Last checked at 24 Sep 2010 07:00
| Press Release | 24 September 2010 |
Pan Pacific Aggregates plc
("PPA" or the "Group")
Interim Results
Pan Pacific Aggregates plc (AIM:PPA), an operator of quarries in British Columbia, today announces its Interim Results for the six months ended 30 June 2010.
Interim Highlights
| • | Revenue of £171,000 (H1 2009: nil) |
| • | Reduced loss before tax of £832,000 (H1 2009: loss of £1,076,000) |
| • | Loss per share of 0.05p per share (H1 2009: 0.3p per share loss) |
| • | Balance of loan notes outstanding £nil (as at 30 June 2009: £5,165,000) |
| • | Cash reserves of £281,000 (as at 30 June 2009: £383,000). At 31 August 2010, cash reserves were £1,069,000 after a net fund raising in July of £1,397,000 |
Commenting on the results, William Voaden, Managing Director of Pan Pacific Aggregates, said: "I am pleased to report that the Group has met its targets of achieving production and generating revenue at Quadling Quarry in the period. While we remain in the pioneering and development stage, we are already achieving a positive gross margin. At the end of March, we made a final payment to RAB Capital to extinguish the convertible loan notes. The Board continues to seek out additional growth opportunities in order to move Pan Pacific Aggregates to the next phase of its development."
- Ends -
For further information:
| Pan Pacific Aggregates plc |
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| William Voaden, Managing Director | Tel: +44 (0) 77 7164 5139 |
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| www.panagg.com |
| Matrix Corporate Capital LLP |
|
| Louis Castro / Tim Graham | Tel: +44 (0) 20 3206 7000 |
| XCAP Securities plc |
|
| Tim Burge / Karen Kelly / David Newton | Tel: +44(0) 20 7101 7070 |
| VSA Capital Limited |
|
| Andrew A Monk | Tel: +44 (0) 20 7096 9580 |
Media enquiries:
| Abchurch Communications Limited |
|
| Nick Probert / Quincy Allan | Tel: +44 (0) 20 7398 7715 |
| nick.probert@abchurch-group.com | www.abchurch-group.com |
Chief Executive's Statement
Introduction
The first six months of the year has been a successful period for the Group in which it met its targets of achieving production and generating revenue at Quadling Quarry ("Quadling"). Substantial capital has been invested at Quadling which has allowed the Group to produce both mainstream as well as diversified specification aggregate products. This investment will lead to an increase in both volume and margin for the Group.
The progress achieved at Quadling will provide the foundation for PPA to continue to move towards profitability within the next twelve months. The major investment during this period has been the installation of the crushing and processing plant which has since contributed to increased sales volumes and a more diverse product range.
Operational Review
The Group's main operational focus during the remainder of the year will be twofold. First, PPA intends to complete the costly but essential pioneering work at Quadling to prepare the quarry for more development. Second, the Group intends to reduce its cost of production through greater efficiencies within the operational process and has set regular key performance indicators to achieve this.
In July 2010, as part of PPA's strategy to capitalise on the robust local construction market in the Vancouver area, the Group appointed Allan Coxworth as a senior salesman. Allan, formerly with Lehigh, a subsidiary of Heidelberg Cement, has already made a significant impact by contributing to the quality of our customers and increasing daily volumes at Quadling.
Financial Performance
Revenue for the six month period was £171,000 (H1 2009: £nil) and the loss before tax was reduced to £832,000 (H1 2009: £1,076,000 loss). Loss per share, basic and diluted, was 0.05 pence (H1 2009: 0.3 pence loss). Cash used in operations in the period was £686,000 (H1 2009: £354,000). Total capital and reserves attributable to equity shareholders of PPA at the period end were £5,675,000 (H1 2009: £841,000). After the period end, in July, the Group raised £1,500,000 (net proceeds £1,397,000) which has placed PPA in a strong position to continue to pursue its strategy in and around the Fraser Valley, British Columbia by developing a significant market presence, both organically and through acquisition.
PPA's financial performance demonstrates that Quadling is still in the pioneering and development stage of the quarrying process, although the Group is already achieving a positive gross margin; the costs attributed to the development of the quarry are non-recurring expenses which the Board expects will be completed by the year end. However, PPA's sales are reducing the impact of these ongoing costs within the financial statements. While a loss has been recorded during this period, this is mainly due to non-recurring development costs.
In the period, expenditures were made to build up the Group in preparation for production and revenue at Quadling, potential acquisitions and the sale of Wood Bay to release the RAB Capital loan notes, which has substantially reduced the financial costs. These non-recurring costs account for approximately 50% of the increase in PPA's administrative costs compared to the previous year. Additionally, the release of these loan notes has significantly reduced the ongoing financial expenses.
Statement of financial position
The statement of financial position has further improved due to a final payment made at the end of March 2010 to RAB Capital PLC in order to extinguish existing convertible loan notes. Furthermore, PPA's development work and further investments in Quadling increases the asset value of the quarry.
