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Creon Corporation plc (AMED)

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Thursday 16 October, 2008

Creon Corporation plc

Interim Results and Issue of Equity

For immediate release: 16 October 2008

                             CREON CORPORATION Plc                              


Creon Corporation Plc (AIM: CRO), today announces:

- its unaudited interim results for the six months ended 31 July 2008;

- the successful subscription to 4,000,000 new Ordinary Shares at 3 pence per
Ordinary Share;

- the agreement - subject to approval by shareholders at a General Meeting -
that each new Ordinary Share issued through the subscription is to be issued
with a warrant that will entitle the holder to subscribe for one new Ordinary
Share at 1.5 pence each.

Details of the proposed date for the General Meeting will set out in the
Circular to be issued shortly.


For further information please contact:

Creon Corporation Plc           Jonathan Freeman      +44 (0)20 7752 0215

Daniel Stewart & Company Plc    Oliver Rigby          +44 (0)20 7776 6550

GTH Media Relations             Toby Hall             +44 (0)20 7153 8039
                                Christian Pickel      +44 (0)20 7153 8036

Director's Report

We present these interim results to shareholders showing the financial
performance of the Group for the six months ended 31 July 2008.

During the period under review, Creon's business of providing mezzanine finance
to UK residential property developers has been severely adversely affected by
the well reported problems within the UK property sector. The combined effect
of very low house sale volumes and a sharp and continuing decline in house
prices, which has gathered momentum during the course of 2008, has resulted in
our remaining loan portfolio suffering from significant problems and repayment
delays. We took the view in the summer of 2007 that we should reduce our levels
of mezzanine finance exposure to the UK residential property market because of
the uncertain outlook. We did not foresee the scale of the decline in the UK
property sector but our action has meant that Creon's exposure to this sector
is not as much as it might have been.

We reported in our annual report for the period to 31 January 2008 that we had
re-appraised Creon's business model and had reached the conclusion that there
were unlikely to be sufficiently attractive property related projects over the
short to medium term to enable the Company to fully invest its cash resources.
We therefore sought out a new investment opportunity to utilise available
resources and announced on 1 July 2008 the acquisition of Pinnacle Plus Limited
("Pinnacle") for a total consideration of £0.77 million (inclusive of
approximately £120,000 of acquisition costs) with up to an additional £0.5
million deferred consideration, to be satisfied by the issue of ordinary shares
in Creon. This acquisition was approved by Creon's shareholders at the
Company's AGM and the transaction completed on 1 August 2008. Creon has
provided approximately £0.4 million of finance to Pinnacle since its first loan
to Pinnacle in April 2008.

It was envisaged at the time of Creon's first loan to Pinnacle that Creon would
be able to provide sufficient working capital to Pinnacle to enable it to
continue with its sustained growth plans. Pinnacle's working capital
requirement was expected to be financed from the repayment of certain of
Creon's existing property mezzanine loans. However, the significant
deterioration in the UK property market has meant that the mezzanine loans have
not been repaid as was expected and, as a result, Creon was not in a position
to continue to provide Pinnacle with the working capital as envisaged. We
therefore sold our ownership of Pinnacle to Felbright Limited, a company
principally owned by the management of Pinnacle, for £1 and converted the loans
of £403,000 already provided by Creon to Pinnacle into £400,000 of preference
shares which are redeemable by Pinnacle within five years and which earn
interest of 7% per annum. In addition we agreed to the novation to Creon of the
loans, and interest accrued, provided by certain third parties to Pinnacle
which had been previously guaranteed by Creon. The total of these loans and
accrued interest, as of 31 October 2008, will total £329,598. We have entered
into discussions with these third parties about the most appropriate way of
achieving repayment of these loans and expect to be able to announce proposals
shortly. Whilst it is very disappointing to have to dispose of Pinnacle we
believe that this is in the best interests of our shareholders as it preserves
some value in the investment we have put into Pinnacle whilst removing the need
to provide further funding at a time when there is such unprecedented
uncertainty in the market place. The completions of both the acquisition and
subsequent disposal of Pinnacle occurred after the end of the period under

