Final Results and Notice of AGM

PAN PACIFIC AGGREGATES PLC

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

AND

NOTICE OF agm

Pan Pacific Aggregates plc ("PPA" or the "Group"), the British Columbia based aggregates company is pleased to announce its final results for the year ended 31 December 2010.

Financial highlights

·; Revenue £714,000 (2009: £2,000)

·; Loss before tax of £3,974,000 (2009: £1,123,000 profit)

·; Loss per share of 0.2p per share (2009: profit per share 0.1p)

·; Balance of loan notes outstanding £nil (2009: £725,000)

·; Fundraising of £1.5m (before costs) during the year (2009: £4.1m) 

·; Net cash reserves at year end of £525,000 (2009: £1,662,000)

Operational highlights

·; Recommenced production and sales at Quadling Quarry

·; Wood Bay property sold and settling of loan notes

Pan Pacific Aggregates plc ("PPA" or the "Company"), the British Columbia based aggregates company, confirms that, in accordance with AIM Rule 20, its annual report and accounts for the year ended 31 December 2010 has been sent to shareholders today.

Copies of the 2010 Annual report and accounts are available from the Company's registered office at 44 Southampton Buildings, London, WC2A 1AP and can also be downloaded from the Company's website, www.panagg.com.

NOTICE OF AGM

Notice is hereby given that the annual general meeting of Pan Pacific Aggregates plc will be held at 44 Southampton Buildings, London WC2A 1AP at 10.00 a.m. 10 August 2011.

Chairman, Pan Pacific Aggregates plc, commented:

 "It is with huge disappointment that we were not able to complete the Reverse Take-Over announced in January 2011. The good progress in getting Quadling Quarry back into production has been overshadowed by the events of 2011. We are currently addressing the financial position of the Company by seeking to raise funds to secure the future of the Company. This will enable the lifting of the current suspension of our shares so that trading in the shares can recommence."

On 15 July 2011, the last practical date prior to the date of this announcement, the pounds sterling equivalent exchange rate was £1 = C$1.54.

For further information please visit www.panagg.com or contact:

MANAGING DIRECTOR'S STATEMENT

1. Introduction

I am pleased to report that, following a busy 2009 in which we successfully turned around the fortunes of PPA, production at our Quadling Quarry recommenced.

We started our development work to drive a road to the top of the quarry during Q4 2009 to facilitate efficient working of the quarry faces.

The Construction and Access Agreement to construct the new by-pass access road with our joint venture partner, Fill Tech Industries Ltd., was signed with City of Abbotsford at the beginning of January. The agreement was amended so that the road can be dedicated to the public via the City of Abbotsford, in which case future maintenance would revert to the City of Abbotsford following a 12 month retention period. It was later agreed that the dedication would take place as soon as City of Abbotsford are able to arrange this.

The new access road was completed and opened at the end of March allowing initial sales from the quarry to commence.

The Wood Bay property was sold in March, 2010. The net proceeds of $1.2m CAN were paid to RAB Special Situations (Master) Fund Ltd ("RAB"). This was the final payment obligation under the agreement with RAB to settle the loan notes issued by the Company to RAB.

Quadling Quarry enjoyed strong demand with sales of mainly non--specification material during Q2. During June we installed a new crushing and processing plant which began producing specification material. This allowed us to increase volumes and improve margins.

2. Operational Performance

We appointed Allan Coxworth as a senior salesman. He has made a significant impact by contributing to the improvement in quality of our customers and increasing daily volumes at Quadling Quarry. We also took steps in the 2nd half of 2010 to reduce our costs per tonne after significant development work was undertaken in the 1st half of 2010. In addition, performance schemes were introduced at the quarry which has assisted our team to drive down cost in individual operating areas.

Q3 2010 saw a 79% increase in revenue over Q2 2010.

Q4 2010 then saw an increase in revenue of 26% over Q3 2010.

In October we announced that we had been recommended to negotiate and execute an agreement with the District of Mission to extract aggregate from Shaw Pit, an existing sand and gravel pit operated by the District of Mission. The District of Mission is located adjacent to the City of Abbotsford on the north side of the Fraser River. It was expected that we would enter into an agreement to commence production in Q2 2011, but our recent financial problems have delayed implementation.

