 11 (0.01) (0.01) Diluted earnings per share 11 (0.01) (0.01) The notes on pages 45 to 74 are an integral part of these financial statements. PAGE | 40 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 2 0 Consolidated Statement of Financial Position As at 31 December Assets Non-current assets Intangible assets Property, plant and equipment Total non-current assets Current assets Trade and other receivables Inventories Cash and cash equivalents Restricted cash Total current assets Total assets Current liabilities Trade and other payables Borrowings Total current liabilities Non-current liabilities Deferred tax liability Lease Commitments Borrowings Note 2020 2019 € € 12 2,793,135 2,836,942 13 4,818,716 5,088,344 7,611,851 7,925,286 14 1,152,317 1,182,685 15 3,041,278 3,928,397 21 337,741 578,417 21 39,937 – 4,571,273 5,689,499 12,183,124 13,614,785 16 1,560,865 1,199,376 17 1,841,493 1,929,696 3,402,358 3,129,072 10 84,504 84,504 18 260,481 220,721 17 2,799,128 2,524,721 Total non-current liabilities 3,144,113 2,829,946 Total liabilities Net assets Equity Called up share capital Share premium Accumulated losses 6,546,471 5,959,018 5,636,653 7,655,767 19 3,721,007 3,220,221 19 32,056,986 31,793,870 (30,283,485) (27,479,114) Share based payment reserve 20 106,602 85,247 Other reserve Total equity 35,543 35,543 5,636,653 7,655,767 The notes on pages 45 to 74 are an integral part of these financial statements. The financial statements on pages 39 to 74 were approved and authorised for issue by the Board on 4 June 2020 and are signed on its behalf. Chris Gilbert, Director 4 June 2021 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 2 0 PAGE | 4 1 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 Operating loss for the year Adjustment for: Amortisation Depreciation Disposal of PPE Note 2020 2019 € € (2,924,086) (2,533,540) 8 456,786 517,638 9 (170,572) (257,771) (2,637,872) (2,273,673) 12 43,807 43,796 13 420,693 648,133 28,571 – Equity settled transactions 21 21,355 – Provision for impairment of receivables 14 14,359 162,578 Provision for inventory Changes in working capital: 15 927,841 392,412 Decrease/(Increase) in trade and other receivables 14 135,723 (455,965) Increase in inventories 15 (40,721) (513,669) (Decrease)/increase in accruals 16 (46,807) 124,116 Increase/(decrease) in trade and other payables 16 424,324 (109,593) Net cash used in operating activities (708,727) (1,981,865) Cash flow from investing activities Expenditure on property, plant & equipment 13 (179,635) (649,715) Expenditure on rights of use assets – (23,736) Interest on bank deposits 9 189 1,437 Net cash used in investing activities (179,446) (672,014) Cash flows from financing activities Proceeds from issue of shares (net of issue costs) 19 763,904 2,371,425 Proceeds from the issue of long-term debt (net of issue costs) 17 – 609,696 Interest paid on loan note instrument 17 (76,470) (187,096) Net cash generated from financing activities 687,434 2,794,026 Net increase/(decrease) in cash and cash equivalents (200,739) 140,147 Cash and cash equivalents at beginning of year 578,417 438,270 Cash and cash equivalents at end of year including restricted cash 21 377,678 578,417 The notes on pages 45 to 74 are an integral part of these financial statements. PAGE | 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 2 0 Consolidated Statement of Changes in Equity Note Share Capital Share Premium Share based payment reserve 19 € 20 € € Other Accumulated Total Reserve losses equity € € € Balance at 1 January 2019 2,700,688 29,941,977 85,247 35,543 (24,945,574) 7,817,881 Loss and total comprehensive loss for the year Transactions with owners (2,533,540) (2,533,540) Share capital issued 519,533 1,851,893 – – – 2,371,426 Balance at 31 December 2019 and at 1 January 2020 Loss and total comprehensive loss for the year Transactions with owners Share options charge 3,220,221 31,793,870 85,247 35,543 (27,479,114) 7,655,767 (2,804,371) (2,804,371) 21,355 21,355 Share capital issued 500,786 263,116 – – 763,902 Balance at 31 December 2020 3,721,007 32,056,986 106,602 35,543 (30,283,485) 5,636,653 The notes on pages 45 to 74 are an integral part of these financial statements. Other reserves of €35,543 (2019 – €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. 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 2 0 PAG E | 4 3 Statement of Financial Position of the parent company As at 31 December Assets Non-current assets Investments Note 2020 2019 € € 25 19,313,372 18,252,932 Property, plant and equipment 13 189,861 235,883 Total non-current assets Current assets Trade and other receivables Cash and cash equivalents Restricted cash Total current assets Total assets Current liabilities Trade and other payables Borrowings Total current liabilities Non-current liabilities Borrowings Lease Liability 19,503,233 18,488,815 14 81,979 296,803 21 112,338 545,587 21 39,937 – 234,254 842,390 19,737,487 19,331,205 16 617,809 398,056 17 1,841,493 1,929,697 2,459,302 2,327,753 17 2,799,128 2,524,722 18 174,239 220,721 Total non-current liabilities 2,973,367 2,745,443 Total liabilities Net assets Equity Share capital Share premium Accumulated losses 5,432,669 5,073,196 14,304,818 14,258,009 19 3,721,007 3,220,221 19 32,056,986 31,793,870 (21,579,777) (20,841,329) Share based payment reserve 20 106,602 85,247 Total equity 14,304,818 14,258,009 The notes on pages 45 to 74 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 €738,448 (2019 – €10,116,971). The financial statements on pages 39 to 74 were approved and authorised for issue by the Board on 4 June 2021, and signed on its behalf. Chris Gilbert Director Company number: 07811256 PAGE | 44 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 2 0 Statement of Changes in Equity of the parent company Note Share based Share Capital Share Premium payment Accumulated Total reserve losses equity 19 € 20 € € € € Balance at 1 January 2019 2,700,688 29,941,977 85,247 (10,724,358) 22,003,554 Loss and total comprehensive income for the year Transactions with owners Share capital issued Balance at 31 December 2019 and at 1 January 2020 Loss and total comprehensive income for the year Transactions with owners Share options charge – – – (10,116,971) (10,116,971) 519,533 1,851,893 – – 2,371,426 3,220,221 31,793,870 85,247 (20,841,329) 14,258,009 (738,448) (738,448) – – 21,355 – 21,355 Share capital issued 500,786 263,116 – – 763,902 Balance at 31 December 2020 3,721,007 32,056,986 106,602 (21,579,777) 14,304,818 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 2 0 PAG E | 4 5 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 accounting standards in conformity with the requirements of the Companies Act 2006. 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, 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. PAGE | 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 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 2 0 PAG E | 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. 