Mezzanine Loans

At the beginning of this financial year, Creon had five loans outstanding
totalling £2.2 million. During the period under review, one of the loans was
repaid and we advanced one further mezzanine loan totalling £250,000. In
relation to the loan that was repaid we received payment partly in cash with
the remainder being made up by taking possession of two properties. We have
taken the view that, in the current economic environment, we should not be
accruing any further income on loans which are over due for re-payment and we
have also written off the majority of the income already accrued on these
loans. The result of this is that we have written off through the income
statement a total of £1,915,000 of loans and previously accrued income. This is
included within `Administrative Expenses' in the income statement provided with
this report. We have let both the properties and intend that they will be sold
in due course. Therefore at the period end the Group had five mezzanine loans
outstanding. We have re-valued these mezzanine loans (including accrued fees
where appropriate) to £578,000.

Financial Results

We are disappointed to report that for the period under review the Group has
incurred a loss before tax of £1.948 million (loss of £.068 million for same
period 2007). This loss is the result of the reduction in the size of our loan
portfolio and the non-performance of some of the loans. Our net assets as at 31
July 2008 stood at a total of £1.014million. The net assets of the Company have
fallen since the period end as a result of additional creditors and the
novation of the loans from Pinnacle. As of 1 October 2008 Creon's net assets
stood at approximately £0.5 million.


In order to continue to operate and to pay creditors as they fall due it is
necessary for Creon to raise further funding. The directors have therefore been
in negotiation with a number of potential investors in an effort to raise
further capital. However, a combination of the steep decline in the property
sector and the condition of the equity markets in general have meant that the
Company has only been able to raise funds on the basis of its net assets.

We have today announced that the Company has succeeded in raising a total of £
120,000 through the issue of 4,000,000 new ordinary shares of 1 pence each in
the capital of the Company ("Ordinary Shares") at a price of 3 pence per
Ordinary Share. This price represents a 25% discount to the current net asset
value per share of the Company. In addition to the issue of the new Ordinary
Shares we have also agreed that each new Ordinary Share issued through this
subscription will also be issued with a warrant that will entitle the holder to
subscribe for one new Ordinary Share at 1.5 pence each. The award of this
warrant will be subject to approval by shareholders at a General Meeting which
is expected to be called shortly. If the existing shareholders do not approve
the resolution relating to the issue of these warrants then the Company will
instead provide a debt instrument to the subscribers equivalent to 50% of the
value of their subscription shares at the subscription price. This instrument
would not be secured but would accrue interest at 5% above the Bank of England
base rate.

Application has been made for the new Ordinary Shares to be admitted to trading
on AIM. Admission of the Ordinary Shares is expected to take place on 21
October 2008 ("Admission").

Following Admission, Creon's issued ordinary share capital will comprise
16,041,491  Ordinary Shares.  All of the Ordinary Shares carry voting rights
and this will be the figure which may be used by shareholders in the Company as
the denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
share capital of the Company.

We are continuing our discussions with other potential investors and hope to be
in a position to be able to raise further funds in the near future, if


Given the continued uncertainty within the UK residential property sector the
Directors believe that it is in the best interests of the Company to continue
to diversify its portfolio of investments away from mezzanine finance to UK
property developers for the foreseeable future. The Directors anticipate that
it may not be possible to realise any of its existing loan portfolio in the
current financial year and believe that certain parts of the existing mezzanine
loan portfolio may require further financial support in order to secure a
successful repayment. The Directors are also investigating other suitable
investment opportunities, both within the property market and in other industry
sectors that are presenting themselves and which may come to fruition during
2009. It is anticipated that the financing of such investments will come at
least in part from the realisation of some of the existing mezzanine loans but
that further new equity funding is also likely to be required.

