Final Results and Notice of AGM

RNS Number : 7406K

Pan Pacific Aggregates PLC

26 April 2010

 

 

PAN PACIFIC AGGREGATES PLC

 

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

AND

NOTICE OF agm

 

Quadling Quarry now operational

 

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 2009 - a period during which the business was restructured and turned around. The company is currently delivering product and generating cashflow.

 

Financial highlights

 

·; Profit before tax of £1,123,000 (2008: £3,336,000 loss)

·; Earnings per share of 0.1p per share (2008: 1.8p loss)

·; Balance of loan notes outstanding £725,000 (2008: £4,571,000)

·; Fundraising of £4.1m during the year (2008: £1.0m) 

·; Net cash reserves at year end of £1,662,000 (2008: £238,000)

 

Operational highlights

 

·; Agreements completed to restructure the Group's financial debt

·; Fundraising to reduce Group debt and increase working capital

·; Preparation work for re-opening of Quadling Quarry

 

Post Period

 

·; Access road completed

·; Quadling Quarry re-opened on 26th March: over 15,000 tonnes of material delivered to customers, generating C$90,000 of revenue

·; Several contracts under negotiation

 

 

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. on Friday, 21 May 2010.

 

William Voaden, Managing Director, Pan Pacific Aggregates plc, commented:

 

 "The year was one where the Company was stabilised and we are now in a position to move forward. The by-pass road access was completed on 26 March 2010 allowing the re-opening of the Quadling Quarry.Additional significant contracts are currently being negotiated.

 

"Going forward, the Group's strategy is to grow in the heavy building materials sector by developing a strong local position, both organically and by acquisition. We intend to expand in existing markets and carefully increase the scale of the operations. The local Vancouver economy is strong and provides a secure foundation to build this Group "

 

 

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

 

William Voaden	Pan Pacific Aggregates plc	Tel: +44 (0) 20 7096 9580
Louis Castro/Tim Graham	Matrix Corporate Capital LLP	Tel: +44 (0) 20 3206 7000
Paul Backhouse	VSA Capital Limited	Tel: +44 (0) 20 7096 9589
Michael Padley / Gary Middleton	Lothbury Financial Services Limited	Tel: +44 (0) 20 7868 2567

 

 

 

CHAIRMAN'S STATEMENT

 

1. Introduction

 

I am pleased to report that during 2009 we have successfully turned around the fortunes of PPA to the extent that the Group now has a firm foundation to develop and grow profitably in the future.

 

It was essential that the existing and potential debt burden of the Group was settled as it was inhibiting the growth prospects for PPA. In this regard the following debt was settled on favourable terms during 2009:

 

1) A CDN$13.2m HSBC writ for payment arrears on various equipment leases at Pan Pacific Quadling Quarry Ltd ("PPQQ" or "Quadling Quarry") (Formerly Pumptown Quarry Ltd) was settled for CDN$150,000.

 

2) PPQQ entered into a voluntary arrangement with its creditors to settle existing and potential claims at 9 cents in the dollar.

 

3) A settlement of the RAB Special Situations (Master) Fund Limited loan notes which totalled £5.2m and cost the Group approximately £123,000 per month in interest prior to entering into a Deed of Variation. The loan notes were settled for £750,000 plus new issued shares.

 

4) With market value of £750,000 and the distribution of the net sale proceeds of the Wood Bay property in Sechelt to RAB.

 

We undertook a number of equity placements during 2009 totalling £4.1m and these monies allowed us to financially restructure, add to our team and prepare our main operating asset Quadling Quarry for production. At Quadling Quarry during 2009 we have undertaken the pioneering work to allow us to get to the top of the quarry reserves, facilitating the efficient future working of the quarry in a safe manner. Whilst undertaking this pioneering work, we have produced over 100,000 tonnes of shot rock material which once sold will aid the initial cash flow during 2010.

 

The Group has had ongoing discussions with the City of Abbotsford and we have now obtained all the required permits to operate Quadling Quarry and furthermore we reached an agreement, to construct a new access road for the quarry to facilitate immediate aggregate sales on its completion. The road was opened at the end of March.

 

I am also pleased to report that we welcomed Thomas Masney to the Plc Board as our Financial Director. We also welcomed Cooky Singh as our Operating and Marketing Director for PPQQ.

 

The strengthening of our team has not only allowed us to achieve good progress during 2009, but will also ensure the continuing prosperity of the company in 2010 and beyond.

 

The Board are confident that PPA is now well positioned to grow the business within a buoyant local market place where there is strong demand for our products in the foreseeable future.

 

At year end PPA had £1.66m in cash reserves and a significantly strengthened balance sheet to pursue our future acquisition strategy.

 

Sales at Quadling Quarry commenced at the end of March 2010 and are progressing towards positive cash flow generation in the second quarter, now that the new access road is open.

 

2. Financial Performance

 

The results for the year reflect the benefits from successfully restructuring and substantially settling the Company's loan notes and the costs associated in maintaining quarry operations and associated finance costs (without corresponding revenue).

 

Revenue for the period was £1,507 (2008: £184,000) and the profit before tax was £1,123,000 (2008: loss of £3,336,000).

