ECO BUILDINGS GROUP PLC

Condensed unaudited consolidated income statement and statement of comprehensive income

ECO BUILDINGS GROUP PLC

Condensed unaudited consolidated statement of financial position

ECO BUILDINGS GROUP PLC

Condensed consolidated statement of cash flows

ECO BUILDINGS GROUP PLC

Condensed consolidated statement of changes in equity

Notes to the condensed consolidated financial statements for the period ended 30 June 2024

(1)              General information

The principal activity of Eco Buildings Group 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.

Eco Buildings Group plc is the Group's ultimate Parent Company ("the parent company"). It is incorporated in England and Wales and domiciled in England. The address of its registered office is 160 Camden High Street, London, NW1 0NE. Eco Buildings Group plc shares are admitted to trading on the London Stock Exchange's AIM market.

(2)              Basis of preparation

The results presented in this report are unaudited and they have been prepared in accordance with the principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union that are applicable to the financial statements for the year ending 31 December 2023.

The accounting policies applied in these results are consistent with those applied in the Group's Annual Report and Accounts for the year ended 31 December 2023 and those expected to be applicable to the financial statements for the year ending 31 December 2024.

This half yearly report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for Eco Buildings Group plc for the year ended 31 December 2023 were approved by the Board on 28 June 2024 and have been filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.  These condensed interim financial statements for the six months ended 30 June 2024 have been prepared in accordance IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2023, which have been prepared in accordance with IFRS as adopted by the European Union.  The Annual Report and Accounts 2023 for the Group are available at www.eco-buildingsplc.net

(3)              Going concern

The Directors have reviewed detailed projected cash flow forecasts and believe it is appropriate to prepare this report on a going concern basis. In making this assessment, they have considered the following factors:

a)     the current working capital position and operational requirements;

b)     the proposed business plan for the combined entity including the development of sales in Albania from the newly commissioned factory in Albania;

c)     rates of production at the newly operational plant in Durres, and the any risks that may impact the levels of production;

d)     current order book including purchase orders received in June 2024 and the companies ability to satisfy these from existing production;

e)     the timing and expected start of revenues under the contracts for construction secured by Eco Buildings with Andrra Invest LLC and Egeu Stone LLC.

f)     the timing of expected sales receipts and completion of other existing orders, as well as collection of outstanding debtors;

g)     the sensitivities of forecast sales figures over the next two years;

h)     the timing and magnitude of planned capital expenditure including expansion of production facilities at the GFRG factory in Albania; and

i)      the level of indebtedness of the company and timing of when such liabilities may fall due, and accordingly the working capital position over the next 18 months.

The forecasts assume that the Company will execute the business plan for the combined entity, as described in the strategic report.  It further assumes that production at the production sites will continue to operate in good order.   The forecast assumes existing contracts held by the Company will be fulfilled on a timely basis.    The Company also anticipates significant revenue growth through the realization of existing sales 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 business plan for the combined entity, including planned capital and strategic expansions could be delayed or result in further losses for the group;

b)     Levels of production at the factory could be lower than expected; Costs of construction of the units could be higher than expected;

c)     Levels of production at the quarries can be impacted by unforeseen delays due to inclement weather or equipment failure; lower than expected quality of material being produced, and the continuing effects of the pandemic;

d)     Costs of production and construction could be higher than planned, or there could be unforeseen additional costs;

e)     Fulfilment of the Company's order book could be delayed, or the payment of amounts due under such contracts could be delayed; and

f)     The resumption of block sales to the international block market may be slower than expected.

If the cash receipts from sales are lower than anticipated the Company has identified that it has available to it several other contingent actions, 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 renegotiation of the terms on its existing debt obligations.  

In conclusion having regard to the existing and future working capital position and projected sales, the Directors are of the opinion that the application of the going concern basis is appropriate.

(4)              Charge on conversion of Pre-RTO Loan notes

Between 6 May 2022 and 31 December 2022, Eco Buildings Operations Limited issued £645,000 of unsecured convertible loan notes. In the event of admission of the Company and its parent to AIM these loan notes were to convert to a variable number of ordinary shares of the Company to provide a conversion value of 2:1.

On the 2 June 2023, loan notes were novated from Eco Buildings Operations Limited to Eco Buildings Group plc.

Following the re-admission of the Company to AIM on the 2 June 2023 the loan notes with a carrying value of €749,490 (£645,000) were converted into 2,345,455 shares at an issue price of 55p, with a total value of €1,498,980 (£1,290,000) resulting in a non-cash accounting charge of €749,490 being recognised in the income statement.

(5)              Loss per share

Basic earnings per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.  Pursuant to IAS 33.20 and in conjunction with IAS 33.64 the share consolidation that occurred in June 2023, changed the average number of shares without a concomitant change in the level of resources.  The number of common shares in issue prior to the share reorganisation in June 2023 is adjusted in accordance with the change in the number of ordinary shares as if the share reorganisation had occurred at the beginning of the period under review.

(6)              Intangible assets

(7)              Property, plant and equipment

(8)              Borrowings

(a)   RTO Convertible Loan Notes

Between 6 May 2022 and 31 December 2022, Eco Buildings Operations Limited issued £645,000 of unsecured convertible loan notes. The loan notes converted to shares on 50% discount on Admission of the Eco Buildings Group plc to AIM.

(b)   Eco Buildings Operations Limited Loan Note

On 3 March 2022 the Group entered into an agreement to acquire operational assets from Gulf Wall FZO, a company registered in Dubai, United Arab Emirates. The consideration for this purchase was the issue of shares in Eco Buildings Group Ltd and the issue of $1,000,000 (£759,763) loan note. The terms of the loan note were agreed on 7 September 2022.  The loan note has a four-year term and an interest rate of 2%.  As at 30 June 2024 the loan note held at amortised cost had a balance of €862,854. (31 December 2023 - €811,533).