Jonathan Freeman
James Barder
15 October 2008

                             Creon Corporation Plc                              


                      FROM 1 FEBRUARY 2008 to 31 JULY 2008                       

Consolidated unaudited interim income statement

                                         Note    6 months  12 months   6 months
                                                    ended      ended      ended                
                                                  31.7.08    31.1.08    31.7.07
                                                     £000       £000       £000
Turnover                                  2            43        402        215
Cost of Sales                                          20      (146)       (87)
Gross profit                                           63        256        128
Administrative expenses                   3        (2007)      (436)      (208)
Loss on ordinary activities before                 (1944)      (180)       (80)
Financial income                          5             4         27         14
Financial expense                         5           (8)          -        (2)
Loss on ordinary activities before tax             (1948)      (153)       (68)
Tax on profit/(loss) on ordinary          6             -         31          -
Loss on ordinary activities after                  (1948)      (122)       (68)
Loss per share                            4      (19.41)p    (1.22)p    (0.67)p

Consolidated unaudited interim balance sheet

                                         Note       As at      As at      As at
                                                  31.7.08    31.1.08    31.7.07
                                                     £000       £000       £000
Non CurrentAssets                                                              
Investment properties                     7           250          -          -
Current Assets                                                                 
Corporation Tax recoverable                            31          -          -
Loans and accrued interest                            990       2611       3264
Debtors                                                47         34          -
Cash at bank                                           11        482        433
Total Assets                                         1329       3127       3697
Liabilities: amounts falling due within   8          (65)      (165)      (230)
one year                                                                       
financial liabilities                               (250)          -      (450)
Total Liabilities                                   (315)      (165)      (680)
Capital and Reserves                                                           
Called up equity share capital            9           100        100        100
Share premium                                        2775       2775       2775
Profit and loss account                            (1861)         87        142
Total Equity- attributable to the                    1014       2962       3017
shareholders of the parent                                                     
Total Liabilitiesand equity                          1329       3127       3697

Unaudited consolidated cash flow statement

                                                 6 months  12 months   6 months
                                                    Ended      Ended      Ended
                                                  31.7.08    31.1.08    31.7.07
                                                     £000       £000       £000
Operating profit/(loss)                            (1944)      (180)       (80)
Decrease/(increase) in Debtors                        271      (132)       (83)
Increase/(decrease) in Creditors                    (100)        (1)         15
Loan provisions                                      1406        250          -
Returns on investment and servicing                                            
of finance                                                                     
Interest received                                       4         27         14
Interest paid                                         (8)                      
Taxation                                                3       (52)          -
Mezzanine finance loans advanced                    (286)     (1049)      (825)
Pinnacle loan advance                               (403)                      
Mezzanine finance loans repaid                        336        677          -
Net cash outflow before financing                   (721)      (460)      (959)
New Loan advanced                                     250          -          -
Increase in cash in the period                      (471)      (460)      (959)
Cash and equivalents at beginning of                  482        942        942
the period                                                                     
Cash and equivalents at end of the                     11        482       (17)

Unaudited Statement of Changes in                                      
                                      Share    Share  Retained    Total
                                    capital  premium  earnings   equity
                                      £ 000    £ 000     £ 000    £ 000
Balance at 31 July 2007                 100     2775       210     3085
Loss for the period ended                 -        -     (123)    (123)
Balance at 31 January 2008              100     2775        87     2962
Loss for the period ended 31.7.08         -        -    (1948)   (1948)
Balance at 31 July 2008                 100     2775    (1861)     1014

Notes to the interim results

1) General information

Creon Corporation Plc is a limited liability company, which was incorporated in
England on 27.8.04, and was admitted to AIM on 25.11.04. Creon Corporation
acquired a subsidiary Creon Estates Ltd on 1.2.08. The sole intra-group
transaction has been eliminated in preparing the consolidated accounts.

The interim financial statements for the Group have been prepared as at 31 July
2008 and for the period of six months then ended, and have neither been audited
nor reviewed pursuant to guidance issued by the Auditing Practises Board.

The comparative figures are shown with consistency to the figures of the
current reported period.

The Company's functional currency is sterling as their operations are primarily
based in the United Kingdom, and these interim, unaudited, financial statements
are presented in sterling.

