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UPDATE - Fox Marble to pull out stops to make up for delays

Last updated: 14:55 03 Aug 2015 BST, First published: 08:12 03 Aug 2015 BST

MarbleSlabs
The company's order book at €2.8mln does not tell the whole story

---ADDS CEO COMMENTS---

Fox Marble (LON:FOX) shares tumbled after the company warned delays have slowed revenue growth but chief executive Chris Gilbert had some comforting words for shareholders.

First half revenues clocked in at €110k, which was lower than expected due to slower than expected completion of deliveries on its order books. The company suffered delays in accessing the new Malasheva quarry while progress in the development of its Sivec quarries in Macedonia was not as rapid as hoped.

The new Malasheva quarry (Malasheva 2) contains Illyric off-white marble that is particularly popular in North America, and Fox Marble expects to start shipping marble from this quarry in the second half of the year as it is now on the verge of gaining access to the site.

Chief executive officer (CEO) Chris Gilbert pledged the company would pull out all the stops to make up for lost time at the site and looked forward to sales of the marble making an impact on the company's bottom line.

Meanwhile, in Macedonia, the company is negotiating with the owners of a site adjacent to Fox's Sivec quarries, with a view to gaining access to higher grades of Sivec more rapidly than can be achieved from Fox's own sites.

CEO Chris Gilbert described the Sivec marble as “our high-end calling-card into the market” and revealed to Proactive Investors “that the very high grade Sivec that exists in the marketplace at the moment between ourselves and the only other quarry in the world that produces it, we have now delivered in to Carrara [the Italian cutter and polisher that Fox Marble is using until its own factory is up and running]; we have now delivered our first orders of the very white Sivec marble.”

The marble is ready to be shipped into London, Gilbert disclosed, where house builder Berkeley Group is keen to get its hands on it.

“That's a very encouraging step for us,” Gilbert asserted. “We now have Sivec coming off the production line in Macedonia.”

Fox Marble shareholders can take heart from the fact that deliveries of the much sought-after Sivec will kick in during the second half of the year, providing a boost to cash flow.

Completing what has been a frustrating first half for the company, there has been a fire at the premises of the company responsible for supplying and refurbishing two major pieces of machinery due to be installed at Fox Marble's factory in Kosovo.

The direct cost to the company is expected to be minimal, thanks to insurance, but it does mean the company will have to source alternative sources of material, which will lead to delays in the start of operations at the factory, having a knock-on effect on full-year revenues.

“We have put in local processing in Macedonia to pick up the slack,” Gilbert divulged.

“The processing that we are doing in the region is at a very attractive price indeed,” Gilbert assured Proactive Investors, adding that it would improve margins, as the cost is cheaper than the Carrara operations in Italy..

Another plus is that the company's order book remains very healthy at €2.8mln, half of which is expected to be realised in 2015, and the cash balance remains positive at €5.6mln.

Gilbert said the order book does not reflect any expected activity in relation to the company's Chinese sales partners, and so if, as expected, the company comes back for another consignment of stone, that would provide a boost to the order book.

"Whilst the first half has been disappointing in terms of sales and we have had some unforeseen operational frustrations, we remain confident in our objective of being a major international supplier of high quality marble,” Gilbert told investors.

“In order to underpin the development of our sales channels we have appointed three additional experienced marble sales staff over the last few months, and we expect that this will also bear fruit as we bring on the production of Illyric White marble from Malesheva 2 and larger volumes from the Sivec quarries in Macedonia," he added.

Shares in Fox Marble tumbled 5.05p to 16.95p in early trading, having been on a strong run since mid-April.

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