FOX.L Regulatory News (FOX)

Fox Marble Holdings plc

 ("Fox Marble" or the "Company")

Preliminary Results for the year ended 31 December 2015

Fox Marble, the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region is pleased to announce its preliminary results for the year ended 31 December 2015.

Operational Highlights

• 10,700 tonnes of marble extracted during 2015 (2014 - 14,188 tonnes).

• Strategic relationship and long-term distribution agreement entered into with Eboracum Marble Limited.

• Completion of factory anticipated during the summer of 2016. All major equipment currently in place or due for installation.

• Order book value of €3.9 million as at 1 June 2016, part of which the Company has begun to deliver.

• Year to date sales of €0.25 million recognised as at 1 June 2016.

• Advanced payment of €0.39 million received from Eboracum Marble Limited during Q1 2016.

• On 13 May 2016, the Company announced that it had conditionally raised £2,000,000 (before expenses) by way of a firm placing of 18,700,000 new Ordinary Shares at 10 pence per share and a conditional placing of 1,300,000 new Ordinary Shares at 10 pence per share, subject to shareholder approval of the resolutions at the General Meeting to be held on 1 June 2016. At the General Meeting held on 1 June 2016, all resolutions were duly passed. The Firm Placing Shares will be admitted to trading on AIM on 2 June 2016 and the Conditional Placing Shares are expected to be admitted to AIM no later than 30 June 2016.

Financial Summary

• Revenue of €0.23 million for the year to 31 December 2015 (2014: €0.15 million).

• Operating loss for the year of €2.51 million (2014: €2.12 million), net loss of €3.03 million (2014: €2.33 million) due to development costs of bringing the quarries to more consistent and larger block size production, and investment in targeted marketing activity to increase our worldwide presence through attendance at industry fairs and key events. Net loss for the year ended 31 December 2015 further includes a fair value adjustment to the loan note instrument of €0.38 million (2014: nil).

• Net cash position at 31 December 2015 of €2.8 million (2014: €4.7 million).

Chris Gilbert, CEO, commented: "Whilst it is fair to recognise the development of sales as being slower than we originally envisaged, we are pleased to report an increase in the Company's order book and a key strategic development in our long-term distribution agreement with Eboracum Marble Limited. Progress at the factory site brings the Company closer to self-sufficiency and to a key stage in its development, with completion entailing increased margins and direct sales opportunities across multiple distribution networks, including the Balkans locally.

Our recent £2m fundraise provides the financial resources with which to fully develop our global supply network, where we look to satisfy demand in the Middle East, North America, India, the Balkans and UK, a process expedited by our strengthening position on site in Kosovo and our targeted marketing campaign."

For further information please visit www.foxmarble.net.

Notes to Editors

Fox Marble Holdings Plc is an AIM quoted natural stone extraction Company operating in Kosovo and the Balkans region, with headquarters in the United Kingdom.

The Company has been granted mining licences in relation to six separate marble quarries and completed a maiden JORC resource indicating an in-situ valuation of approximately Euro 16.5 billion. Established in 2011, Fox Marble has access to over 300 million cubic metres of premium quality marble.

Fox Marble also has rights to extract marble from the Drini and Malesheva quarries, both in Kosovo and from the Prilep Quarry in Macedonia.

Chairman's statement

Dear Shareholder,

It was disappointing to report in the Company's year-end trading update that we have not seen the progress we anticipated during 2015. Clearly we were over optimistic in forecasting deliveries against our order book and the build-up of sales. Indeed the level of sales achieved in the year was particularly disappointing. Also the completion of our factory in Kosovo was delayed, partly due to a fire at one of our equipment supplier's factories.

Nevertheless your company has made progress. Our order book is growing, our quarries are producing a consistent quantity and quality of marble and our cutting and polishing factory in Kosovo is now nearing completion. Fox Marble's attendance as an exhibitor at the Veronafiere, the international trade fair for stone, design and technology, was well received and we have secured a large order and cash payment from a new distributor, Eboracum Marble Limited. In addition, we have recently announced the new block purchase agreement signed with Karailias Marble Limited.