As at 31 August 2010, the Group had approximately £1,069,000 of cash.
Outlook
The Vancouver region continues to enjoy buoyant market conditions which have resulted in greater aggregates demand through commissioned infrastructure and construction based projects. The Group has and will continue to invest in additional plant to capitalise on this opportunity.
The Board remains positive that the Group will continue its progress and success during the second half of the year. The Board is looking to prepare PPA for the next phase of its development and continues to seek out additional growth opportunities including acquisitions.
A further trading update will be announced to the market within the next month.
The Board wishes to thank our shareholders for their continued support for PPA during the past year which has been challenging for all concerned.
William Voaden
Managing Director
23 September 2010
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June 2010
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| Unaudited | Unaudited | Audited |
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| Six month ended | Six month ended | Year ended |
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| 30 June 2010 | 30 June 2009 | 31 Dec 2009 |
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| Note | £'000 | £'000 | £'000 |
| Revenue |
| 171 | - | 2 |
| Cost of sales |
| (148) | - | (2) |
| Gross profit
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| 23
| -
| -
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| Impairment charge |
| - | - | (200) |
| Administrative expenses |
| (782) | (400) | (1,087) |
| (Loss) / profit from operations |
| (759) | (400) | (1,287) |
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| Financial expense |
| (74) | (677) | (745) |
| Financial income |
| 1 | 1 | 3,155 |
| (Loss) / profit before taxation |
| (832) | (1,076) | 1,123 |
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| Taxation |
| 9 | - | - |
| (Loss)/profit for the period/year attributable to the equity holders of the parent |
| (823) | (1,076) | 1,123 |
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| Other comprehensive income |
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| Exchange differences arising on the translation of foreign subsidiaries |
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(51) |
- | (95) |
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| Total comprehensive income attributable to: |
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| Equity holders of the parent |
| (874) | (1,075) | 1,028 |
| Minority interest |
| - | (1) | - |
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| (874) | (1,076) | 1,028 |
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| Loss per ordinary share |
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| Basic and diluted (pence) | 4 | (0.05) | (0.3) | (0.1) |
Pan Pacific Aggregates Plc
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2010
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| Unaudited | Unaudited | Audited |
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| At 30 June | At 30 June | At 31 December |
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| 2010 | 2009 | 2009 |
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| Note | £'000 | £'000 | £'000 |
| Assets |
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| Non-current assets |
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| Intangible assets |
| 3,904 | 3,862 | 3,890 |
| Property, plant and equipment |
| 4,127 | 3,809 | 3,065 |
| Total non-current assets |
| 8,031 | 7,671 | 6,955 |
| Current assets |
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| Inventories |
| 233 | 118 | 150 |
| Receivables |
| 149 | 3 | 80 |
| Cash and cash equivalents |
| 281 | 383 | 1,662 |
| Non-current assets held for sale |
| - | - | 725 |
| Total current assets |
| 663 | 504 | 2,617 |
| Total assets |
| 8,694 | 8,175 | 9,572 |
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| Liabilities |
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| Current liabilities |
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| Loan Notes |
| - | 5,165 | 725 |
| Trade payables |
| 634 | 519 | 443 |
| Other loans & payables |
| 1,523 | 837 | 1,006 |
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| 2,157 | 6,521 | 2,174 |
| Non-current liabilities |
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| Deferred tax |
| 796 | 813 | 813 |
| Other loans & payables |
| 66 | - | 36 |
| Total liabilities |
| 3,019 | 7,334 | 3,023 |
| Total net assets |
| 5,675 | 841 | 6,549 |
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| Capital and reserves attributable to equity holders of the company |
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| Called up share capital | 3 | 1,624 | 686 | 1,624 |
| Share premium account | 3 | 11,345 | 8,798 | 11,345 |
| Foreign exchange reserve |
| (600) | (396) | (549) |
| Reserve for options granted |
| 54 | 86 | 54 |
| Reserve for warrants granted |
| 178 | 72 | 250 |
| Retained deficit |
| (6,927) | (8,406) | (6,176) |
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| 5,674 | 840 | 6,548 |
| Minority Interest |
| 1 | 1 | 1 |
| Total equity |
| 5,675 | 841 | 6,549 |
Pan Pacific Aggregates Plc
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW
Six months ended 30 June 2010
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| Unaudited | Unaudited | Audited | ||
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| Six month ended | Six month ended | Year ended | ||
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| 30 June 2010 | 30 June 2009 | 31 December 2009 | ||
| Operating activities | £'000
| £'000
| £'000
| ||
| (Loss) / profit before taxation | (832) | (1,076) | (1,123) | ||
| Adjustments for |
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| Depreciation and amortisation | 33 | 13 | 51 | ||
| Impairment of investment | - | - | 200 | ||
| Gain on redemption of loan notes | - | - | (3,155) | ||
| Interest charge
| 74 | 583 | 745 | ||
| Share based payment expense | - | - | - | ||
