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Pan PacificAggregate (MXO)

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Thursday 29 September, 2011

Pan PacificAggregate

Half Yearly Report

RNS Number : 1356P
Pan Pacific Aggregates PLC
29 September 2011
 



PAN PACIFIC AGGREGATES PLC

HALF YEARLY REPORT

 

Pan Pacific Aggregates plc ("PPA" or the "Group") (AIM: PPA), an operator of quarries in British Columbia, today announces its Half Yearly Results for the six months ended 30 June 2011.

 

Financial and Operational Highlights:

·     Revenues up  to £526k (H1 2010: £171k)

·     Gross profit up  to £93k (H1 2010: £23k)

·     Cash outflow from operating activities reduced to £377k (H1 2010: £686k)

·     Administrative expenses of £992k (HI 2010: £792k) including £300k of non-recurring costs related to the aborted reverse takeover

·     Operational loss of £899k (HI 2010: £759k)

·     Finance expenses of £117k (HI 2010: £74k)

·     Loss before tax of £1,016k (H1 2010: loss of £832k)

·     Loss per share of 0.04p per share (H1 2010: 0.05p per share loss)

·     £250k of the £500k owing under the CVA paid to the Supervisor of the CVA

 

William Voaden, Managing Director of PPA, commented: 

 

"I am delighted to report that the Quadling Quarry met its production and revenue targets for the period, despite financial problems experienced earlier this year.  We have also grown our supply book and improved quality and customer service.  The significant capital investment made in crushing and processing equipment at Quadling last year is generating returns and this is being reflected in gross margins.  The increase in administrative expenses was primarily due to a one-off expenditure related to the aborted reverse take-over.  We have reduced operating costs in other areas, including completing the pioneering work and now in the production preparation stage to form the quarry faces which will also maximise potential reserves.

 

Looking ahead, I am confident that the Group is now well positioned to pursue its growth strategy.  After the period end, we raised a further £1,360,000, substantially strengthening our balance sheet.  The core business is stable and we are exploring a number of opportunities, including acquisitions, while keeping a firm control on costs.

With growing turnover, improved margins, focused acquisitions strategy and improved cash position, the board has confidence in the Group's future.

 

- Ends -

 

For further information contact:

 



Pan Pacific Aggregates plc


Tel: +44 (0) 182 925 0576

Euan McAlpine, Executive Chairman


www.panagg.com




Zeus Capital Limited (Nomad)


Tel: +44 (0) 161 831 1512

Ross Andrews / Aaron Smyth






Alexander David Securities Limited (Joint Broker)


Tel: +44 (0) 20 7448 9820

David Scott / Bill Sharp






XCAP Securities plc (Joint Broker)


Tel: +44(0) 20 7101 7070

John Grant / Karen Kelly



 

 

HALF YEARLY REPORT

 

Introduction:

 

The first six months of the year has seen a period of sustained improvement for the Group in which it met its production and revenue targets at Quadling Quarry ("Quadling").  Despite the financial problems encountered earlier this year, we have made substantial progress since we first opened for business at the end of March 2010.  We have continued to improve both the product mix and client base and, in the six months, we have seen revenues rise 208% compared to the same period last year, albeit from a low base. The significant capital investment made in crushing and processing equipment at Quadling last year is now beginning to generate growing revenues. This investment will lead to further increases in both volume and margin for the Group as we continue to develop the quarry. Our commitment to quality control, which took up a major part of H2 2010 has also played an important part in our revenue growth.

 

We continue to manage our cost base and develop deep sustainable relationships with our long-term clients.

 

Operational Review:

 

We are now close to reaching final agreement with BC Hydro, the British Columbia state electricity provider, to divert their powerline which runs through our property to power a 911 emergency communications mast on the top of Sumas Mountain. Negotiations have been ongoing for many months, but we expect to complete the diversion around the western edge of our property boundary shortly. This will allow us to access the western end of our property.

 

Initially, we will concentrate on harvesting the area currently inaccessible due to the existing cable and the surrounding Right of Way. This will then exhaust the eastern end of Quadling and release an area at the base to relocate the crushing and processing plant. Meanwhile we will develop the western end so that after the plant is relocated, we can use gravity to deliver the raw stock feed and minimise the use of mechanical delivery to the primary crusher. This will greatly reduce costs and allow us to increase our outputs & therefore sales.  Recent contract wins demonstrate our ability to secure contracts after intense bidding activity and we expect this trend to continue.

 

Once the BC Hydro cable has been diverted, we will apply to the City of Abbotsford for a revision to our existing permit.  This will allow us to maximise the tonnage we can extract from within our current permitted area.

 

On 17 September 2011, we held our second annual Open Day at Quadling for neighbours, customers, staff, suppliers & subcontractors which was well attended. This also gave us an opportunity to explain our plans over the next 12 months and thank all those who have contributed to our change in fortunes and to answer questions.