Four quarries are in operation at Cervenilla, Syrigane and Malesheva in Kosovo and Prilep in Macedonia, and are now producing nine varieties of stone. 10,700 tonnes of marble were extracted during 2015, as the Company worked to access larger and more consistent blocks at each of the quarries. During 2015, we were able to re-commence quarrying at our Malesheva site and began extraction of the Illirico Bianco marble, along with an exciting new silver-grey marble for the Company, known as Illirico Selene.

The factory at Lipjan is nearing completion. This was delayed in 2015 by an unexpected and unfortunate fire at our supplier's factory in Italy which destroyed two key pieces of equipment. Replacement equipment has been sourced and is currently under installation at the factory site. The factory will open up a number of new sales channels and in particular, the local Balkan market for cut and polished tiles. It will also remove our reliance on our cutting and polishing operations in Carrara, Italy, with consequent cost benefits.

Sales for the year were €0.23 million, significantly below our expectations. This is largely due to our significant time investment to forge strategic relationships and demonstrate our capacity to provide the consistent quality and quantities of marble our customers require. To date we have confirmed orders for 2016 of €3.9 million.

The results for the year reflect ongoing costs incurred in developing our quarries, quarry operating expenses, overhead expenditure and a fair value adjustment to the loan note instrument. Costs are being managed tightly, particularly in this period before we have established a large, stable and recurring level of sales. The loss for 2015 was €3.0 million. Net cash at the year-end was €2.8 million.

On 13 May 2016, the Company announced that it had conditionally raised £2,000,000 (before expenses) and the proceeds will be used in the main to achieve the objectives of completing the factory, training our workforce and expanding our sales and distribution network globally.

Your Board is responsible for ensuring that the Company operates to high standards of corporate governance, ethical standards and integrity. Your non-executive directors bring a wealth of relevant experience and provide constructive and supportive challenge to the executive directors. Overall I believe your Board is working well.

I would like to thank all our employees who work so hard and have embraced our vision to establish Kosovo as a major supplier of high quality marble worldwide. We are most grateful for their on-going support and dedication.

I remain confident in the significant potential and prospects for Fox Marble. Our objective is to become the leading supplier of premium marble from Kosovo and South East Europe, thereby establishing a substantial marble industry and employment in Kosovo and generating attractive returns for our shareholders. We are at a critical stage in the development of the Company as we build sales ahead of achieving cash break even. The completion of the factory in Kosovo and access to the local market, building our order book, and tight control of costs are critical to the achievement of our objective.

Andrew Allner

Non-Executive Chairman

1 June 2016

Strategic Report

Business activities

Quarry operations

Four of Fox Marble's quarries are currently in operation at Cervenilla, Syrigane, Malesheva and Prilep producing nine varieties of stone. In total 10,700 tonnes of marble have been extracted from these quarries in the year (2014: 14,188). In addition, the Group currently has six further quarries under licence or operating agreements.

Fox Marble has focussed on opening new benches at the existing quarries during 2015 so as to access larger and more consistent blocks from each site.

Cervenilla

This site was the first of ours to be opened in November 2012. The quarry is being exploited across three separate locations (Cervenilla A, B & C) from which red, light and darker grey marble is being produced in significant quantities, with over 5,350 tonnes quarried in 2015. The quarry is producing large compact blocks which have been sold both as blocks and processed into polished slabs for sale and is the source for the Grigio Argento being supplied to Pisani for installation into the Berkeley Homes Chelsea Creek development.

Syrigane

The quarry at Syrigane (formerly Suhogerll) is open across two benches. The site contains a variety of the multi-tonal breccia and callacatta type marble and has been producing significant volumes of breccia marble in large compact blocks, with over 4,000 tonnes of marble quarried in 2015.