 

The basic and diluted earnings per share was 0.1 p (2008: 1.8p loss).

 

Cash used in operations in the period was £1,097,000 (2008: £1,120,000)

 

Total capital and reserves attributable to equity shareholders of PPA at the year end were £6,548,000 (2008: £1,343,000).

 

During 2009 we raised £3,816,000 at an average price of 0.3p net of issue costs (2008: £954,000 at a price of 1p per share) during very difficult market conditions. The proceeds were used to settle loan notes and fund working capital and investment in the quarry.

 

Finance costs (excluding the gain of £3,155,000 on redemption of convertible loan notes), decreased by 31.3 % to £745,000 from £1,085,000 in 2008. This decrease is mainly due to the redemption of the convertible loan notes in November 2009. During the year £140,019 of interest payable on the convertible loan notes issued to RAB Capital Special Situations (Master) Fund Limited ("RAB") was forgiven and £3,241,215 was converted to 53,718,795 new ordinary shares. The loan note balance at the year end of £725,000 represents the amount to be settled from the proceeds of the sale of property in British Columbia.

 

3. Operational Performance

 

The focus of management during 2009 was the financial restructuring of the business to get the company in a position to commence operations at our existing quarry assets during 2010 and provide the base for future acquisitions.

 

Most notable has been the turnaround position at Quadling Quarry, where we obtained all the necessary permits for the future production of the quarry. The difficult but essential pioneering work has also been completed and this will allow us to properly set out a plan for the efficient and safe production of aggregates at Quadling.

 

This pioneering work has produced some 100,000 tonnes of shot rock material that will be processed in the early part of 2010 for immediate sales.

 

The other main constraint to sales and profitability at Quadling Quarry was the construction of a new quarry access road. A development agreement was signed with the City of Abbotsford in December 2009, which allowed us to begin construction of the access road. The access road was completed during March 2010.

 

At Caren Ridge on the Sechelt peninsular, we have progressed the required permissions with the submission of the final working plan for a small scale operation on the existing permitted area. We are in discussions with the Province, First Nations and the Local Authorities to finalise this approval to allow PPA to commence operations during 2010.

 

As previously announced, we are seeking potential acquisition targets and these negotiations are progressing on a number of fronts. The aim being to increase our presence in the Lower Mainland area.

 

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 & safety matters.

 

All Group facilities comply with the Provincial and local environmental requirements and during 2009 we did not receive any formal environmental notices.

 

5. Dividend

 

The Board does not recommend the payment of a dividend.

 

6. Board Changes

 

Following the Annual General Meeting, James Ladner, Non-executive Chairman, tendered his resignation to the Board, with effect from 31 August, 2009. The board would like to thank James for his contribution to the Company.

 

On the 27 July, 2009 the Company appointed William Voaden, Managing Director of the Company, as interim Executive Chairman until such time that a suitable Non-executive Chairman can be identified and appointed to the Board.

 

On 31 August, 2009 the Company appointed Thomas Masney as Finance Director. Mr. Masney is a Chartered Accountant who is a specialist in company turnarounds and restructuring. He has held a number of posts as Financial Director or CFO in Canada, London and Hong Kong following his early careers with Ernst and Young and PricewaterhouseCoopers.

 

7. Post Balance Sheet Date Events

 

Equipment leases were held in Pan Pacific Equipment Ltd, a 100% subsidiary which was placed into liquidation on 11 January 2010 and its assets have been repossessed by secured lenders. The financial impact of the liquidation on the Group was a charge of £23,000, which has been accrued in the current year.

 

 

On the 1 February 2010 Pan Pacific Quadling Quarry Limited was issued a Soil Removal Permit from the City of Abbotsford on the basis that quarry could begin to ship aggregates from its site as soon as construction of the by-pass access road was completed. On 26 March 2010 the by-pass road was completed and shipments began.

 

8. Strategy

 

Our strategy for growth lies in three key areas, namely:

 

1. increase the size of the Group's aggregate resource;

2. deliver the Group's products to customers within the western seaboard of Canada; and

3. develop strategic alliances with large volume consumers of construction and industrial aggregates.

 

Our overall strategy is to expand the Group in existing markets and carefully increase the size of our operations organically, via joint ventures and acquisitions.

 

9. People

 

I would like to thank all our employees for their continuing dedication to serving the Group and its customers effectively. I am confident that in the more challenging times I see ahead they will respond and outperform accordingly.

 

10. Outlook

 

The opening of Quadling Quarry (previously named Pumptown Quarry) processing operations in February 2010, has positioned the Group to begin to develop an aggregates business in the Lower Mainland of British Columbia. The raising of funds and conversion of debt into equity in 2009 has allowed the Group to strengthen its balance sheet. We are now reviewing further acquisitions to build on the opportunities in this area. We are pleased with the progress the business has made over the past year in resolving the various challenges facing it.

 

11. Conclusion

 

During 2009, we have focused on two objectives to restructure the Group's finances and to get Quadling Quarry ready for production in Q1 2010. Both have been achieved.