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 PAGE | 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 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 comprehensive income. Where a project does not lead to the discovery of commercially viable quantities of 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 2 0 PAG E | 4 9 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. PAGE | 50 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 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. 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 using the Black Scholes model 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. Tax credits in respect of research and development are recognised in the period in which the receipt of the tax credit is considered to be probable. 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 2 0 PAGE | 51 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 2020 was 1.1053 (31 December 2019 – 1.1815). The average Euro/Sterling exchange rate for the year ended 31 December 2020 was 1.123 (31 December 2019 – 1.139). 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 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. PAGE | 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 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. 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 €159,222 at 31 December 2020 (2019 – €6,125). The main assumptions used in the valuation of the derivative conversion option as at 31 December 2020 were: 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 2 0 PAG E | 53 underlying share price of £0.0250 (31 December 2019: £0.0245), EUR/GBP spot rate of 1.1053 (31 December 2019: 1.1815), historic volatility of 34% (31 December 2019: 53%) and risk free rate of 0.3% (31 December 2019: 1.9%) 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. New standards and interpretations not yet adopted (a) New standards, amendments and interpretations In the current year, the Group has applied the below amendments to IFRS Standards and Interpretations issued by the Board that are effective for an annual period that begins on or after 1 January 2020. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements (i) Amendments to References to the Conceptual Framework in IFRS Standards Together with the revised Conceptual Framework, which became effective upon publication on 29 March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. Not all amendments, however, update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the Standard have not been updated with the new definitions developed in the revised Conceptual Framework. The amendments, where they actually are updates, are effective for annual periods beginning on or after 1 January 2020, with early application permitted. (ii) Amendments to IAS 1 and IAS 8 Definition of material The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS Standards. The concept of ‘obscuring’ material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected to influence’. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term ‘material’ to ensure consistency. No other new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 January 2020 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. • • • • • • • IFRS 17 IFRS 10 and IAS 28 (amendments) Amendments to IAS 1 and IAS 8 Amendments to IFRS 3 Amendments to IAS 16 Amendments to IAS 37 Annual Improvements to IFRS Standards 2018-2020 Cycle Insurance Contracts Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Definition of material References to the Conceptual Framework Property, Plant and Equipment—Proceeds before Intended Use Onerous Contracts – Cost of Fulfilling a Contract Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture PAGE | 54 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 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. 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. In August 2021 the Company is due to repay the existing €1.8 million Gulf Loan Note. The Company is already in discussion as to securing an extension to this loan note and is confident that it can secure such a concession, however at this point the arrangements have not yet been finalised. 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 during 2021, 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 scenarios which management have considered that could impact the financial performance of the Company. These include: (a) (b) (c) the company may not be able to secure an extension to the Gulf Marble Loan note, and the loan note may become payable in full or in part in August 2021; 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; fulfilment of the Company’s order book could be delayed, or the payment of amounts due under such contracts could be delayed; (d) the continued progression of the Covid-19 may have a further detrimental impact on sales or on operations; and (e) the resumption of block sales to the international block market may be slower than expected. As at 31 May 2020 the Company has €0.8 million in cash including €0.4 million of restricted funds related to litigation funding. 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. On 1 May 2021, the Company entered into a facility arrangement of £1,000,000 at an interest rate of 9% per annum arranged by Brandon Hill Capital Limited, which may be drawn down at the Company’s request. This facility expires on 31 May 2022, and is undrawn at 31 May 2021. In addition to this the Company has agreed a further facility of £700,000 with a non related party high net worth individual that can be used if required. 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. 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 2 0 PAGE | 55 5. 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 €7,611,851 (2019 – €7,925,286), €4,309,546 (2019 – €4,262,651) relates to Property, Plant and Machinery acquired for the exploitation of assets in Kosovo and €433,702 (2019 – €588,902) relates to Property, Plant and Machinery acquired for the exploitation of assets in North Macedonia. Intangible assets held by the Group relate to intangible assets acquired in relation to mining rights and licences in North Macedonia of €2,633,424 (2019 – €2,674,866) and exploration and evaluation expenditure incurred in Kosovo of €75,207 (2019 – €77,572). Property, Plant and Machinery Intangible assets Kosovo 31 December 2020 € 4,309,546 75,207 Macedonia Other Total 31 December 31 December 31 December 2020 2020 2020 € € € 433,072 75,492 4,818,716 2,633,424 84,504 2,793,135 Total non-current assets 7,611,851 Property, Plant and Machinery Intangible assets 31 December 2019 € 4,262,651 77,572 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 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 €2,794,414 (2019 – €2,881,919) were costs incurred in the United Kingdom of €1,175,189 (2019 – €1,385,145). Of the net interest cost of the Group of €286,214 (2019 – €259,867) €279,002 is incurred in the United Kingdom (2019 – €259,867). 