Interim Results

30th Sep 2008 07:00

Pan Pacific Aggregates plc

(AIM: PPA)

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008

Pan Pacific Aggregates plc ("PPA" or "the Company"), an AIM listed quarrying company operating in British Colombia, Canada, announces its Interim Results for the period ended 30 June 2008.

Highlights:

Acquisition of Pumptown Quarry

Initial contribution from Pumptown 

Sales from Pumptown increased 70% in June

Post period:

Cash at bank c. £575,000 as of 20 September 2008

New Nomad and Broker appointed

Shares relisted following suspension

Managing Director William Voaden commented:

"Having come through a difficult month the outlook is positive. We are in a strong financial position, we have a strengthened management team and we look forward to bringing two quarries into production by the year end. This will generate positive cashflow and move the Company into profit."

Enquiries:

Pan Pacific Aggregates plc	+44 (0) 20 7096 9580
William Voaden
Dowgate Capital Advisers Ltd	+44 (0) 20 7492 4777
David Newton
Lothbury Financial Limited	+44 (0) 20 7011 9411
Michael Padley / Louise Davis

  

Managing Director's Statement

The Company has a strong asset base, with over £500,000 held in cash. It is PPA's intention to have two quarries in production by the year end, and this should provide a positive cash contribution going forward.

Since the period end the Company was suspended, in the Board's opinion unnecessarily. However, trading in the shares has now resumed and the issues involved have been or are about to be addressed. We issued a trading update yesterday that covered these points, and this is repeated below.

The first half of the year was spent looking for potential acquisitions and negotiating compensation for the imposed time delay for the submission of the large producer permit application on the Northern area of the Sechelt Peninsula.  The statement within the 2007 financial accounts provided an update on the Pumptown acquisition.

The acquisition of Pumptown Quarry in the Fraser Valley of British Columbia was completed on the 6th of June 2008, providing the Company with immediate operational capability and cash flow. During June we achieved record production from Pumptown and improved the quality of the product by replacing the crusher system within the quarry process plant.

These interim accounts for the period ending 30th June 2008 include the June sales figures from Pumptown and demonstrate the tangible benefits of this acquisition.

Operations at Pumptown were set back following an inspection by the Local Authority engineers of the bridge on the sole access road to the quarry which revealed that its structural condition was deteriorating.  Aggregate lorries are prohibited from using the bridge until either structural repairs or replacement has been completed. At the time of this inspection, and as part of the acquisition process, we were intending to re-negotiate with HSBC the terms of certain equipment lease for an existing treatment plant.

As a consequence, we were faced not only with the possibility of generating no income from Pumptown for up to 18 months due the need to replace the bridge, but also the possibility of being required to enter into new lease arrangements without the cash flow to support this financial commitment.  We therefore released a statement to the market on 29th August 2008 setting out our dilemma. Our previous Nomad, Hanson Westhouse, resigned on the same day and our shares were suspended.

We are pleased to report that the issues arising are being resolved. Since the suspension, we have worked tirelessly to get our shares reinstated to trading on AIM within the 30 day period provided by the AIM Rules for Companies. First and foremost, this required the appointment of a new Nomad and we are pleased to announce that Dowgate Capital Advisers have been appointed.

We are currently in discussions with Columbia National Investments Ltd (CNI), the vendor of the Pumptown Quarry, and HSBC regarding the leases for the quarry plant, and it is anticipated that there will be a settlement payment made to HSBC by the company during the next three months.

As a consequence of our ongoing discussions with CNI, we are not expecting to conclude an agreement on Pine Flats by the year end.

We are pleased to report that progress has been made and negotiations are in hand to provide alternative access to the quarry without using the bridge.

During the period of share suspension we have conducted a complete review of the Company's business and structure.  This includes refocusing our future development primarily in the Fraser Valley and capitalising on our permitted area at Caren Ridge on Sechelt.  We have also restructured our board of management and, to this end, the Company is pleased to announce that Euan McAlpine has joined the Board as an executive director.

We also expect to appoint a Financial Director as well as a further non-executive director.