(c)    Series 11 Loan Note

On 27 May 2020 Eco Buildings Group PLC reached agreement with the holders of the Series 3, 4, 6, 7, 8, 9 and 10 loan note holders to reschedule the terms of the loan notes.  The existing loan notes were cancelled and replaced by the Series 11 Loan Note.  The Series 11 Loan Note has an interest rate of 2% per annum.  The Loan note was due for conversion or repayment on the 1 December 2026 with a conversion price of 5p.  

The noteholders had the right, in the event of a change of control of the Company, to give written notice to the Company to require that the interest rate on the stock increases to 25% per annum with effect from the date of the change of control. In the event the noteholders elected to increase the interest rate, the Company may repay the stock at par, together with all accrued interest.  On 27 April 2023, the Company amended the Series 11 CLNs pursuant to which the terms of the Series 11 Instrument were altered to agree that (i) the Acquisition shall not cause the interest rate payable pursuant to the Series 11 Instrument to increase, notwithstanding that a change of control of the Company will occur, and (ii) the Series 11 CLNs would convert at a rate of 80 pence per ordinary share.

As at 30 June 2024, the Series 11 Loan Note held at amortised cost had a balance of €2,413,044 (31 December 2023- €2,297,603).  The Stockholders' option to convert the loan has been treated as an embedded derivative and measured at fair value.  As at 30 June 2024 the derivative had a value of €555 (31 December 2023- €555).  The fair value has been assessed using a Black Scholes methodology. The derivative is classified as a level 3 derivative on the basis that the valuation includes one or more significant inputs not based on observable market data.

(d)   Gulf Loan Note

As consideration for the acquisition of Gulf Marble Investments Limited Eco Buildings Group plc 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 was repayable from 1 October 2020.  The Loan Note carries an interest rate of Libor plus 1.5% payable annually in arrears.  The Gulf Loan Note was amended on 7 August 2021 pursuant to which the total principal amount to be repaid under the Notes was increased to €1,885,000. In addition, interest shall accrue in respect of the GM Notes at the rate of 4.5% in the period from 8 August 2021 to 1 January 2025. Furthermore, if the Company raises more than €7 million prior to the date of repayment of the Notes, 25% of the Notes are to be repaid immediately.

As at 30 June 2024, the Gulf Loan Note held at amortised cost had a balance of €1,911,461 (31 December 2023 - €1,824,313).  The Stockholders' option to convert the loan has been treated as an embedded derivative and measured at fair value.  As at 30 June 2024, the derivative had a value of nil (31 December 2023 - nil).  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)   Other Borrowings held at amortised cost

In July 2021 Eco Buildings Group Plc borrowed £50,000 under the Covid bounce back loan scheme.  The loan carries an interest rate of 2.5% and is repaid in monthly instalments over five years.  As at 30 June 2024 there remained €24,507 outstanding on this debt.

The Directors consider that the carrying amount of borrowings approximates their fair value at 30 June 2024.

(9)              Share capital

In accordance with IFRS 3 - Business Combinations, as applied to a reverse acquisition, the share capital in the consolidated accounts of Eco Buildings Group PLC reflects the share capital of the legal acquirer, Eco Buildings Group PLC, with the difference between share capital of the legal acquirer and the accounting acquirer, Eco Buildings Operations Limited (formerly Eco Buildings Group Ltd), being aggregated and shown as part of retained earnings and other reserves.

On the 2 June 2023 each Ordinary Share in the issued share capital of the Eco Buildings Group PLC at the 1 June 2023 was sub-divided into 13 Sub-divided Shares, following which 113,974 Sub-divided Shares were issued at nominal value. Following the Sub-divided Share Issuance, every 659 Sub-divided Shares was consolidated into one Post-Consolidation Ordinary Share and then each Post-Consolidation Share was sub-divided into one New Ordinary Share with a nominal value of 1p and one New Deferred Share with a nominal value of 50p.

The New Ordinary Shares have the same rights as the previous Ordinary Shares including voting, dividend, return of capital and other rights.

The New Deferred Shares do not have any voting rights and do not carry any entitlement to attend general meetings of the Company; nor will they be admitted to AIM or any other market.

The Share Reorganisation resulted in the Company having 8,232,857 New Ordinary Shares and 8,232,857 New Deferred Shares being in issue immediately following the Share Reorganisation. 

Issue of Shares

On 7 February 2024 Eco Buildings Group PLC raised £827,000 via a subscription for  new ordinary. The Subscription was effected at a price of 12 pence per share.

Warrants over new ordinary shares were issued on the basis of one for every one Subscription Share.  The warrants have a three-year term, with an exercise price of 12p for the first 12 months, 19p for the following 12 months, and 26p for the final twelve months.

Following the admission of the new ordinary shares, the total issued share capital of the Company was 76,961,747 ordinary shares, each with voting rights.

On the 2 June 2023, following the share reorganisation described above the Company issued in aggregate 61,837,223 new ordinary shares representing the total of the Placing Shares, the Consideration Shares and the CLN Shares)

﷐      The Placing shares were issued as part of placing to raise £2.7 million prior to expense at a placing price of 55p.

﷐      Consideration shares were issued in settlement of the consideration price for the acquisition of Eco Buildings Group Ltd .

﷐      CLN Shares were issued as settlement of the Convertible Loan Notes totalling £645,000 novated into the Company as part of the Acquisition of Eco Buildings Group Limited as noted above

(10)            Events after the reporting period

On 21 August 2024 Eco Buildings Group PLC announced that it had raised £450,000 via a subscription for  new ordinary. The Subscription was effected at a price of 10 pence per share.

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