 

Financial Performance:

 

The Group's focus on quality product to our customers has underpinned the improvement in revenues.  Revenue for the six month period was £526,000 (H1 2010: £171,000).  The loss before tax was £1,016,000 (H1 2010: £832,000 loss), primarily due to Financial Expenses of £117,000 (H1 2010: £74,000).  While administrative expenses increased over the period to £992,000 (H1 2010: £782,000) this increase was due to approximately £300,000 of non-recurring costs arising from the reverse takeover. As a result, the total loss per share, basic and diluted, was 0.04 pence (H1 2010: 0.05 pence loss). 

 

Cash used in operations in the period amounted to £377,000 (H1 2010: £686,000).   Total capital and reserves attributable to equity shareholders of PPA at the period end were £3,013,000 (H1 2010: £5,675,000).

 

PPA's financial performance demonstrates that Quadling is contributing to the Group through achieving a positive gross margin and a significant reduction in the cash used in operations. While a loss was recorded for the period, the cash outflow from operating activities reduced to £377,000 (H1 2010: £686,000) for the first 6 months as compared to the same period in 2010.

 

Statement of financial position:

 

The net asset and capital and reserve position reduced since year ended 31 December, 2010 due to the loss before tax of £1,016,000.

 

After the period end, in July and August, the Group raised £1,360,000 (net proceeds £1,245,000) which strengthened PPA's financial position.

 

As at 31 August 2011, the Group had approximately £765,000 of cash.

 

Outlook:

 

PPA delivers essential aggregates to the Vancouver and Lower Mainland region which continues to enjoy steady market conditions. We continue to increase market share and current market conditions have resulted in opportunities for PPA. 

 

The Board remains positive that the Group will continue its progress and success during the second half of the year.  The Board is preparing PPA for the next phase of its development and continues to seek additional growth opportunities including acquisitions.

 

The Board wishes to thank our shareholders for their continued support for PPA during the past year which has been challenging for all concerned.

 

With our growing turnover, improved margins, focused acquisition strategy and improved cash position we have confidence in the Group's future success.

 

Euan McAlpine

Executive Chairman

 

Pan Pacific Aggregates Plc

 UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Six months ended 30 June 2011



Unaudited six months ended

30 June

2011

Unaudited six months ended

30 June

2010

Audited Year ended

31 December 2010


Note

£'000

£'000

£'000

Revenue


526

171

714

Cost of sales


(433)

(148)

(662)

Gross profit

 


93

 

23

 

52

 

Impairment charge


-

-

(2,000)

Other administrative expenses


(992)

(782)

(1,864)

Loss from operations


(899)

(759)

(3,812)






Financial expense


(117)

(74)

(163)

Financial income


-

1

1

Loss before taxation


(1,016)

(832)

(3,974)






Taxation


-

9

-

Loss for the period/year

attributable to the equity holders of

the parent


(1,016)

(823)

(3,974)






Other comprehensive income





Exchange differences arising on the translation of foreign

subsidiaries


 

 

(6)

 

 

(51)

(67)











Total comprehensive loss

attributable to:





Equity holders of the parent


(1,022)

(874)

(4,041)






Loss per ordinary share





Basic and diluted (pence)

4

(0.04) 

(0.05)

(0.2)

 

 

Pan Pacific Aggregates Plc

 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2011



Unaudited

At 30 June

Unaudited

At 30 June

At 31 Audited as at 31

December



2011

2010

2010


Note

£'000

£'000

£'000

Assets





Non-current assets





Intangible assets


1,985

3,904

1,953

Property, plant and equipment


3,971

4,127

4,096

Total non-current assets


5,956

8,031

6,049

Current assets





Inventories


230

233

197

Receivables


284

149

304

Cash and cash equivalents


39

281

525

Total current assets


553

663

1,026

Total assets


6,509

8,694

7,075

Liabilities





Current liabilities





Trade payables


1,169

634

754

Mortgage and other loans


1,340

1,523

1,209



2,509

2,157

1,963

Non-current liabilities





Other loans


232

66

297

Deferred tax


755

796

779



987

862

1,076

Total liabilities


3,496

3,019

3,039

Total net assets


3,013

5,675

4,036

Capital and reserves attributable to equity holders of the company





Called up share capital

3

2,374

1,624

2,374

Share premium account

3

11,949

11,345

11,949

Foreign exchange reserve


(622)

(600)

(616)

Reserve for options granted


174

54

174

Reserve for warrants granted


224

178

224

Retained deficit


(11,086)

(6,927)

(10,070)



3,013

5,674

4,035

Non-controlling interest


-

1

1

Total equity


3,013

5,675

4,036

 

 