In July we completed a private placement of £1.02m (102m shares) for working capital, acquisitions and quarry development.

As at 20th September 2008 there was approximately £575,000 of cash in the Company.  Furthermore, the Company will review its asset base and will, if possible, dispose of those non-operational assets that are not income earning to ensure that there is sufficient working capital in the business for the foreseeable future.

Outlook

The Company's operational focus will now be to develop and consolidate an aggregates business in the Fraser Valley, as well as utilising our existing small producer permit at Sechelt (Caren Ridge). By year-end we intend to have two operating units in production, and this should provide us with a positive cash contribution in the future.

Currently, we are in discussion to acquire an additional operating quarry in the Fraser Valley and will announce further details of this opportunity when negotiations are more advanced.

William Voaden

30 September 2008

  

UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six month period ended 30 June 2008
		Six month ended	Six month ended	Year ended
		30 June 2008	30 June 2007	31 December 2007
	Note	£'000	£'000	£'000
Revenue		104	-	21
Cost of sales		(79)	-	(15)
Gross profit		25	-	6
Administrative expenses		(586)	(818)	(1,262)
Loss from operations		(561)	(818)	(1,256)
Financial expense		(466)	(174)	(1,057)
Financial income		11	12	34
Loss before taxation		(1,016)	(980)	(2,279)
Taxation		-	-	-
Loss for the year		(1,016)	(980)	(2,279)
Attributable to:
Equity holders of the parent		(1,015)	(979)	(2,278)
Minority interest		(1)	(1)	(1)
Loss for the year after taxation		(1,016)	(980)	(2,279)
Loss per ordinary share
Basic and diluted (pence)		(1.0)	(1.5)	(3.6)

  

UNUADITED CONSOLIDATED BALANCE SHEET
As at 30 June 2008
		At 30 June	At 30 June				At 31 December
		2008	2007				2007
	Note	£'000	£'000				£'000
Assets:
Non-current assets
Intangible assets		7,024	4,571				4,664
Property, plant and equipment		521	167				138
Total non current assets		7,545	4,738				4,802
Current assets
Inventories		72	14				-
Receivables		276	87				30
Cash and cash equivalents		54	1,066				742
Total current assets		402	1,167				772
Total assets		7,947	5,905				5,574
Liabilities:
Current liabilities
Loan Notes		4,019	3,750				4,634
Trade payables		459	164				83
Other payables		125	80				105
		4,603	3,994				4,822
Non-current liabilities
Other payables		789	-				-
Total liabilities		5,392	3,994				4,822
Total net assets		2,555	1,911				752
Capital and reserves attributable
to equity holders of the company
Called up share capital	2	187	64				64
Share premium account		7,788	5,144				5,342
Foreign exchange reserve		(295)	(327)				(321)
Reserve for options granted		933	826				822
Reserve for warrants granted		113	198				-
Retained deficit		(6,172)	(3,995)				(5,156)
		2,554	1,910				751
Minority Interest		1	1				1
Total equity		2,555	1,911				752

  

UNAUDITED GROUP COMPANY CASH FLOW STATEMENT
for the six month period ended 30 June 2008
	Six month ended		Six month ended	Year ended
	30June 2008		30 June 2007	31 December 2007
Operating activities	£'000		£'000	£'000
Loss before taxation	(561)		(818)	(1,256)
Adjustments for
Depreciation	10		9	21
Fair value of options granted	111		264	398
	121		273	419
Cash outflows from operating activities before
changes in working capital and provisions	(440)		(545)	(837)
(Increase) /Decrease in trade and other receivables	(155)		(7)	50
Decrease /(Increase) in inventories	80		-	14
Increase /(Decrease) in trade and other payables	78		(271)	(320)
	3		(278)	(256)
Cash (outflows)/inflows from operating activities	(437)		(823)	(1,093)
Investing activities
Interest received	11		12	34
Purchase of property, plant and equipment	-		-	(1)
Proceeds from sale of property, plant and equipment			-	18
Purchase of subsidiary	(237)
Purchase of intangible assets	(25)		(328)	(421)
Cash flows from investing activities	(251)		(316)	(370)
Financing activities
Issue of convertible loan notes	-		1,500	1,500
Cash flows from financing activities	-		1,500	1,500
(Decrease)/Increase in cash	(688)		361	37
Cash and equivalents at beginning of the period	742		705	705
Cash and equivalents at end of the period	54		1,066	742

