Operating Update
Fox Marble Holdings plc
(“Fox Marble” or the “Company”)
Highlights
· Sales for the year ended 31 December 2019 of €1.4 million, (2018 - €1.4 million)
· Production for the year ended 31 December 2019 of 14,515 tonnes (2018 – 12,561 tonnes) with production in Prilep of 11,547 tonnes (2018 – 5,803 tonnes)
· Fundraising completed raising £0.7 million in December 2019
Operating Update
Fox Marble, the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region, is pleased to provide the following operational update ahead of the publication of its preliminary results for year ended 31 December 2019 which are anticipated to be notified in May 2020.
Sales
Sales for the year ended 2019 were €1.4 million. The fall in block sales of Illirico Selene following the closure of operations in Maleshevë was offset by increased block sales from the Prilep quarry in Macedonia. Sales from the factory increased significantly in the final quarter of the year, outpacing the previous three quarters, following the appointment of new factory manager and non-board COO, and we expect this trend to continue into 2020. Sales of processed marble are expected to form an increasing proportion of sales from 2020 onwards.
The opening of the Company's new showroom in Pristina is a demonstration of Fox Marble's confidence in the market growth potential of the region, both for its own processed products as well as providing cutting and polishing services to third parties.
The Company’s strategic focus for sales over 2020 will be:
· Factory sales of processed marble to Kosovo and the greater Balkans area
· Block sales to China and other markets, driven by Fox Marble's Prilep quarry in Macedonia which has significant reserves potential of premium quality Alexandria White and Alexandria Blue marble.
The Coronavirus (COVID-19) outbreak will have an impact on block sales throughout the marble industry, as a result of the prominence of China as a buyer of unprocessed marble and the travel restrictions imposed since the start of the year. We continue to monitor the situation.
The Company continues to tightly manage its working capital.
Quarry Production
The quarry in Prilep in Macedonia, which produces Alexandrian White and Alexandrian Blue marble, has seen production nearly double in the 2019 financial period compared to 2018, a product of both the investment in new machinery at the start of 2019 and the new quarry team installed at the end of 2018. Production has effectively doubled two years in a row at the quarry (2017 production – 2,285 tonnes) and further growth is expected in the 2020. The target for 2020 will be to increase marble production by up to 50% compared to 2019 during the year with minimum capital investment.
The Cervenillë and Syrigane quarries in Kosovo – sources respectively of our Argento Grigio, Rosso Cait and Breccia marbles are open, with machinery on site and ready for deployment. At present quarry teams are not on site, as the Company has a significant reserve of material in stock, however the quarries can be staffed at short notice. This allows the Company to preserve working capital, whilst using existing stock reserves to provide material for sale from the factory.
Quarry production at the Maleshevë quarry in Kosovo was stopped in July 2019 a result of the ongoing dispute with Green Power Sh.p.k.. The Company has filed civil claims in Kosovo against Green Power Sh.pk for breach of contract and damages, in addition to the wider Arbitration case launched against the Government of Kosovo, as announced in September 2019.
The foundation of a successful and growing natural stone company is its reserves base. Fox Marble's strategy is to seek to grow its reserves over the medium term, and is actively screening opportunities. This will provide the opportunity to increase both block sales and processed marble from the factory from the end of 2020 onwards.
Factory
Fox Marble’s processing facility is a 5,400 square metre double skinned steel factory for the cutting and processing of blocks into polished slabs and tiles which was erected on a 10-hectare site that the Company acquired in Lipjan in 2013, close to Pristina airport in Kosovo. The new factory manager Secondino de Costas, under the direction of our new COO Francisco Espinosa has implemented new processes and improved operations across the factory site.
As announced on 5 December 2019 and 17 February 2020, the Company entered into three new contracts to process material for third parties at the factory. These agreements represent a new revenue stream for the Company, whereby it provides marble cutting and polishing services to other companies quarrying in the wider Balkan region. These agreements have allowed Fox Marble to expand capacity at the factory whilst maximising operating efficiencies and continuing to process its own material for sale.
On the back of increased factory operating efficiency and capacity, the new sales team is delivering increased sales of processed marble driven by a targeted focus on the Kosovo domestic market, as well as entering into long term contracts to process marble for third parties.
Dispute and Arbitration Claim
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 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 is represented by its legal advisers, Stephenson Harwood LLP, as well as its Kosovan lawyers.
Chris Gilbert, CEO, commented
“In the last year the Company has re focussed its activities and l look forward to seeing the results of this and I am hopeful that we shall see the results of this in 2020 particularly in the sale of processed marble on the back of our developing customer base in the Balkans region. The hard work that our enhanced management team is undertaking will show results this year.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For more information on Fox Marble please visit www.foxmarble.net or contact:
Fox Marble Holdings plc
Chris Gilbert, Chief Executive Officer
Fiona Hadfield, Finance Director
Tel: +44 (0) 20 7380 0999
Brandon Hill Capital (Joint Broker)
Oliver Stansfield
Tel: +44 (0) 20 3463 5000
Optiva Securities (Joint Broker)
Christian Dennis / Jeremy King
Tel:+44 (0) 20 3137 1902
Cairn Financial Advisers LLP (Nomad)
Liam Murray / Sandy Jamieson / Ludovico Lazzaretti
Tel: +44 (0) 20 7213 0880
Notes to Editors
Fox Marble (AIM: FOX), is a marble production, processing and distribution company in Kosovo and the Balkans region.
Its marble products, which includes Alexandrian Blue, Alexandrian White, Breccia Paradisea, Etruscan gold and Grigio Argento and are gaining sales globally both to international wholesale companies as well as being supplied directly into luxury residential properties. In the UK these include among others St George’s Homes and Capital and Counties Plc’s Lillie Square development. In Sydney, Australia Rosso Cait, Alexandrian White and Breccia Paradisea marble have been used in what is expected to be Australia’s most expensive residential property. These sales serve to demonstrate the desirability of Fox Marble’s premium marble products as the stone of choice in some of the most prestigious and expensive residential developments around the world.
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.