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 2020 2019 € € Revenue by territory Europe 662,305 883,271 Middle East – 148,976 China 53,595 390,625 Total revenue 715,900 1,422,872 PAGE | 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 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 2020 2019 € € Revenue by product Sale of block marble 154,606 1,219,618 Sale of processed marble 547,513 168,807 Provision of processing services 13,781 34,447 Total revenue 715,900 1,422,872 Revenue is recognised in a manner that depicts the pattern of the transfer of goods and services to customers. The amount recognised reflects the amount to which the Group expects to be entitled in exchange for those goods and services. Sales contracts are evaluated to determine the performance obligations, the transaction price and the point at which there is transfer of control. The transactional price is the amount of consideration due in exchange for transferring the promised goods or services to the customer, and is allocated against the performance obligations and recognised in accordance with whether control is recognised over a defined period or at a specific point in time. Block marble may be sold under a sales agreement with a customer or on a non-contractual basis. Sales agreements for block marble generally contain agreed pricing and minimum volume, through which customers can gain exclusivity within a given region. Block marble may be sold on an ex-quarry basis or free on board (FOB) basis. Revenue is recognised on the sale of block marble when control of the block marble is transferred to the buyer as the transfer of legal title, customer acceptance and an unconditional requirement to pay. The group derives revenue from the sale of blocks at a point in time. Processed marble may be sold on an as seen basis or may be cut to order. The Company may enter into contracts to supply a given volume of processed marble as specified by the client. Processed marble may be sold on ex-factory basis or may include transport to customers. Revenue in relation to larger projects may involve separately identifiable performance obligations. Such performance obligations may include the separate delivery of instalments of product in accordance with the contractual schedule. Where marble is cut to order the Group does not consider the provision of marble and the processing of marble as separate obligations, unless the client selects and takes title to specific block marble. The group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Consequently, the Group does not adjust any of the transaction prices for the time value of money. Group Year ended Year ended 31 December 31 December 2020 2019 € € Contractual basis 414,346 745,201 Non-contractual basis 301,554 677,671 Total revenue 715,900 1,422,872 The following table sets out financial assets and liabilities that relate to sales contracts the Group has entered into 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 2 0 PAGE | 57 Group Year ended Year ended 31 December 31 December 2020 2019 € € Trade receivables 189,448 142.216 Contract Liabilities (Advances received from customers) 293,360 313,582 6. Expenses by nature Group Year ended Year ended 31 December 31 December 2020 2019 € € Operating loss is stated after charging/(crediting): Cost of materials sold 559,358 814,626 Inventory provision 927,841 392,412 Fees payable to the Company’s auditors 73,979 76,050 Legal & professional fees 280,542 293,972 Consultancy fees and commissions 285,792 400,458 Staff costs 491,488 690,074 Operating lease rental – 16,424 Other head office costs 116,947 147,304 Travelling, entertainment & subsistence costs 28,340 106,194 Depreciation 158,751 207,850 Amortisation 43,807 43,796 Quarry operating costs 279,615 172,564 Foreign exchange (loss)/gain 16,802 (19,205) Share option charge 21,355 – Marketing & PR 3,807 47,690 Testing, storage, sampling and transportation of materials 59,671 94,858 Provision for bad debts 14,359 162,578 Sundry (income)/expenses (8,682) 48,900 Cost of sales, administrative and other operational expenses 3,353,772 3,696,545 The analysis of auditors’ remunerations is as follows: Group Year ended Year ended 31 December 31 December 2020 2019 € € Fees payable to the Company’s auditors and its associates for services to the group Audit of UK parent company 16,711 16,711 Audit of consolidated financial statements 42,763 44,834 Audit of overseas subsidiaries 14,505 14,505 Audit of UK subsidiaries Total audit services 73,979 76,050 7. Directors and Employees The employee benefit expenses during the year were as follows: Group 2020 2019 € € Wages and salaries 434,945 615,764 Social security costs 56,543 74,310 491,488 690,074 PAGE | 58 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 2 0 Company 2020 2019 € € Wages and salaries 121,449 136,768 Social security costs 15,912 9,684 137,361 146,452 The monthly average number employed during the year, including the Executive Directors, was: Group 2020 2019 Directors 5 5 Administration 9 9 Quarry and factory operations 46 55 60 69 Company 2020 2019 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 2020 2019 € € Salary 227,492 296,645 Consultancy fees – 76,393 Aggregate emoluments payable to directors 227,492 373,038 Group 2020 2019 € € Salary 132,600 136,768 Aggregate emoluments payable to directors 132,600 135,609 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 2020 and 2019 The highest paid director’s emoluments were as follows Group 2020 2019 € € Total amount of emoluments payable 66,300 148,279 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 2 0 PAGE | 59 Remuneration in respect of Directors was as follows: Year ended 31 December 2020 Executive directors Chris Gilbert(1) Fiona Hadfield Non-Executive directors Andrew Allner(2) Sir Colin Terry(2) Roy Harrison(2) 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) Salary Consultancy Fees Total € € € 58,611 – 58,611 36,281 – 36,281 94,892 – 94,892 66,300 – 66,300 33,150 – 33,150 33,150 – 33,150 132,600 – 132,600 227,492 – 227,492 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 (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. 8. Net finance costs 2020 2019 € € Finance costs Interest expense on borrowings 279,957 343,952 Net foreign exchange loss on loan note instrument – 171,235 Movement in the fair value of derivative (note 19) 153,096 – Interest payable on lease liabilities 23,733 2,451 456,786 517,638 PAGE | 60 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 2 0 9. Net finance income 2020 2019 € € Finance income Movement in the fair value of derivative (note 19) – 256,335 Net foreign exchange gain on loan note instrument 170,383 – Interest income on bank deposits 189 1,436 170,572 257,771 10. 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: 2020 2019 € € Reconciliation of effective tax rate Loss before income tax (2,924,086) (2,533,540) Tax calculated at domestic tax rates applicable to profits in the respective countries at a weighted average rate of 15.05% (2019 – 14.1%) 440,166 357,247 Tax effect of expenses that are not deductible in determining taxable profit (56,898) (48,790) Capital allowances in excess of depreciation and amortisation 1,297 Adjustment in respect of prior years 119,715 Deferred tax asset not recognised in respect of losses (383,268) (404,740) Total tax credit for the year 119,715 – 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% (2019 – 19%). The tax computations of Fox Marble Holdings plc Group show it has tax losses carried forward of €20,365,322 (2019 – €19,548,868). 