Chris Gilbert, CEO of Fox Marble, commented: “We continue to build our customer base and sales, and, with the factory fully operational, we are now able to process and sell marble slabs and tiles throughout the year. Our material particularly, the Illirico Selene and Alexandrian White, is proving very popular, and we are working hard to meet the demand our sales and marketing effort has created. We expect that our new sales base in Dubai will bear fruit in the coming months, and we are already in discussion with potential customers in the region. “
Fox Marble Holdings plc (LON: FOX), a dimension stone company focused on marble quarrying and finishing in Kosovo and the Balkans, today announced its interim results for the six months ended 30 June 2018.
Operational Highlights
· Receipt of $500,000 advance payment for the sale of processed materials destined for a major construction project in Dubai.
· Capital investment made in the quarries to support increased production in 2018 of €0.5 million, together with the purchase, installation and commissioning of a state-of-the-art CNC machine to allow bespoke cut to size polished slabs and tiles to be produced in the factory.
· Further expansion in capacity at the factory in the form of tile line machinery received and in the process of installation in the factory. This will allow production of standard size tiles at high volume and rates.
· Quarry production of 5,473 tonnes in the six months to 30 June 2018, following the winter shutdown of the quarries (2017 – 3,780).
· Successful share placing completed in January 2018 raising £2.8 million through the issue of 26,283,331 ordinary shares at 10.5p. The Company simultaneously issued 7,457,140 shares to discharge £783,000 of the Company’s outstanding loans and other liabilities to certain Directors and to Brandon Hill Capital Limited.
Financial Highlights
· Revenue from the sale of marble products for the six months to 30 June 2018 increased 26 % to €615k (H1 2017: €330k).
· Loss for the six months to 30 June 2018 of €816k (six months to 30 June 2017: €1,427k)
· Debt repaid in the period of €2,403k following the placing completed in January 2018. Debt balance at 30 June 2018 of €861k (31 December 2017: €3,441k), including derivatives over own equity of €107k (31 December 2017: €373k) arising on the conversion option on loan note instruments.
· Cash balance as at 30 June 2018 of €154k (31 December 2017: €929k). Cash balance as at 24 September 2018 of €454k.
· Facilities available for draw down at 24 September 2018 of €1.1 million.
Sales and Marketing
As mentioned in our operational update of 31 July 2018 sales for the six months to 30 June 2018 are €615k (2017 – €329,000).
The installation of the CNC machine in our factory in Lipjan near Prishtina in Kosovo has allowed the Company to enter the bespoke cut to size market including orders of 3,000 square metres of Alexandrian White tiles to a large distributor in Greece, Rekalis G Gregarios Marble and 7,500 square metres of 60cm x 60cm Alexandrian White tiles to large scale retailer based in Mumbai in India. The Company has established an office in Dubai to service the GCC region and has entered into a forward purchase agreement under the terms of which it has sold $500,000 of processed marble for which it has received payment.
In addition to these large-scale orders we continue to complete a number of smaller cut to size and bespoke orders out of the factory for shipment internationally and to the local Kosovan market.
Alongside sales of processed marble, the Company continues to sell high quality block marble direct from its quarries to international wholesalers mainly in China, India and Turkey.
Following the previously announced initial 300 tonnes of its Illirico Selene marble to a sold to a new Chinese customer following in June, the customer has returned to the site and purchased a further order of over 300 tonnes. The customer has confirmed they wish to take 300 tonnes of this material each month for the next 12 months and are entering into an offtake agreement to do so, supported by a letter of credit.
These are the first significant orders from China and represent a breakthrough in that market. Fox understands that this material is for a project that its customer is supplying and will require a minimum of 5,000 tonnes to complete the project.
In June 2018, the Company announced that it had completed the delivery of over 2,000 tonnes of block marble to Simsekler Mermer Company. India continues to be a growing market, with repeat sales made to existing customers throughout the period.
The Company has recently opened a new showroom for its material in London. The showroom exhibits slabs from the complete range of Fox Marble stone, including Illirico Selene, Illirico Bianco, Rosso Cait, Breccia Paradisea, and Alexandrian White. It is intended that the showroom will support the marketing of material to projects in the United Kingdom and Northern Europe.
The showroom is conveniently located for European sales being less than 10 miles from Heathrow Airport and 35 miles from Stanstead Airport. Located at 2 Courtenay Road, East Lane, Wembley HA9 7ND, it is also very close to North Wembley Station, and can be visited by appointment.
Factory
The state-of-the-art Computer Numerical Control (“CNC”) machine has allowed the Company to expand its cut to size capabilities for its own marble. The machine is capable of automatically processing many varied shapes and thicknesses of material from slabs to small blocks. The CNC machine allows the Company to produce marble directly for installation into residential projects.
The Company continues to further expand capacity at the factory. Fox Marble has taken delivery this month of a tile line in the factory, which is currently being installed, together with additional bridge saws and bridge edge processors. These machines, once installed and operational, will allow the Company to produce standard size tiles and stairs at high volume.
Various types of marble blocks continue to be stockpiled in the block yard at the factory to meet demand for slabs and cut to size orders throughout the winter even while the quarries are closed due to the usual winter weather constraints. Over time this will reduce the seasonal nature of the Company’s sales. Further processing in the factory allows the Company to improve its yield of quarried material, as blocks with small defects which would not be attractive to block buyers, can be processed in house to produce high quality slabs.
Quarries
Additional capital expenditure has allowed new equipment to be delivered to the quarries, and has had a positive impact, production at the quarries has been encouraging.
We have continued to focus production efforts in Kosovo on the Maleshevë quarry, as demand for our Illirico Selene is currently outpacing our level of production. The Company has quarried 3,544 tonnes of material in the Maleshevë quarry in the period to 30 June 2018 (2017 2,753 tonnes). The quarry at Maleshevë is now open across five eight metre benches and is producing a higher proportion of high-grade blocks. At the Prilep quarry in the newly named Republic of North Macedonia 1,929 tonnes were quarried in the period to 30 June 2018 (2017 1,027 tonnes).
Financing
On 3 January 2018, the Company announced its intention to issue 7,235,712 new Ordinary Shares at a price of 10.5 pence per share by means of a to raise £759,750 before expenses, and to issue a further 19,047,619 new Ordinary Shares at the Issue Price by means of a Subscription to raise £2 million before expenses. In addition, the Company announced its intention to discharge £783,000 of the Company’s outstanding loans and other liabilities by the issue of a further 7,457,140 new Ordinary Shares to certain Directors and to Brandon Hill Capital Limited at 10.5 pence for share.
On the 19 January 2018 the Company issued 33,740,471 Ordinary Shares at 10.5p a share.
Following the placing, total borrowings at the Company as at 30 June 2018 are £675,000, being the outstanding Loan notes. (31 December 2017 – £2,760,000).
As previously announced on the 31 July 2018, the holders of the series 3 and 5 Loan notes have subscribed for an additional £300,000 of Loan notes on the same terms as previously announced in the Company.
Outlook
The Board is positive about the outlook for the Company for the remainder of this year and into 2019. The Company has increasing numbers of customers in multiple jurisdictions who are making orders of its material, and the ability to produce cut to size material is expanding the range of customers around the world. This will result in increased production and conversion of our order book into sales and cash which is of critical importance.