Malesheva

In July 2013 the Company acquired the rights to the Malesheva quarry in Kosovo from a local company. The licence to the quarry is for 20 years with an irrevocable option to extend the period by a further 20 years thereafter. The Company will pay a royalty of 20% on net revenue generated from the sale of block marble to the previous licence holder of the quarry.

In October 2015, the Company acquired the rights to a further 300-hectare site close to the Company's existing licence resource in Malesheva from a local company. By November 2015, this quarry had been opened and the first blocks extracted and sent for testing. As the two Malesheva quarries are adjacent, operational efficiencies can be achieved.

These quarries contain a mixture of Cremo Olta marble, Illirico Bianco marble and a new silver-grey marble known as Illirico Selene.

Based on early orders of the Bianco Illirico from the new Malesheva quarry and queries from distributors, the Company has found that demand for Illirico marble is strong, particularly in North American markets, and the Company believes that this marble could become the largest volume seller of its mid-priced marble range.

Prilep

The Company entered into an agreement to operate a quarry in Prilep, Macedonia in 2013. The agreement is for a period of 20 years with an irrevocable option to extend the period for a further 20 years thereafter. The Prilep quarry contains the highly desirable white Sivec marble, currently available from only one other quarry in the world.

This type of marble has been used in a number of prestigious projects, including the construction of the Sheik Zayed Grand Mosque in Abu Dhabi. The demand for Sivec exceeds current world supply and once the quarry site reaches full levels of commercial production we anticipate rapid sales of this stone. Sivec marble represents the most expensive marble in the Fox Marble portfolio.

The Prilep Alpha quarry is controlled by a local partner who has appointed Fox Marble to operate the quarry on its behalf. Fox Marble will receive 42.5% of the gross revenue from the sale of all block marble from this quarry, without having to fund the cost of equipping or investing in the reopening of the quarry. The Company will be responsible for the costs associated with extracting the marble from the quarry.

This quarry is open and producing, and operations are being ramped up to reach full levels of commercial production.

In August 2014 the Company entered into a sub-lease arrangement with New World Holdings (Malta) Limited to acquire the rights to a second Sivec marble quarry - the Omega Sivec quarry at Prilep in Macedonia. This new quarry site is adjacent to the Company's existing operations in Prilep. The consideration for the sub-lease was £1,000,000 and a subsequent 40 per cent. gross revenue royalty obligation. The sub-lease has an initial term of 20 years, which is extendable by the Company for a further 20 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. Fox Marble estimates that the quarry will require approximately £600,000 of capital expenditure investment to reach commercial production.

Other quarry sites

The Company also holds exploitation licences for quarries at Antena, Verrezat and Peja and an operating agreement over a quarry at Drini. These sites are not currently being quarried, pending their further development.

Processing Factory

A 5,400 square metre double skinned steel factory for the cutting and processing of blocks into polished tiles and slabs has been erected on a 10-hectare site the Company has acquired in Lipjan, close to Pristina airport.

The Company's factory is nearing completion. An unexpected fire in July 2015 at our supplier's factory in Italy destroyed their facility, our equipment and disrupted our manufacturer's supply and installation programme. Our polishing and resin lines are being assembled in Italy pending delivery and installation in the next three months. The fit out and installation of equipment is nearing completion and it is anticipated that the Company will be processing its materials during the course of summer 2016. The external gantry crane for moving blocks, and the internal gantry crane, are both installed and operational. A team of engineers is currently installing two of the three eighty blade block processing gangsaws. The Company's factory will open up a number of important new sales channels for the Company and provide a further boost to the economics, given the high margin derived from the cutting and polishing industry for marble.

It is anticipated that the factory will be operational all year and capable of operating a multi-shift work programme. This is currently the only block processing facility in Kosovo, Albania and Montenegro. The nearest comparable facility is in Macedonia, close to the Greek border.