We undertook an equity placement in July 2010 raising £1.5m (before expenses) which was primarily used to fund working capital and equipment investment in Quadling Quarry.

We held an open day at Quadling Quarry in September 2010. This was well attended and allowed the local community to see what we had achieved in comparison with our plans and stated objectives. As a result, we had our Soil Removal Permit renewed by City of Abbotsford in January 2011. This allowed us to apply to extend our working hours in February 2011 to meet customer demand and this was approved by City of Abbotsford.

The strengthening of our team has allowed us to achieve good progress during 2010.

On 17 January 2011 the Company announced that it was in discussion regarding a potential transaction, which if completed would constitute a Reverse Takeover under AIM Rules. Our shares were temporarily suspended and remain suspended to this day.

Given the significant progress made during 2010, it was a huge disappointment to announce in April that our proposed Reverse Take-over, announced in January 2011, had failed. This transaction would have transformed the Company and immediately propelled it into a position to achieve our long term strategy. However, the abandonment of the transaction left us with no alternative but to enter into a Company Voluntary Arrangement ("CVA") in order to agree an overall payment arrangement with our advisers and certain other creditors. The CVA was approved on 7 June and we are now fund raising to finance the CVA and our next 18 months working capital for development of the business.

If the fundraising is successful, the Board is confident that PPA will be well positioned to grow the business within a buoyant local market place where there is strong demand for our products in the foreseeable future.

3. Financial Performance

The results for the year reflect the benefits from successfully restructuring and settling the Company's loan notes and the costs associated in maintaining quarry operations. Although we posted a loss for the year compared to a profit in 2009, this is not a reflection of the operational performance for 2010. The profit for 2009 was a product of the financial stabilisation by buying back the RAB loan notes and releasing liabilities from the statement of financial position. In the statement of financial position for 2010 we have reduced the asset value attributed to the Sechelt operation as we still await the final approval from the Ministry of Natural Resources. The delay has been exacerbated by the merging of the Department of Mines with the Department of Forestry to become the Ministry of Natural Resources. The significant delays have resulted in a difference between the book value and the net present value of future cash flows from Sechelt operations and an impairment charge has been recorded.

Revenue for the period was £714,000 (2009: £1,507) and the loss before tax was £3,974,000 (2009: profit of £1,123,000).

The basic and diluted loss per share was 0.2p (2009: 0.1p profit).

Cash used in operations in the period was £1,543,000 (2009: £1,097,000).

Total capital and reserves attributable to equity shareholders of PPA at the year end were £4,035,000 (2009: £6,548,000).

During 2010 we raised £1,400,000 at an average price of 0.2p after issue costs (2009: £3,816,000 at a price of 0.3p per share) in very difficult market conditions. The proceeds were used to fund working capital and investment in the quarry.

Finance costs of £163,000 decreased by 78% from £745,000 in 2009. This decrease is mainly due to the redemption of the convertible loan notes in November 2009. During the year £163,000 of interest payable was incurred to service the mortgage and loan debt of Quadling Quarry. The RAB loan note balance at the year end was £nil (2009: £725,000).

4. Environmental performance

The operating companies are subject to various Canadian environmental laws and regulations. The Directors and management ensure that operating companies obtain all the necessary licences, permits and other authorisations for all operating units in Canada.

At each Board meeting the Group Operations Director reports on all environmental health and safety matters.

All Group facilities comply with the Provincial and local environmental requirements and during 2010 we did not receive any formal environmental notices.

5. Dividend

The Board does not recommend the payment of a dividend at this stage (2009: £nil).

6. Board Changes

There were no changes to the Board during 2010.

7. Post Reporting Date Events

On 9 February 2011 the CDN$1,670,000 (£1,076,516) term mortgage on Pan Pacific Quadling property was extended to 30 June 2012. It is the intention of the Directors to refinance this mortgage as soon as possible and prior to 30 June 2012.

The Directors of the Company engaged Kingston Smith & Partners to assist with taking steps to enter into a Company Voluntary Arrangement ("CVA") with its creditors. On 18 May 2011, the Directors of the Company made a Proposal to its creditors for a CVA in satisfaction of its debts. The CVA terms require, amongst other things, that an amount of £500,000 be paid to the Supervisor within 18 months of the approval of the CVA to settle Supervisor, professional and creditor claims.