 

Our restructured financial position now provides us with a solid foundation for growth in the future whilst Quadling Quarry has been transformed with the pioneering work, the by-pass road, and the granting all of the required operating permits. I am pleased to report that we now have a working quarry.

 

To conclude, the local Vancouver economy is strong and provides a secure foundation to build the Group in the forthcoming years.

 

We are determined to convert this opportunity into the desired Shareholder value.

 

 

William Voaden

Chairman

 

 

 26 April 2010

 

 

Pan Pacific Aggregates plc confirms that, in accordance with AIM Rule 20, its annual report and accounts for the year ended 31 December 2009 has been sent to shareholders today.

 

Copies of the 2009 Annual report and accounts are available from the Company's registered office at 7 Devonshire Square, Cutlers Gardens, London, EC2M 4YH and can also be downloaded from the Company's website, www.panagg.com.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 2009

		2009		2008
		£'000		£'000
		Audited		Audited
Revenue		2		184
Cost of sales		(2)		(252)
Gross (loss)/profit		-		(68)
Impairment charge		(200)		629
Other administrative expenses		(1,087)		(1,569)
Loss before operations		(1,287)		(2,266)
Financial expense		(745)		(1,085)
Financial income		3,155		15
Profit / (loss) before taxation		1,123		(3,336)
Taxation		-		7
Profit / (loss) for the year attributable to the equity holders of the parent		1,123		(3,329)
Other comprehensive income
Exchange differences arising on the		(95)		(133)
translation of foreign subsidiaries
Total comprehensive income attributable to:
Equity holders of the parent		1,028		(3,461
Minority interest		-		(1)
		1,028		(3,462)
Profit /(loss) per ordinary share
Basic and diluted (pence)		0.1p		(1.8p)
All amounts relate to continuing activities

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2009

	2009	2009	2008	2008
	£'000	£'000	£'000	£'000
	Audited		Audited
Assets
Non-current assets
Intangible assets	3,890		3,835
Property, plant and equipment	3,065		3,821
Total current assets		6,955		7,656
Current assets
Inventories	150		126
Receivables	80		40
Cash and cash equivalents	1,662		238
Non-current assets held for sale	725		-
Total current assets		2,617		404
Total assets		9,572		8,060
Liabilities
Current liabilities
Loan Notes	725		4,571
Trade payables	443		438
Mortgage and other payables	1,006		894
		2,174		5,903
Non-current liabilities
Deferred tax		813		813
Other payables		36		-
Total liabilities		3,023		6,716
Total net assets		6,549		1,344
Capital and reserves attributable to equity holders of the company
Called up share capital		1,624		288
Share premium account		11,345		8,681
Foreign exchange reserve		(549)		(453)
Reserve for options granted		54		86
Reserve for warrants granted		250		72
Retained deficit		(6,176)		(7,331)
		6,548		1,343
Minority Interest		1		1
Total equity		6,549		1,344

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 2009

	2009	2009	2008	2008
	£'000	£'000	£'000	£'000
	Audited		Audited
Operating activities
Profit / (loss) before taxation		1,123		(3,336)
Adjustments for
Depreciation and amortisation	51		44
Impairment of investments	200		629
Gain on redemption of loan notes	(3,155)		-
Interest receivable	-		(15)
Interest charge	745		1,085
Share based payment expense	-		419
		(2,159)		2,162
Cash outflows from operating activities before changes in working capital and provisions		(1,036)		(1,174)
(Increase) /decrease in trade and other receivables	(42)		51
(Increase) in inventories	(24)		(54)
Increase in trade and other payables	5		59
		(61)		56
Cash outflows from operating activities		(1,097)		(1,120)
Investing activities
Interest received	-		15
Acquisition of subsidiary (net of cash required)	-		(212)
Purchase of property, plant and equipment	(221)		(24)
Purchase of intangible assets	-		(52)
Cash flows from investing activities		(221)		(273)
Financing activities
Interest paid	(185)		(67)
Issue of ordinary share capital	4,139		1,020
Share issue costs	(323)		(66)
Repayment of convertible loan notes	(809)		-
Cash flows from financing activities		2,741		887
Increase (decrease) in cash		1,423		(506)
Cash and equivalents at beginning of the year		238		742
Exchange gains/(losses) on cash and cash equivalents		1		2
Cash and equivalents at end of the year		1,662		238

 

 

NOTES TO THE FINANCIAL INFORMATION

 

1. Basis of preparation

 

The financial statements of the Group for the twelve months ended 31 December 2009 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 2009 or 2008 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the registrar of companies, and those for 2009 will be delivered in due course. The auditors have reported on those accounts; their reports were (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 237 (2) or (3) of the Companies Act 1985 in respect of the accounts for 2008 nor a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2009.

 

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

 

The final results were approved by the Board of Directors on [6] April 2010.

 

2. Earnings per share

 

Profit 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 759,584,310 (2008 - 187,597,232) and the profit for the Group for the year was £1,123,000 (2008 - loss £3,310,000). The weighted average share price during 2009 was £0.54, based on this the total number of potentially dilutive warrants and options was calculated to be 7,525,303. 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 , Chairman and 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.

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