Pan Pacific Aggregates Plc

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

Six months ended 30 June 2011


Unaudited six months ended

30 June

2011

Unaudited six months ended

30 June

2010

Audited Year ended

31 December 2010

Operating activities

£'000

 

£'000

 

£'000

 

Loss before taxation

(1,016)

(832)

(3,974)

Adjustments for




Depreciation and amortisation

152

33

211

Impairment

-

-

2,000

Finance income

-

-

(1)

Finance expense

 

117

74

163

Share based payment expense

-

-

128


269

107

2,501

Cash outflows from operating activities before changes in working capital and provisions

(747)

(725)

(1,473)




Decrease / (Increase) in trade and other receivables

20

(69)

(275)

(Increase) / decrease in inventories

(33)

(83)

(47)

Increase in trade and other payables

383

 

191

261


370

39

(61)

Cash outflows from operating activities

(377)

(686)

(1,534)





Investing activities




Finance income

-

1

1

Disposal of property, plant and equipment

-

5

12

Disposal of current assets held for resale

-

725

725

Purchase of property, plant and equipment

 

(26)

 

(595)

(1,254)

Purchase of mineral properties

(32)

(31)

(63)

Cash outflows from investing activities

(58)

105

(579)





Financing activities




Finance expense

(117)

(74)

(163)

Issue of ordinary share capital

-

-

1,500

Share issue costs

-

-

(100)

Repayment of convertible loan notes

-

(725)

(725)

Increase in mortgage and loans

131

-

203

(Repayment) / draw down of other loans

(65)

 

 

261

Cash flows from financing activities

(51)

(799)

976





(Decrease) in cash

(486)

(1,380)

(1,137)

Cash and equivalents at beginning of the period / year

525

1,662

1,662

Exchange gain on cash and cash equivalents

-

(1)

-

Cash and equivalents at end of the period / year

39

281

525

 

 

 

 

NOTES TO THE FINANCIAL INFORMATION

 

1.         Accounting policies

 

Basis of preparation

 

The condensed interim financial information has been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The condensed interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial information for the year ended 31 December 2011.

 

The condensed interim financial information for the period 1 January 2011 to 30 June 2011 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 2010 to 30 June 2010 and the audited financial year to 31 December 2010.

 

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 2010 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; however it did include references to matters to which the auditors drew attention by way of emphasis on going concern without qualifying their report. The auditors' report 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



Allotted, called up and
fully paid ordinary shares

Share

Company

of £0.001 each

Premium


Number

£'000

£'000

As at 1 January 2010

2,081,674,600

1,623,981,242

1,624

11,345

Issue of warrants

-

-

-

-

Issue of shares

-

-

-

-

Issue costs

-

-

-

-

As at 30 June 2010

2,081,674,600

1,623,981,242

1,624

11,345

Issue of warrants

22,500,000



(46)

Issue of shares

750,000,000

750,000,000

750

750

Issue costs




(100)

As at 31 December 2010

2,854,174,600

2,373,981,242

2,374

11,949

Issue of warrants

-

-

-

-

Issue of shares

-

-

-

-

Issue costs

-

-

-

-

As at 30 June 2011

2,854,174,600

2,373,981,242

2,374

11,949

 

 

 

At an Annual General Meeting held on 10 August 2011, 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 £6,393,000 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 £1,022,000 (2010: £874,000) and on 2,373,981,242 (2010: 1,623,981,242) 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 reporting date events

 

On 18 July 2011, the Company entered into a Warrant Deed pursuant to which Alexander David Securities plc, joint broker to the Company, has, conditional on Admission of the Company's shares, been granted warrants to subscribe for up to 34,111,111 new ordinary shares . The warrants are exercisable at any time in any amounts at a price of 0.1p per share for a period of three years from Admission or removal of the suspension of the shares.

 

On 18 July 2011, the Company entered into a Warrant Deed pursuant to which Zeus Capital Limited, nominated adviser to the Company, has been granted a warrant to subscribe for up to 34,111,111 new ordinary shares. The warrants are exercisable at any time in any amounts at a price of 0.1p per share for a period of three years from Admission or removal of the suspension of the shares.

 

On 19 July 2011, the Company issued and allotted 1,335,000,000 new ordinary shares of 0.1 pence each (representing approximately 56 percent of the current issued share capital of the Company) at a price of 0.1 pence per share, to raise £1,335,000 before expenses.

 

On 11 August 2011, the company issued and allotted 25,000,000 new ordinary shares of 0.1 pence each at a price of 0.1 pence per share in consideration of Mr McAlpine agreeing to capitalise £25,000 of salary, fees and expenses owed to him by the company.

 

On 23 September 2011, Quadling Quarry repaid in full the CDN$200,000 three month loan it obtained in June 2011.

 

6.         Distribution of the Half Yearly Report

 

Copies of the Half Yearly Report will be available to the public from the Company website, www.panagg.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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