Sales and Marketing

Sales and marketing has remained the primary focus for the Company over the last twelve months. Sales for 2015 were lower than originally estimated as it has taken longer than anticipated to crystallise a number of potential transactions and offtakes. However, Q4 of 2015 saw significant progress and Fox Marble has entered into a material contract of €2m for all our materials via a new UK distributer, Eboracum Marble Limited. The Company has received an advance payment on this order of €390,000 (£300,000) and has begun delivery in 2016.

Early in 2015 the Company announced that it had supplied 900 sqm of polished slabs of its grey Argento Grigio marble to St George plc, which is the prestige home division of Berkeley Homes plc. Since completing the above order, the Company received additional orders via Pisani, our longstanding UK distributer, and its offtake agreement with the Company, from St George plc for two different types of marble (white and grey), part of which was supplied to its Chelsea Creek development throughout 2015 and the balance will be supplied in 2016. This order has a total value of €570,000 of cut and polished slabs.

The order with Berkeley Homes plc is a testament to the quality of our marble, and in particular the attractiveness of our grey Argento Grigio stone. We look forward to developing a long-term relationship with this prestigious house builder.

The Company has entered into an agreement to supply its minimum grade blocks of Sivec to a new customer, Karailias Marble Limited, based in Greece. The initial order is for a minimum of €440,000 worth of blocks to be delivered prior to the 2016 year end. It is anticipated that will result in additional orders throughout the year.

As a result the order book for 2016 currently stands at €3.9 million.

The Company has distributed samples and marketing materials across over 20 countries including the Middle East, Europe, the United States of America and Asia.

World marble production and demand

World dimension stone production was estimated at 136.5 million tonnes in 2014, an increase of five percent on 2013 estimate world dimension stone production. The top three producing countries in 2014 were China, India and Turkey. World dimension stone production is forecast to reach 172.75 million tonnes by 2020.

Global demand is divided into sale of processed marble slabs and raw marble blocks, with China being the largest importer of stone, taking 45% of the global trade followed by the USA with 13%, in 2014. The largest exporters of stone in 2014 by share of the world market were China (30%), followed by India (21%) and Turkey (17%).

(Source: XXVI World Marble and Stones Report 2015 by Carlo C. Montani).

The Group recorded revenues in the year of €229,242 (2014 - €149,924). The Group incurred an operating loss of €2,401,864 for the year ended 31 December 2015 (2014 - €2,116,259). The increase in operating loss reflects the costs incurred to bring the quarries to a stage required for production of more consistent and larger block sizes and investment in targeted marketing activity to increase our worldwide presence through attendance at industry fairs and key events.

The Group incurred a loss after tax for the year ended 31 December 2015 of €3,034,084 (2014 - €2,325,489).

The Company does not anticipate payment of dividends until the operations become significantly cash generative. The Directors intend to adopt a progressive dividend policy when it becomes commercially prudent to do so.

The Future

In the coming year we hope to fulfil a number of key milestones for the Company, including commissioning of the factory and increasing levels of production in all our quarries. In addition and most significantly we expect to see the Company winning further significant orders for its product as we continue to develop our branding, marketing and sales. We anticipate that revenue will increase as more customers purchase our stone and already we are seeing the results of our efforts in establishing our product in key marketplaces throughout the world and the benefit or having our marble actually installed in developments. Success with our on-going marketing and strategic relationship building programme makes us confident of achieving sustainable income from a diverse, global range of customers for both our block and slab products.

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

We are always trying to identify and address areas of future risk. As the operations have been rolled out, the Company has sought to impose a rigorous health and safety culture across the Group, ensuring buy-in to this by all staff. This is reflected in the commitment of senior management time and effort. Effective training in safety consciousness will be a continuing policy.

An ethics policy was also put in place and communicated throughout the Group. Ensuring systems to maintain compliance and make third party contractors aware of and committed to our policy is a requirement under the Bribery Act and we will therefore take further measures to communicate and monitor compliance with our policies beyond the Group.