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 2020 is €3,607,271 (2019 – €3,214,464). Group 2020 2019 € € 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. 11. Earnings per share 2020 2019 € € Loss for the year used for the calculation of basic EPS (2,804,371) (2,533,540) Number of shares Weighted average number of ordinary shares for the purpose of basic EPS 287,591,514 230,948,303 Effect of potentially dilutive ordinary shares – Weighted average number of ordinary shares for the purpose of diluted EPS 287,591,514 230,948,303 Earnings per share: Basic (0.01) (0.01) Diluted (0.01) (0.01) 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 2 0 PAGE | 61 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. 12. Intangible assets Group: As at 31 December 2019 ,1 January 2020 and 31 December 2020 Accumulated amortisation As at 1 January 2019 Amortisation charge As at 31 December 2019 and as at 1 January 2020 Charge for the year As at 31 December 2020 Net Book Value As at 1 January 2019 As at 31 December 2019 As at 31 December 2020 Capitalised exploration and Mining rights evaluation and licences expenditure Total € € € Goodwill € 84,504 2,725,840 92,866 2,903,210 – – – 9,537 12,936 22,473 41,438 2,358 43,796 50,975 15,294 66,269 41,441 2,365 43,807 92,416 17,659 110,076 84,504 84,504 84,504 2,716,304 79,930 2,880,738 2,674,866 77,572 2,836,942 2,633,424 75,207 2,793,135 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 performed a review for impairment and concluded that no such impairment exists. In considering the value in use the company made a number of judgments around anticipated production and sales, including judgments as to when block sales and pricing might recover from the impact of the Covid 19 pandemic. Other intangible assets relating to quarries in operation include amounts spent by the Group acquiring licences. Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is determined by discounting estimated future net cash flows generated by the asset. Intangible assets relating to quarries in operation are assessed annually for indicators of impairment in accordance with IAS 36. PAGE | 62 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 2 0 13. Property, plant and equipment Group: Quarry Plant & Machinery € Factory Plant & Machinery € Rights of use asset € Office Equipment and Land and Leasehold buildings improvements Total € € € Cost As at 1 January 2019 Additions As at 31 December 2019 and as at 1 January 2020 Additions Disposals As at 31 December 2020 – 3,431,312 50,306 597,773 – 242,710 160,000 30,488 6,933,293 – 936 891,725 1,372 3,909,266 3,481,618 88,131 (170,000) 3,910,638 3,399,749 242,710 90,132 332,842 160,000 31,424 7,825,018 – – 179,635 (170,000) 160,000 31,424 7,834,653 Accumulated depreciation As at 1 January 2019 Depreciation charge(1) As at 31 December 2019 and as at 1 January 2020 Depreciation charge(1) Disposals As at 31 December 2020 1,920,274 530,593 138,408 110,056 2,450,867 225,454 – 2,676,321 248,464 133,643 (141,429) 240,678 – 6,827 6,827 61,044 – 67,871 – 29,859 2,088,541 – 657 648,133 – 30,516 2,736,674 – 550 420,691 – (141,429) – 31,066 3,015,936 Net Book Value As at 1 January 2019 As at 31 December 2019 As at 31 December 2020 1,391,219 1,458,399 3,292,904 3,233,154 1,234,317 3,159,070 – 235,883 264,971 160,000 629 4,844,752 160,000 908 5,088,344 160,000 359 4,818,716 (1) Depreciation on plant and machinery is included in in the cost of inventory to the extent it is directly related to production of that inventory. In the year ended 31 December 2020 €261,871 of depreciation was included in the cost of inventory produced (2019 €461,170). 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 2020 year end. The assets were counted by an independent assessor in October 2019 as part of ongoing civil litigation against Green Power Sh.P.K, and an injunction was granted to the Company stopping Green Power Sh.P.K or any other third party moving, selling or interfering with them in any way. The Company is confident of its rights over the assets and the enforcement of those rights, and that the value of the assets is not impaired. 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 2 0 PAG E | 63 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 Additions – – As at 31 December 2020 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 Depreciation charge 46,022 46,022 As at 31 December 2020 52,849 52,849 Net Book Value As at 31 December 2018 – – As at 31 December 2019 235,883 235,883 As at 31 December 2020 189,861 189,861 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. 14. Trade and other receivables Group 2020 2019 € € Current assets Trade receivables 459,226 223,540 Less: provision for impairment in receivables (99,178) (81,324) Trade receivables (net) 360,048 142,216 Deposits on capital equipment 148,750 148,750 Accrued Revenue 87,374 91,300 Deposits 55,000 55,000 Other receivables 235,562 286,071 Prepayments 40,952 161,816 VAT recoverable 29,577 94,901 Amounts due from related party 195,090 202,631 1,152,317 1,182,685 Company 2020 2019 € € Current assets Prepayments 157 48,540 Other receivables 65,939 233,520 VAT recoverable 15,883 14,743 81,979 296,803 Included in other receivables as at 31 December 2020 are other receivables of €55,145 (2019 – €58,957 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 €24,884 (2019 – €26,573). PAGE | 64 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 2 0 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 using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided in note 21. As at 31 December 2020 €195,090 (2018 – €202,631) 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 21. 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 21. Included in receivables for the Group are receivables denominated in GBP of €248,040 (2019 – €309,763). There are nil receivables denominated in USD (2019 – nil). Included in receivables for the Company are receivables denominated in GBP of €81,979 (2019 – €296,803). All GBP denominated receivables have been translated to Euro at the exchange rate prevailing at 31 December 2020. 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 (2019 – €148,750). These relate to additional equipment for the factory site which the Group expects to install within the next twelve months. The Company is currently planning further factory capacity expansion and expects this to include expansion of the gang saw capacity. To date the installation of the third gangsaw has been delayed till such point as the volume of sales at the factory necessitated its installation. 