  NOTES FORMING PART OF THE FINANCIAL STATEMENTS

For the for the six month period ended 30 June 2008

1. Accounting policies

Basis of preparation

The unaudited results have been prepared on the basis of the accounting policies adopted in the annual accounts for the year ended 31 December 2007 and are neither audited nor reviewed by the auditors of Pan Pacific Aggregates Plc. 

The interim report is unaudited and does not constitute Statutory Accounts as defined in Section 240 of the Companies Act 1985. The financial information for the period 1 January 2008 to 30 June 2008 is not the Company's full statutory accounts for that period. A copy of the Company's 2007 Statutory Accounts has been filed with the Registrar of Companies. The audit report issued for the period ended 31 December 2007 was unqualified and did not contained a statement under S237 (2) - (3) pf companies Act 1985.

In the opinion of the directors the financial information for the period 1 January 2008 to 30 June 2008 presents fairly the financial position, results of operations and cash flows for the period in conformity with International Financial Reporting Standards, as adopted in the European Union, consistently applied. 

2. AIM Rule Compliance Report

Pan Pacific Aggregates plc is quoted on AIM and, as such under AIM Rule 31 the Company is required to:

(1) have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules;

(2) seek advice form its nominated adviser ("Nomad") regarding its compliance with the AIM Rules whenever appropriate and take that advice into account;

(3) 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;

(4) ensure that each of the Company's Directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and

(5) 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 James Ladner, 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

		Allotted, called up and fully paid ordinary shares		Share
Company	Authorised	of £0.001 each		Premium
	Number	Number	£	£
As at 1 January 2007	100,000,000	64,136,765	64,137	5,144,339
EGM 3 May 2007	450,000,000
As at 30 June 2007	550,000,000	64,136,765	64,137	5,144,339
Warrant reserve transfer	-			198,333
As at 31 December 2007	550,000,000	64,136,765	64,137	5,342,452
Conversion of debt 29 February 2008	-	42,451,082	42,451	1,038,778
Issue of warrants 29 February 2008				(112,850)
EGM 27 May 2008	200,000,000
Issue of shares 6 June 2008		80,000,000	80,000	1,520,000
As at 30 June 2008	750,000,000	186,587,847	186,588	7,788,380

On February 2008 RAB Special Situations (Master) Fund Limited) ('RAB') converted £821,229 of Secured Convertible Loan Notes issued by the Company arising from the capitalisation of interest, resulting in the issue of 32,242,994 new ordinary shares in the Company, at a conversion price of 2.547 pence per share (the 'Conversion Price'). RAB has also been issued with a further 10,208,088 new ordinary shares in satisfaction of a redemption premium of £260,000 payable on the first redemption or conversion of any of the Loan Notes. In addition, RAB has been issued with warrants over a further 16,121,497 ordinary shares in the Company, which can be exercised at the Conversion Price within the 2 years from the date of issue.

On May 2008 resolutions proposing to increase the authorized number of shares from 550,000,000 to 750,000,000 and proposing the allotment of 80,000,000 shares for acquisition of 100% of Pumptown Quarry Inc and CNI Equipment were approved at the shareholders' meeting. On June 6, 2008 the acquisition was completed for considerations of $400,000.00 Canadian Dollars and the issuance of 80,000,000 common shares with a fair value of £0.02 being the nominal value £0.001.

4. Post balance sheet events

On July 2008 the Company completed the issue of 102,000,000 ordinary shares for a consideration of 1 penny per ordinary share. In total £1,020,000 were raised for increasing production and continue evaluation of its projects. The share issue has been fully subscribed and paid.

ENDIR QKLFLVKBZBBF

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