The Company regularly reviews the risks and uncertainties facing the business through a regular series of board and operational meetings. 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 all of the hazards and risks associated natural resource companies. These risks and uncertainties include, but are not limited to, environmental hazards, industrial accidents, labour disputes, geological problems, unanticipated changes in rock formation characteristics, encountering unanticipated ground or water conditions, land slips, flooding, levels of wastage, periodic interruptions due to 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 properties, 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 detailed procedures. Oversight of the Groups 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 aspects of communication on safety. Other operational risks are mitigated through the use of trained personnel, detailed monitoring of operations on a technical and geological basis to ensure that issues are identified and addressed promptly.

Quarry development risk

Certain 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. In the event that the marble mined is of a lower quality than expected, then demand for, and 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 sufficient potential in terms of inferred and indicated resources.

Factory development risk

The Group's planned processing factory is currently under construction. Completion and commissioning of the factory and its operations could be subject to delays and capital assets may exceed planned cost. To mitigate this risk factory development is subject to robust budgeting and cost control processes, and project management and completion timetables are reviewed and approved by senior management.

Production and sales risk

To date the Group has not commenced full commercial production at all of its quarries. There can be no assurance that the Group will be profitable in future. The Group expects to continue to incur losses unless and until such time as some or all of the quarries enter into commercial production and generate 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 over the next twelve months.

To mitigate this risk, quarry operations have approved business plans and targets whilst 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 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 heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that existing or future environmental regulation will not materially 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 help 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 local government.

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 succession planning is being developed to ensure skills development and retention and proactive recruitment processes are in place.

The Group's activities expose it to a number of risks including cash flow risk, liquidity risk and foreign currency risk.

Finally, I would like to thank all our staff and our Board colleagues for their unstinting efforts on behalf of Fox Marble.

Chris Gilbert

Chief Executive Officer

1 June 2016

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2015

Consolidated Statement of Financial Position

As at 31 December 2015

Consolidated Statement of Cash Flows

For the year ended 31 December 2015

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

Notes to the Consolidated Financial Statements

1. General information

The principal activity of Fox Marble Holdings plc and its subsidiary companies Fox Marble Limited, H&P Sh.p.k, Granit Shala Sh.P.K, Rex Marble Sh.P.K and Fox Marble Kosova Sh.P.K (collectively "Fox Marble Group" or "Group") is the exploitation of quarry reserves in the Republic of Kosovo and South East Europe.

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 15 Kings Terrace, London, NW1 0JP. 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 and parent company financial statements (together "the financial statements") have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue as endorsed by the European Union and the requirements of the Companies Act applicable to companies reporting under IFRS. IFRS includes Interpretations issued by the IFRS Interpretations Committee (formerly - IFRIC).

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 consolidated and parent company financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with EU adopted 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 accounting policies set out below have been applied consistently across the Group and to all periods presented in these financial statements.

3. Critical accounting estimates and areas of judgement

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 have to be met before estimated quarry reserves can be designated as ''proved'' and ''probable''. Proved and probable quarry reserve estimates are updated at regular intervals taking into account 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 taken into account in impairment assessments of non-current assets.

Treatment of convertible loan note

On the 31 August 2012 the Company issued €1,295,278 (£1,060,000) fixed rate convertible unsecured loan note 2017 under the terms of the agreement signed 24 August 2012 with Amati Global Investors Limited ("Series 1 Loan Note").

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 receiving a fixed amount of foreign currency cash 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 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 €25,744 at 31 December 2015 (2014 - €30,838).

Inventory valuation

Inventories are stated at the lower of cost and net realisable value. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

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 management has considered:

(a) the current working capital position and operational requirements;

(b) the sensitivities of forecasts sales figures in the next two years;

(c) the timing and magnitude of planned capital expenditure; and

(d) the strategic exploitation of the company's significant resources.

The Company is subject to a number of risks and uncertainties, which may impact on the forecast financial performance on the company. The following risk factors, which are not exhaustive, are considered particularly relevant to the Group's ability to function as a going concern.