15. Inventories Group 2020 2019 € € Block Marble 2,794,092 3,458,722 Processed marble 247,186 469,675 3,041,278 3,928,397 The cost of inventories recognised as an expense and included in cost of sales amounted to €559,358 (2019 – €784,567). In the current year the Group has recognised a provision of € 927,841 (2019 – €392,412) in relation to inventory. The cumulative provision against inventory held in stock at 31 December 2020 is €2,082,640 (2019 – €1,155,159). Included in inventories is €835,369 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 2020 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. 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 2 0 PAGE | 65 16. Trade and other payables Group 2020 2019 € € Trade payables 278,481 353,840 Contract Liabilities – Advances received from customers 293,360 313,582 Amounts due to related parties 500,371 313,706 Other payables 308,793 5,582 Accruals 144,093 190,900 Other tax and social security payable 35,767 21,766 1,560,865 1,199,376 Company 2020 2019 € € Trade payables 147,193 99,940 Amounts due to related parties 331,556 212,670 Accruals 83,313 85,446 Other payables 55,747 – 617,809 398,056 Amounts due to related parties are considered further in note 23. Included in trade and other payables of the Group are GBP denominated payables of €690,231 (2019- €701,989) and USD denominated payables of €293,360 (2019 – €328,273). 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 2020. All trade and other payables at 31 December 2020 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. 17. Borrowings Group and Company: 2019 2019 € € Current borrowings Convertible loan notes held at amortised cost 1,841,027 1,924,821 Derivative over own equity at fair value 466 4,875 1,841,493 1,929,696 Non-current borrowings Convertible loan notes held at amortised cost 2,640,372 2,523,471 Derivative over own equity at fair value 158,756 1,250 2,799,128 2,524,721 a. Series 3, 4, 6, 7, 8, 9 and 10 Loan Notes The Company has previously issued the following loan notes: • • • 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 had an interest rate of 8% per annum. The Loan Note was due for conversion or repayment on 31 August 2020 with a conversion price set at 10p. 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 had an interest rate of 8% per annum. The Loan Note was due for conversion or repayment on 31 August 2020 with a conversion price set at 10.5p. 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 had 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. PAGE | 66 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 2 0 • • 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 had 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. 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 had 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 above Loan Notes held at amortised cost had a balance of €2,265,553. The Stockholders’ option to convert the loan was treated as an embedded derivative and measured at fair value. As at 31 December 2019 the derivative had a value of €2,243. The fair values were assessed using a Black Scholes methodology. The derivative was classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data. 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 loan note, together with any accrued interest at that date was exchanged for Series 11 Loan Note, whose terms are considered below. b. 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 2020, the Series 5 Loan Note held at amortised cost had a balance of €83,567 (31 December 2019 – €91,073). The Stockholders’ option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2020, the derivative had a value of €52 (31 December 2019 – €84). The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data. The Loan note was repaid in January 2021. c. Other Borrowings In September 2019, the Company entered a short-term borrowing arrangement with a value of £345,000. The interest rate was 1% per calendar month with a repayment date of the 31 March 2020. As at 31 December 2020 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. The term of the remaining borrowings amounting to £120,000 were varied to extend the repayment date to 30 June 2023. As at 31 December 2020 these held at amortised cost had a balance €145,901. d. Gulf Loan Note 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. The loan note is due for repayment on the 8 August 2021. The Company is currently in negotiation with the loan note holders to secure an extension to the term of the loan note. As at 31 December 2020, the Gulf Loan Note held at amortised cost had a balance of €1,757,740 (31 December 2019 – €1,676,062). The Stockholders’ option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2020, the derivative had a value of €181 (31 December 2019 – €382). 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 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. 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 2 0 PAGE | 67 The existing loan notes were cancelled and replaced by the Series 11 Loan Note. The Series 11 Loan Note has an interest rate of 2% per annum. The Loan note is due for conversion or repayment on the 30 June 2026 with a conversion price of 5p. As at 31 December 2020, the Series 11 Loan Note held at amortised cost had a balance of €2,494,470. The Stockholders’ option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2020, the derivative had a value of €155,188. The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data. The Directors consider that the carrying amount of borrowings approximates their fair value at 31 December 2020. 18. 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 2020 2019 € € At 1 January 220,721 – Additions 90,131 218,270 Interest expense 23,733 2,451 Foreign Exchange (25,725) – Rent payments made in year (48,379) – At 31 December 260,481 220,721 Company: Year ended Year ended 31 December 31 December 2020 2019 € € At 1 January 220,721 – Additions – 218,270 Interest expense 16,522 2,451 Foreign Exchange (25,725) – Rent payments made in year (37,279) – At 31 December 174,239 220,721 As at 31 December 2020 Carrying Contractual cash flows Amount € € 6 months or less € 6-12 months 1-2 years 2-5 years € € € Lease Liability 260,481 323,131 38,861 38,861 77,721 167,689 As at 31 December 2019 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 Municipal rights of use as at 31 December 2020 and 31 December 2019 are as follows Area Area m2’000 Lease Period Payment start date Cervenillë Syriganë Municipal rights of use Municipal rights of use 2,000 540 04/02/2011 10 years €0.5 per cubic metre extracted 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. PAGE | 68 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 2 0 19. Share capital Group and Company: 2020 Number 2019 Number Share capital 2020 € Share Share Share capital premium premium 2019 2020 2019 € € € Issued, called up and fully paid Ordinary shares of £0.01 each At 1 January Issued in the year At 31 December 262,657,882 217,885,322 44,772,560 308,372,174 262,657,882 45,714,292 3,220,221 500,786 3,721,007 2,700,688 31,793,870 29,941,977 519,532 263,116 1,851,893 3,220,221 32,056,986 31,793,870 On the 17 June 2020 the Company issued 45,714,292 new Ordinary Shares at a price of 1.75 pence per share through Allenby Capital and Brandon Hill Capital Limited to raise £0.8 million before expenses. Expenses of €112,492 were offset to share premium in the year ended 31 December 2020 (2019 - €31,969). 