2) Accounting policies

In accordance with the rules of the Alternative Investment Market the financial

presented in this report has been prepared using accounting policies that are
expected to be applied in the preparation of the financial statements for the
year ending 31 January 2009. The principal accounting policies are set out

These policies are consistent with the recognition and measurement principles
of International Financial Reporting Standards ("IFRIC") and International
Financial Reporting Interpretations Committee ("FRIC") interpretations as
endorsed for use in the European Union that are expected to be applicable for
the year ended 31January 2009. There were no adjustments identified on
transition from UK GAAP to IFRS for the half year period to 31 July 2007 and
the full year end to 31 January 2008.

The financial information for the six months ended 31 July 2008 and for the six
months ended 31 July 2007 is unaudited.

The financial information presented for the Group does not constitute
"statutory accounts" within the meaning of Section 240 of the Companies Act

The information of the year ended 31 January 2008 has been extracted from the
financial statements of the statutory accounts of Creon Corporation Plc which
were prepared under UK Generally Accepted Accounting Principles ("UK GAAP") and
have been delivered to the Registrar of Companies. The auditors have reported
on those financial statements; their report was unqualified, did not include
references to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain any statements under either Section
237(2) or Section 237(3) of the Companies Act 1985.

The auditors have not reported on the financial statements for the half year
period to 31 July 2007 and for the year ended 31 January 2008 as disclosed
under IFRS.


Turnover represents property rents received and accrued and actual interest on
mezzanine finance loans.

Foreign currency transactions

Foreign currency transactions are translated into the functional currency using
the exchange rate prevailing at the date of the transaction. Any foreign
exchange gains and losses resulting from the settlement of such transactions,
and from translation at period end of any monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.

Segmental analysis

The company has only one major business segment, that of advancing mezzanine
finance loans, and carries out all of its operations in the United Kingdom.
Therefore the directors do not consider it necessary to prepare a segmental

Investment properties

Investment properties are those properties that are held either to earn rental
income or for capital appreciation or both.

Investment properties are measured initially at cost, including related
transaction costs. After initial recognition at cost, investment properties are
carried at their fair valuation based on professional valuation made as of each
reporting date. Properties are treated as acquired at the point when the Group
assumes the significant risk and returns of ownership and as disposed when
these are transferred to the buyer.

The difference between the fair value of an investment property at the
reporting date and its carrying amount prior to re-measurement is included in
the income statement as a valuation gain or loss.

3) Administrative expenses

Administrative expenses include £1.915 million of write offs relating to loans
and interest previously accrued thereon (2007: nil)

4) Earnings per Share

The loss per share for the period was 19.41 pence. The calculation of earnings
per share is based on the loss of £1,948,095 for the period and the weighted
average number of shares in issue (10,036.110).

5) Financial Revenues

Finance income consists of interest received on bank deposits. Finance expense
comprises interest on a new bank loan of £250,000.

6) Taxation

The Company is subject to UK corporation tax and is recovering all such tax
paid in the past against last year's operating loss. No allowance has been made
for tax credits on current year losses.

7) Non current Assets

Non current assets comprise two residential properties accepted as part of a
mezzanine loan repayment. The properties are currently let on assured shorthold

8) Creditors

                                              As at     As at     As at
                                          31.7.08 £   31.1.08   31.7.07
                                               '000     £'000     £'000
Trade creditors and Accruals                     65       165       181
Corporation Tax                                   -         -        49
                                                 65       165       230

All creditors are due within one year.

9) Share Capital

                                             As at     As at     As at
                                           31.7.08   31.1.08   31.7.07
                                              £000      £000      £000
50,000,000 ordinary shares of £                500       500       500
0.01 each                                                             
Allotted, called up and fully                                         
10,036,110ordinary shares of £                 100       100       100
0.01 each                                                             

10) Preparation of the Interim Report

This report was approved by the Directors on 15 October 2008.

The interim report is being sent to shareholders as soon practicably possible.


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