(a) The Malesheva and Prilep quarries are not currently at full level of commercial production. The amount of marble quarried at these sites is expected to increase significantly over the next twelve months. Levels of production can be impacted by unforeseen delays due to inclement weather, equipment failure or the need to re-site the quarry bench. Delays in reaching anticipated levels of production may impact the Group's ability to generate revenues or achieve profitability.

(b) Equipment at the Group's marble processing factory is currently being installed. Once installation is complete machinery will need to be tested, and a workforce recruited and trained. Completion could be subject to delays or cost overruns. This would impact the ability of the company to process marble at its own site and impact the profitability of the Company's future operations.

(c) The Group's level of historical sales is low and the volume of sales is anticipated to grow over the next twelve months. There can be no assurance however that sales will be realised, that the Group will generate sufficient revenues or achieve profitability.

In the event that the cash receipts from sales are lower than anticipated the Company identified that it has available to it a number of contingent actions it can take to mitigate the impact of potential downside scenarios. These include reviewing planned capital expenditure, redeploying company resources to more profitable resources, reducing overhead, renegotiating terms on its existing loan notes and seeking additional financing.

As a result of the review of the projected cash flows and risk factors, on 13 May 2016 the Company announced that it had conditionally raised £2,000,000 (before expenses) by way of a firm placing of 18,700,000 new Ordinary Shares at 10 pence per share and a conditional placing of 1,300,000 new Ordinary Shares at 10 pence per share, subject to shareholder approval of the resolutions at the General Meeting to be held on 1 June 2016. At the General Meeting held on 1 June 2016, all resolutions were duly passed. The Firm Placing Shares will be admitted to trading on AIM on 2 June 2016 and the Conditional Placing Shares are expected to be admitted to AIM no later than 30 June 2016.

In conclusion having regard to the existing working capital position, the placing of new Ordinary Shares and projected sales, the Directors are of the opinion that the Group has adequate resources to enable it to undertake its planned activities for the next twelve months.

5. Expenses by nature

During the year the group (including its overseas subsidiaries) obtained the following services from the company's auditors and its associates:

6. Fair value adjustment

The fair value adjustment of €379,476 for the year ended 31 December 2015 is as a result of a revision to the fair value of the loan note instrument using the increased interest rate of 25% (2014 - nil). Further detail on the instrument can be found in notes 11 and 15.

7. Finance costs

On the 31 August 2012 the Company issued €1,295,278 (£1,060,000) fixed rate convertible unsecured loan note 2017 under the terms of the agreement signed 24 August 2012 with Amati Global Investors Limited. Interest accrued on the loan notes at 8% per annum from the date of issue due quarterly in arrears until 31 August 2015. From 1 September 2015, the interest rate increased to 25% per annum, payable quarterly in arrears.

8. Loss per share

Basic loss 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.

Diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of the Ordinary Shares which would be in issue if all the options granted other than those which are anti-dilutive, were exercised.

The following potentially dilutive instruments have been excluded from the calculation of weighted average number of ordinary shares for the year ended 31 December 2015 for the purpose of calculating diluted loss per share on the basis that the instruments would be anti-dilutive.

· A warrant instrument entered into by the Company dated 24 August 2012, pursuant to which the Company issued Warrants to subscribe for an aggregate of 1,188,250 Ordinary Shares to Fox-Davies Capital Limited.

· A warrant instrument entered into by the Company dated 24 August 2012, pursuant to which the Company issued Warrants to subscribe for an aggregate of 369,250 Ordinary Shares to Merchant Securities Limited.

· Warrant instruments entered into by the Company dated 8 August 2013 and 28 August 2013, pursuant to which the Company issued Warrants to subscribe for an aggregate of 882,727 Ordinary Shares to Merchant Securities Limited.

· A grant of 120,000 options granted under the DSOP.

· Shares issuable under unsecured convertible loan notes issued by the Company.