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| 107 | 596 | (2,159) | ||
| Cash outflows from operating activities before changes in working capital | (725) | (480) | (1,036) | ||
| and provisions |
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| (Increase) / decrease in trade and other receivables | (69) | 37 | (42) | ||
| (Increase) / decrease in inventories | (83) | 8 | (24) | ||
| Increase in trade and other payables | 191 | 81 | 5 | ||
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| 39 | 126 | (61) | ||
| Cash outflows from operating activities | (686) | (354) | (1,097) | ||
| Investing activities |
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| Interest received | 1 | 1 | - | ||
| Disposal of property, plant and equipment | 5 | - | - | ||
| Purchase of property, plant and equipment | (626) | - | (221) | ||
| Cash flows from investing activities | (620) | 1 | (221) | ||
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| Financing activities |
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| Interest paid | (74) | (83) | (185) | ||
| Issue of ordinary share capital |
| 581 | 4,139 | ||
| Share issue costs |
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| (323) | ||
| Repayment of convertible loan notes |
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| (890) | ||
| Cash flows from financing activities | (74) | 498 | 2,741 | ||
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| (Decrease) / increase in cash | (1,380) | 145 | 1,423 | ||
| Cash and equivalents at beginning of the period | 1,662 | 238 | 238 | ||
| Exchange gain on cash and equivalents | (1) | - | 1 | ||
| Cash and equivalents at end of the period | 281 | 383 | 1,662 | ||
NOTES TO THE FINANCIAL INFORMATION
1. Accounting policies
Basis of preparation
The condensed interim financial information for the period 1 January 2010 to 30 June 2010 is neither audited nor reviewed by the auditors of Pan Pacific Aggregates Plc. In the opinion of the Directors, the condensed interim financial information for the period presents fairly the financial position, and the results from operations and cash flows for the period are in conformity with generally accepted accounting principles consistently applied. The financial statements incorporate comparative figures for the interim period 1 January 2009 to 30 June 2009 and the audited financial year to 31 December 2009.
The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. The comparatives for the full year ended 31 December 2009 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.
2. AIM Compliance Committee
In accordance with AIM Rule 31 the Company is required to have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules; seek advice from its nominated adviser ("Nomad") regarding its compliance with the AIM Rules whenever appropriate and take that advice into account; provide the Company's Nomad with any information it requests in order for the Nomad to carry out its responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisers; ensure that each of the Company's directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and ensure that each director discloses without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with reasonable diligence be ascertained by the director.
In order to ensure that these obligations are being discharged, the Board has established a committee of the Board (the "AIM Committee"), chaired by William Voaden, and Dr Anton Schrafl a non-executive director of the Company.
Having reviewed relevant Board papers and met with the Company's Executive Board and the Nomad to ensure that such is the case, the AIM Committee is satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.
3. Share capital
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| Allotted, called up and fully paid ordinary shares | Share | ||
| Company | Authorised | of £0.001 each | Premium | ||
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| Number | Number | £'000 | £'000 | |
| As at 1 January 2009 | 800,000,000 | 288,587,847 | 288 | 8,681 | |
| Increase in authorised shares | 400,000,000 |
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| Issue of shares |
| 398,166,665 | 398 | 186 | |
| Issue costs |
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| (69) | |
| As at 30 June 2009 | 1,200,000,000 | 686,754,512 | 686 | 8,798 | |
| Increase in authorised shares | 3,800,000000 |
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| Conversion of Loan Notes |
| 53,718,795 | 54 | 308 | |
| Issue of warrants |
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| (178) | |
| Issue of shares |
| 883,507,935 | 884 | 2,672 | |
| Issue costs |
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| (255) | |
| As at 31 December 2009 | 5,000,000,000 | 1,623,981,242 | 1,624 | 11,345 | |
| Issue of shares |
| - | - | - | |
| Issue costs |
| - | - | - | |
| As at 30 June 2010 | 5,000,000,000 | 1,623,981,242 | 1,624 | 11,345 | |
At an Annual General Meeting held on 21 May 2010, a resolution proposing to authorise the Directors to allot Relevant Securities (as defined in the notes to the Resolution in the Notice of Meeting) up to a maximum nominal amount of £811,991 was approved
4. Loss per share
Basic earnings per share is calculated on the loss after taxation for the period attributable to equity holders of the Company of £657,000 (2009: £1,076,000) and on 1,623,981,242 (2009: 356,872,000) ordinary shares, being the weighted average number in issue during the period.Due to the loss in the period the effect of the share options was considered anti-dilutive and hence no additional diluted loss per share information has been provided.
5. Post balance sheet events
On 14 July 2010, the Company issue and allotted 750,000,000 new ordinary shares of 0.1 pence each (representing approximately 46 percent of the current issued share capital of the Company) at a price of 0.2 pence per share, to raise £1,500,000 before expenses.
6. Distribution of the Interim Results
Copies of these Interim Results will be available to the public from the Company website, www.panagg.com.