At a meeting of the Company creditors held on 7 June 2011 the CVA Proposal was approved without modification by a majority of more than 75 per cent in value of the unsecured creditors which are not related to the Company.

At a General Meeting of the Members, held on 7 June 2011, the Members approved the Resolution of the acceptance of the CVA Proposal. The Members also approved further Resolutions which unconditionally authorise the Directors to allot Relevant Securities up to an aggregate nominal amount of £5,412,500 and allot equity securities to a limit of 3,250,000,000 Ordinary Shares in a Placing of Shares, issue warrants over ordinary shares and an allotment of equity securities in connection with a rights issue or other offer to holders of ordinary shares in proportion to their respective holdings.

On 23 June 2011, Quadling Quarry entered into a CDN$200,000 three month temporary loan.

The Group has raised £1,335,000 of funding via new equity finance.

8. Strategy

Our strategy, following the abortive RTO, is to raise additional funds and to put the Company on a sound financial footing. 

9. People

I would like to thank all our employees for their continuing dedication to serving the Group and its customers effectively.

10. Outlook

While we are disappointed with the current financial position, we are hopeful of resolving this very shortly. We must not overlook the strong position the Group has developed over 2010 with the reopening of Quadling Quarry and, once our financial position is secured, we expect to make progress from this solid base.

11. Going Concern

The Group has raised £1,335,000 of funding via new equity finance. The Directors are currently seeking to raise a further £300,000 in equity finance, however, as at the date of signing the financial statements this has not been completed. The Directors are confident that they will be able to obtain the new equity finance in the near future and to be in a position to announce the results of their efforts shortly. This financing will be used to provide the Group with working capital, funds to settle the CVA and to further develop its assets. Although the Directors expect to be able to successfully raise the additional funds required they have no binding agreements to date. As noted above the Group have a term loan on Pan Pacific Quadling Quarry Ltd. which falls due for repayment on 30 June 2012. The Directors intend to seek alternative sources of funding to replace this loan but at the date of signature of the financial statements have not completed their considerations of the options available to the Group. However, they are confident that within the next twelve months this will be achieved. On this basis the financial statements have been prepare on a going concern basis. This condition along with other matters disclosed in the Directors' report and note 1 to the financial statements, indicates the existence of a material uncertainty which may cast significant doubt about the Group and Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if he Group and Company were unable to continue as a going concern.

12. Conclusion

It is with huge disappointment that we were not able to complete the Reverse Take-over announced in January 2011. We are grateful to our shareholders for allowing us to restructure the Company under the terms of the Company Voluntary Arrangement approved on 7 June 2011.

The good progress in getting Quadling Quarry back into production has been overshadowed by the events of 2011. We have addressed the financial position of the Company and raised funds to support its current working capital requirements and development needs. In the longer term the Company will seek to renegotiate or replace the Quadling Quarry mortgage which falls due for repayment on the 30 June 2012.

William Voaden

Managing Director

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 2010

NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

The financial statements of the Group for the twelve months ended 31 December 2010 have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by European Union.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009 but is derived from those accounts. Statutory accounts for 2009 have been delivered to the registrar of companies, and those for 2010 will be delivered in due course. The auditors have reported on those accounts. Their report for the year ended 31 December 2010 was (i) unqualified but did include a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Their report for the year ended 31 December 2009 was (i) unqualified and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

This announcement does not constitute the Group's annual report and statutory accounts.

The final results were approved by the Board of Directors on 15 July 2011.

2. Earnings per share

Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of equity shares in issue for the year was 1,973,296,310 (2009 - 759,584,310) and the loss for the Group for the year was £3,974,000 (2009 - profit £1,123,000). The weighted average loss per share during 2010 was 0.2 pence (2009 - profit per share of 0.1 pence). The total number of potentially dilutive warrants and options was calculated to be 2,114,863,420. After taking into account the effect of these dilutive warrants and options there was no difference between the reported profit per share and the dilutive profit per share. Hence no additional diluted profit per share information has been provided.

3. 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, Managing Director of the Company.

4. Distribution of the Annual Report

A copy of the Annual Report and Financial Statements has been sent to all shareholders today. Further copies will be available to the public from the Company Secretary at the Company's registered address at 44 Southampton Buildings, London, WC2A 1AP or from the Company's website, www.panagg.com.