9. Intangible assets

Capitalised exploration and evaluation expenditure represents rights to the mining of decorative stone reserves in the Peja, Syrigane (formerly Suhogerll) and Rahovec quarries.

The Group has been granted rights of use by the local municipality for twenty years over land in the Syrigane and Rahovec region through acquisition of the issued share capital of Rex Marble SH.P.K and H&P SH.P.K.

On the 16 August 2014 the Company entered into a sub-lease arrangement with New World Holdings (Malta) Limited in relation to the Omega Sivec marble quarry at Prilep in 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 20 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.

10. Property, plant and equipment

11. Convertible loan note

(1) The liability includes a fair value adjustment of €379,476 for the year ended 31 December 2015 as a result of a revision to the fair value of the loan note instrument using the increased interest rate of 25% (2014 - nil).

On the 31 August 2012 the Company issued €1,295,278 (£1,060,000) fixed rate convertible unsecured loan note 2017 under the terms of the agreement signed 24 August 2012 with Amati Global Investors Limited ("Series 1 Loan Note").

Interest accrued on the Series 1 Loan Note at 8% per annum from the date of issue due quarterly in arrears, until 31 August 2015. On the third anniversary of issue, 31 August 2015, the interest rate was raised by the loan note holder to 25%. As a result, the loan note becomes repayable at the option of the Company.

On the 29 August 2013 the Company paid interest of €104,643, being the interest that had accrued between 24 August 2012 and 31 August 2013. These funds were used by Amati Global Investors Limited to subscribe for shares in the Company as part of the secondary placing in 2013. The Company elected to capitalise the remaining interest due until 31 August 2014. The accrued capitalised interest of €117,855 was repaid by the Company on the 28 February 2015.

At any time prior to repayment of the Series 1 Loan Note, a Stockholder may issue a conversion notice. The Stockholder will receive such number of fully paid Ordinary Shares as satisfied by the formula: 1 Ordinary Share for every y pence nominal of Stock converted, where y is the lesser of: 20 + (number of whole months which have lapsed between the date of issue of the Stock held by the Stockholder and the date of receipt of by the Company of a conversion notice multiplied by 0.1666); and 26.

If the Series 1 Loan Note is not converted at the Stockholders request it must be repaid in full on the 5th anniversary of the instrument date. The Series 1 Loan Notes may be repaid earlier in the event the interest rate rises to 25%.

As at 31 December 2015 the loan note held at amortised cost had a balance of €1,824,012 (2014 - €1,471,854). The Stockholders option to convert the loan has been treated as an embedded derivative and measured at fair value. As at 31 December 2015 the derivative had a value of €25,774 (2014 - €30,838). The fair value has been assessed using a Black Scholes methodology.

The directors consider that the carrying amount of borrowings approximates their fair value at 31 December 2015.

Costs of €103,551 were incurred in connection with the issue of this Series 1 loan note. Costs are amortised over the period of the loan. As at 31 December 2015 the balance of these costs was nil (2014 - €23,011).

12. Share capital

The Company has one class of ordinary share capital.

a. On a resolution at a general meeting, every member (whether present in person, by proxy or authorised representative) has one vote in respect of each ordinary share held by him.

b. All ordinary shares rank equally in the right to participate in any approved dividend distribution applicable to this class of share.

c. Except as otherwise provided below, all dividends must be

i. Declared and paid according to the amounts paid up on the shares on which the dividend is paid; and

ii. Apportioned and paid proportionately to the amounts paid up on the shares during any portion of the period in respect of which the dividend is paid.

d. If any share is issued in terms of providing that it ranks for dividend as from a particular date, that share ranks for dividend accordingly.

e. In the event of any winding up all shares will rank equally in relation to distribution of capital.

f. All shares are non-redeemable.

On the 4 August 2014 the Company issued 26,388,883 shares at a price of 18p per share as part of the Secondary Placing on AIM, following shareholder approval at a general meeting.