20. Share based payment reserve Group and Company: Year ended Year ended 31 December 31 December 2020 2019 € € At 1 January 85,247 85,247 Equity settled share-based payment charge 21,355 – At 31 December 106,602 85,247 Date of Issue Exercise price Granted Outstanding Performance Warrants Beaufort Securities Limited Beaufort Securities Limited Consultants Consultants Warrants Placing Warrants Share options DSOP Share scheme 12 July 2017 12 July 2017 13 September 2019 06 December 2019 15p 100,000 100,000 20p 75,000 75,000 4p 1,704,316 1,704,316 2.75p 1,818,182 1,818,182 17 June 2020 3.5p 22,857,146 22,857,146 31 August 2012 20p 120,000 120,000 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 could be exercised for a period of up to 3 years from their date of issue. The warrants expired unexercised on 12 July 2020. In 2019 the Company issued 3,522,498 warrants as part of the package of compensation to two senior consultants. The warrants vest in equal instalments over three years as a condition of continued employment. 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. Warrants over new ordinary shares were issued on the basis of one for every two Placing Shares, exercisable at a price of 3.5 pence per share, representing a 100% premium to the Placing Price. The warrants have a exercise period of 18 months. 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. 21. 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. 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 2 0 PAG E | 69 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. The gearing ratios at 31 December 2020 and 31 December 2019 are as follows: Group Year ended Year ended 31 December 31 December 2020 2019 € € Total borrowings (note 17) (4,640,621) (4,454,418) Less cash and cash equivalents 337,741 578,417 Net debt (4,302,880) (3,876,002) Total equity 5,636,653 7,655,765 Total capital 10,277,273 12,110,183 Gearing ratio 44.96% 36.78% Company Year ended Year ended 31 December 31 December 2020 2019 € € Total borrowings (note 17) (4,640,621) (4,454,418) Less cash and cash equivalents 112,241 545,587 Net debt (4,528,380) (3,908,831) Total equity 14,273,818 14,258,009 Total capital 18,914,440 18,712,427 Gearing ratio 24.53% 23.80% 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 2020 € Balance at Foreign Exchange Non cash 31 December Difference movements Cash Flow 2020 € € € € 578,417 (4,454,418) (3,876,001) – 170,383 170,383 – (240,676) 337,741 (279,956) (76,630) (4,640,621) (279,956) (317,306) (4,302,880) Balance at 1 January 2020 € Balance at Foreign Exchange Non cash 31 December Difference movements Cash Flow 2020 € € € € 545,587 (4,454,418) (3,908,831) – 170,383 170,383 – (433,346) 112,241 (279,956) (76,630) (4,640,621) (279,956) (509,976 (4,528,380) 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. PAGE | 70 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 2 0 Restricted cash The Group and Company hold a balance of €39,937 of restricted cash at 31 December 2020 (31 December 2019 – Nil) relating to litigation funding received as at 31 December 2020. Litigation funds received are required to be spent solely on costs associated with the arbitration proceedings being brought against the republic of Kosovo. Further details can be found in note 27. 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. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was €1,380,703 (2019 - €1,598,094). Financial assets are assessed for impairment annually and a provision for bad debt of €14,359 has been recognised in 2020 (2019 – €81,234). 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 2020 or 1 January 2020 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 2020 and 31 December 2019 was determined as follows for both trade receivables: 31 December 2020 Expected loss rate Gross Carrying Amount Loss allowance 31 December 2019 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% €4,500 €735 22% 39% 36% €2,181 €209,862 459,226 €468 €71,442 (99,178) 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 Current 11% €242,685 €26,532 Current 11% €17,461 €1,910 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. 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 2 0 PAGE | 7 1 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 2020 the Group holds €377,678 in cash and cash equivalents and restricted cash (2019 – €578,417). The Group mitigates banking sector credit risk through the use of banks with no lower than a single A rating. As at 31 December 2020 the Company holds €152,276 in cash and cash equivalents and restricted cash (2019 – €545,587). 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. There is exposure to movements in the GBP/EUR exchange rate as a portion of the cash and restricted cash held by the group is denominated in GBP and the Group’s borrowing facilities are GBP denominated. 31 December 31 December 2020 2019 Group € € Cash denominated in EUR 207,544 26,875 Cash denominated in GBP 130,093 551,482 Cash denominated in USD 104 59 337,741 578,417 Company Cash denominated in EUR 97 98 Cash denominated in GBP 112,241 545,489 112,338 545,587 Restricted cash is held in GBP. On the 21 December 2020 the Company received a payment in error of €212,239. Once the error had been noted and resolved the repayment of the balance was made in January 2021. At 31 December 2020 this amount is included in cash and cash equivalents. As at 31 December 2020 if the currency has weakened/strengthened by 10% against the GBP with all other variables constant, post-tax profit would have been €275,231 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 (2019 - €325,132). Similarly, the Company has calculated the impact of a 10% increase or decrease in the GBP/EUR exchange rate would have a €283,401 (2019 – €193,214) 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 2020 if the currency has weakened/strengthened by 10% against the GBP with all other variables constant, post-tax profit would have been €292,310 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 (2019 - €89,410). Similarly, the Company has calculated the impact of a 10% increase or decrease in the GBP/EUR exchange rate would have a €292,310 (2019 – €173,210) 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. PAGE | 72 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 2 0 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 2020 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 2020 Carrying Contractual cash flows Amount € € 6 months or less € 6-12 1-2 years 2-5 years months € € € Borrowings Trade and other payables 4,640,621 1,560,865 4,605,568 1,560,865 134,665 1,560,865 1,825,165 64,413 2,581,325 – – – For the Company as at 31 December 2020 and 2019, 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 2020 are €617,089 (2018 – €398,056). 