On the 15 May 2015 the Company issued of 10,000,000 shares at a price of 20p per share as part of a Secondary Placing on AIM. The shares placed were within existing authorities held by the Board of Directors.

The Company has recognised transaction costs of €138,591 in relation to the issue of share capital within share premium in the year to 31 December 2015 (2014 - €449,146).

13. Accumulated losses

Accumulated losses include a charge of £6,035,228 incurred in the year ended 31 December 2012.

Between 25 August 2011 and 29 September 2011 Fox Marble Limited issued €1,508,807 (£1,195,000) of unsecured convertible loan notes due 2016 ("Pre IPO loan note"). 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 5:1. On the 24 August 2012, following the acquisition of Fox Marble Limited by Fox Marble Holdings plc the loan notes were novated from Fox Marble Limited to Fox Marble Holdings plc.

Following the admission of the Company to AIM on the 31 August 2012 the loan notes with a carrying value of €1,508,807 (£1,195,000) were converted into 29,875,000 shares at an issue price of 20p, with a total value of €7,544,035 (£5,975,000) resulting in a non-cash accounting charge of €6,035,228 being recognised in the statement of comprehensive income.

14. Capital commitments

Capital expenditure contracted for but not yet incurred at the end of the reporting period is as follows:

In addition to the above committed spending, the Group has planned expenditure in respect of the completion of its processing factory of €1,061,914 (2014: €946,410).

15. Events after the reporting period

a) On 13 May 2016, the Company announced that it had conditionally raised £2,000,000 (before expenses) by way of a firm placing of 18,700,000 new Ordinary Shares at 10 pence per share and a conditional placing of 1,300,000 new Ordinary Shares at 10 pence per share, subject to shareholder approval of the resolutions at the General Meeting to be held on 1 June 2016. At the General Meeting held on 1 June 2016, all resolutions were duly passed. The Firm Placing Shares will be admitted to trading on AIM on 2 June 2016 and the Conditional Placing Shares are expected to be admitted to AIM no later than 30 June 2016.

b) On 12 May 2016 Amati Global Investors Limited agreed to amend the terms of the loan note instrument signed on 24 August 2012 such that, subject to shareholder approval of the resolutions at the General Meeting, the interest rate on the Loan Note will revert to the more favourable 8% interest per annum in return for amending the conversion formula to 1 Ordinary Share for every 10 pence nominal of stock converted.

c) The Non-Executive Directors of the Company have agreed to utilise their fees (net of tax) to subscribe for Ordinary Shares in the Company. In addition, Executive Directors Christopher Gilbert and Dr Etrur Albani have agreed to utilise fifty per cent of their remuneration (net of tax) to subscribe for Ordinary Shares in the Company at the Company's request. The volume of Ordinary Shares subscribed for will be calculated quarterly in arrears and with reference to the 30-day volume weighted average price per Ordinary Share as at the time of issue.

16. Information

Copies of the Annual Report and Financial Statements will be posted to shaerholders. Further copies will be available from Fox Marble Holding plc's registered office at 15 Kings Terrace, London, NW1 OJP or on the company's website at www.foxmarble.net.

17. Adoption of Financial Reporting Standard 101 (FRS101)

Following the publication of FRS 100, "Application of financial reporting requirements", by the Financial Reporting Council, the Board considers that it is in the best interests of the group for the parent company to adopt FRS 101, 'Reduced disclosure framework'. FRS 101 applies only to the preparation of the parent company financial statements and does not impact on the preparation of the consolidated financial statements. Disclosures that will no longer be provided in the parent company financial statements for financial periods ending 31 December 2016 onwards are as follows: cash flow statement, related party transactions or balances with other wholly owned entities within the group, financial instruments and fair value measurement. Although the decision does not require formal shareholder approval, the Company is required to notify all shareholders and any shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in the Company may object. Objections must be served on the Company in writing and delivered to the Company Secretary at the Company Secretary's registered office (190 High Street, Tonbridge, Kent, TN9 1BE) not later than 31 July 2016.