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 2020, the Company holds borrowings of €1,785,000 with variable interest rate (2019 – €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 2020 there would be an increase in loss before tax by approximately €17,850 (2019 – €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 2020 and 2019. 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 2 0 PAGE | 7 3 22. Interests in other undertakings % Ownership Date acquired/ Incorporated 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 Registered Office 160 Camden High Street, NW1 0NE Garibaldi 1/2, Pristina:, Bulevardl Ddshmoret e Kombit, Nr.72lA-7, Pristina Bill Klinton n36, Pristina Place of incorporation Principal activity 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. 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 2020. 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 2020 (2019 – nil), as the entities remain dormant. There were no transactions with non- controlling interests in the year ended 31 December 2020 (2019 – nil). 23. 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 compensation of Chris Gilbert is in part paid via Rockmasters Limited a company wholly owned by him. As at 31 December 2020 the Group has accrued €423,628 due to directors of the Company in respect of fees due to them (2019 - €285,583). As at 31 December 2020 the Company has accrued €331,556 due to directors of the Company in respect of fees due to them (2018 - €212,670). As at 31 December 2020 there is €29,238 payable (2019 - €17,643) 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 €15,571,245 (2019 – €14,541,805). Amounts provided to Fox Marble Limited relate to the provision of funding for operations and capital expenditure. PAGE | 74 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 2 0 The Company and Group have receivables from directors and former directors of the Company of €24,844 (2019 - €26,572) relating to the issue of share capital on the 31 August 2011. Included in trade and other receivables is €195,091 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 €86,479 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. 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. 24. 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 2020 the Group had capital equipment deposits of €148,750 (2018 - €148,750) which are expected to be capitalised into property plant and equipment in 2021. (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 2020 2019 € € Expiring within one year – – Expiring within one to five years 320,352 225,625 320,352 225,625 25. Investments Company: 2020 2019 € € Shares in subsidiary undertakings 3,711,127 3,711,127 Loans to subsidiary undertakings 15,602,245 14,541,805 19,313,372 18,252,932 An impairment charge of Nil in the carrying value of the investment in Fox Marble Limited was recognised in the year ended 31 December 2020 (2019 – €9,468,513). 26. 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 May 2021 control 11.58% of the share capital of the Company. 27. 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. 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 2 0 PAGE | 7 5 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. On the 16 December 2020 the Company announced that it had engaged the services of Dentons CS Europe LLP to act on the Company’s behalf in its circa €195 million claim against the Republic of Kosovo. Dentons have agreed a fee arrangement which enables Fox Marble to bring the Arbitration through to its conclusion. On the same day the Company announced it had secured litigation funds of £500,000. As at 31 December 2020 £75,000 of funds had been received, and a further £350,000 was received since year end and prior to the date of this report. The litigation funding has been raised from private investors. This funding, plus a pre-agreed return on investment, will only be repaid if the Arbitration proceedings are successful and no Company shares are being provided to the investors in the Litigation Fund. 28. Events after the reporting period On 16 December 2020, the Company announced a conditional placing of 65,500,000 new Ordinary Shares at a price of 1.6 pence per share through Brandon Hill Capital Limited, the Company’s joint broker, to raise £1,048,000 million before expenses. The Placing was conditional, inter alia, on shareholders giving the directors authorities to issue new ordinary shares on a non-pre-emptive basis. A General Meeting of shareholders was held. on 4 January 2021 to grant the Board authority to allot the Placing Shares for cash on a non pre-emptive basis, at which authority was granted. Application was made for the 65,500,000 Placing Shares to be admitted to trading on AIM on the 5 January 2021 The Placing Shares rank pari passu with the existing ordinary shares of the Company. On the 16 February 2021 the Company issued 5,000,000 new ordinary shares in the Company to five individuals in lieu of cash payments. The issue of shares reflects the contributions made to the Company by these individuals. On the 1 May 2021 Fox Marble agreed a credit facility with Brandon Hill Capital Limited for £1,000,000. The repayment date of the facility is 31 May 2022 and any amounts drawn down would incur an interest rate of 9%. As at the date of this report no amounts had been drawn down on this facility. PAGE | 76 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 2 0 Notice of General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of Fox Marble Holdings plc (“the Company”) will be held at 2.00 pm on the 30 June 2021 at 160 Camden High Street, NW1 0NE, London to consider, and if thought fit, to pass the following resolutions of which resolutions 1 to 9 will be proposed as ordinary resolutions and resolution 10 as a special resolution. 1. To receive the annual report and financial statements for the year ended 31 December 2020. 2. To re-elect Andrew Allner as a Director of the Company. 3. To re-elect Christopher Gilbert as a Director of the Company. 4. To re-elect Fiona Hadfield as a Director of the Company. 5. To re-elect Roy Harrison as a Director of the Company. 6. To re-elect Colin Terry as a Director of the Company. 7. To reappoint PKF LLP as the Company’s auditors until the conclusion of the next Annual General Meeting. 8. To authorise the Directors to determine the remuneration of the auditors. 9. THAT the Directors of the Company be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (“the Act”) to exercise all the powers of the Company to allot shares in the Company or to grant rights to subscribe for or convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount of £1,250,278 and such authority shall, unless previously revoked or varied by Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company to be held in 2022, save that the Company may, at any time before such expiry, make an offer or agreement which would or might require shares to be allotted or rights to be granted under such offer or agreement as if the authority conferred had not expired. Special Resolution 10. THAT, subject to and conditional upon the passing of resolution 5 above, the Directors of the Company be empowered under Section 570 of the Companies Act 2006 (“the Act”) to allot equity securities (within the meaning of Section 560 of the Act) for cash and/or to sell or transfer shares held by the Company in treasury (as the Directors shall deem appropriate) under the authority conferred by resolution 5 above as if section 561(1) of the Act did not apply to any such allotment provided that this power shall be limited to: a. the allotment of equity securities in connection with any rights issue or other pro-rata offer in favour of the holders of ordinary shares of 1p each in the Company where the equity securities respectively attributable to the interests of all such holders of shares are proportionate (as nearly as may be practicable) to the respective number of shares held by them in the capital of the Company, provided that the Directors of the Company may make such arrangements in respect of overseas holders of shares and/or to deal with fractional entitlements as they consider necessary or convenient; and b. the allotment (otherwise than pursuant to sub-paragraph (a) above) of further equity securities and/or the sale or transfer of shares held by the Company in treasury (as the Directors shall deem appropriate) up to an aggregate nominal amount of £378,878. and this authority shall expire at the conclusion of the Company’s Annual General Meeting to be held in 2022, save that the Company may, at any time before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities under such offers or agreements as if the power conferred by this resolution had not expired and provided further that this authority shall be in substitution for, and to the exclusion of, any existing authority conferred on the Directors. By order of the Board Ben Harber Company Secretary 4 June 2021 Registered office: 160 Camden High Street, London, NW1 0NE 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 2 0 PAG E | 7 7 Notes 1. Right to attend, speak and vote Our preference had been to welcome shareholders in person to our 2021 Annual General Meeting, particularly given the constraints we faced in 2020 due to the COVID-19 pandemic. However, at present, due to the current UK Government restrictions on public gatherings we are asking shareholders not to attend the venue in person and instead to participate in the meeting by submitting their proxy form. We are proposing to hold the Annual General Meeting at 160 Camden High Street, London NW1 0NE with the minimum attendance required to form a quorum. Shareholders that do attempt to attend the venue for the Annual General Meeting will not be permitted entry. Shareholders should email any questions they have,or would normally raise during the course of the AGM to info@foxmarble.net. Shareholders are requested to submit any questions that they may have, in good time, ahead of the meeting. In the event that the arrangements for the AGM have to change due to the evolving COVID-19 situation, the Company will issue a further communication via the regulatory news service. Please complete and submit an online form in accordance with the instructions set out in the instructions printed on it. All proxies should be received by no later than 2.00pm on Monday 28th June 2021. 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 or Thomas Verlander at 60 Gracechurch Street, London EC3V 0HR Scanning it and sending it by email to thomas.verlander@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). PAGE | 78 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 2 0 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. 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 thomas.verlander@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 378,872,214 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 378,872,214. Explanation of Resolutions The Company’s Annual General Meeting will be held at 30 June 2021 at 2.00pm. The Notice of Meeting is set out on page 75 of this document. Details of resolutions to be considered at the meeting are given below. Resolutions 1 to 9 inclusive are proposed as ordinary resolutions, which means that for each of these resolutions to be passed, more than half (50%) of the votes cast must be in favour of the resolution. Resolution 10 is proposed as a special resolution, which means that for each this resolution to be passed, at least three-quarters (75%) 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 2020 and the Directors’ Report and Auditors’ Report on those accounts, which have been posted to shareholders with this Notice. Director’s re-election (resolution 2-6) The Directors in accordance with article 80 of the Articles of Association of the Company and, being eligible, offer themselves for re-election as a Directors of the Company. The biographical details of all of the Directors can be found on pages 17 and 18 of the annual report. 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 2 0 PAGE | 7 9 Auditors appointment (resolution 7) The Company is required at each general meeting at which accounts are presented to appoint auditors to hold office until the next such meeting. The Board, on the recommendation of the Audit Committee recommends the re- appointment of PricewaterhouseCoopers LLP who have expressed their willingness to continue in office as auditor and a resolution to re-appoint them has been proposed at the Annual General Meeting. Auditor fees (resolution 8) Resolution 8 authorises the Directors to determine the remuneration of the auditors. Authority to allot shares and Disapplication of Pre-emption Rights (resolutions 9 and 10) The purpose of these resolutions is to give the Directors authority to allot shares in place of the existing authority approved at the Annual General Meeting of the Company held on 30 June 2020, which expires at the end of the 2021 Annual General Meeting. In accordance with best practice and institutional investor guidelines, the Directors are seeking authority under resolution 4 to allot up to a maximum of 125,027,830.62 Ordinary shares. This represents approximately 33% of the issued ordinary share capital as at 7 May 2021. Further, in order to retain some flexibility, the Directors are seeking power under resolution 5 to allot 37,887,221.40 equity securities wholly for cash other than on a pre- emptive basis to current shareholders pro-rata to their existing holdings. This amount represents 10% of the issued ordinary share capital as at 7 May 2021. Unless previously revoked, these authorities will be valid until the conclusion of the next Annual General Meeting of the company to be held in 2022 or 30 June 2022, whichever is the earlier. It is intended to renew each of the above authorities at each Annual General Meeting. Fox Marble Holdings Plc Annual Report & Financial Statements 2020 sterling 174966 Fox Marble Holdings Plc 160 Camden High Street, London, NW1 0NE Tel: +44 (0) 207 380 0999 www.foxmarble.net

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