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Creon Corporation plc (AMED)

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Friday 23 October, 2009

Creon Corporation plc

Interim results for the six months ended 31 Jul...

For immediate release: 23 October 2009, 7AM

                             Creon Corporation Plc                             

             Interim results for the six months ended 31 July 2009             

Creon Corporation Plc (AIM: CRO) today announces its interim results for the
six months ended 31 July 2009.



I am pleased to present these interim results of Creon Corporation Plc
("Creon", the "Group", or the "Company") for the six months ended 31 July 2009
to shareholders.

As notified in previous announcements, over the last 12 months there have been
significant changes to Creon's business and the environment within which it
operates. At the Company's annual general meeting held in August 2009, the
Company's shareholders approved Creon's new broader investment strategy,
providing the Company with a wider range of investment options and
opportunities. This new investment strategy is expected to provide the
directors with a wider range of investment prospects and also to make the
Company more attractive to potential new investors.


During the six month period under review, the Company continued to prepare for
its repositioning from a pure-play UK residential property mezzanine finance
provider to a more general investment company. Towards the end of 2008, the
Company was re-financed such that it could settle the majority of its historic
creditors in order to attract new shareholders that wished to pursue new
investment opportunities. We are expecting some potential new proposals from
them in the near future. We also had a change of directors during the period
and I'm pleased to say that Guus Berting has agreed to, with immediate effect,
become Creon's executive director and Jonathan Freeman will continue to serve
on the board as a non-executive director. We would like to thank Jonathan for
his efforts over the last few years, particularly in the most recent difficult
12 months.

Financial review

Income during the period represented rental income from the two investment
properties and loan income from a £200,000 loan made in February 2009.
Administrative expenses during the period include an impairment charge of £
13,000 in respect of the carrying value of the Group's quoted investments.
There were no finance costs during the period due to overpayments of interest
in the previous year on the £250,000 Bank of Scotland loan ("BoS Loan"). The
loss for the period was £96,000, resulting in a loss per share for the period
of 0.22 pence.

As at the period end, the Group held two investment properties which had been
received in settlement of a previous mezzanine loan. At 31 July 2009, the
properties had an aggregate carrying value of £335,000. We're pleased to report
that both properties were sold after the period end for an aggregate sum of £
340,000, before selling costs, and part of the net proceeds of these property
sales were used to repay the BoS Loan. The Group also continues to hold the
unquoted 7% preference shares in Pinnacle, the value of which remained at £
400,000 in the Directors' view at the period end.

The Group's net debt position at the period end was £250,000. However, we're
pleased to report that as at the date of this announcement, the Group had net
cash of approximately £50,000. In addition, the Group is expecting repayment in
the near future of its only remaining performing loan of £110,000 with
interest. This, in addition to the Group's existing cash resources is, in the
opinion of the Directors, sufficient working capital for the foreseeable


The Directors continue to discuss ways of raising further funds with its
current shareholders and advisers and are hopeful of making a further
announcement in this regard in due course. For the moment, however, we are
pleased to have secured a future for the Group, which has little or no debt,
despite the unprecedented difficult market conditions over the last 18 months.



for the six months ended 31 July 2009

                                        Note    6 months   6 months   12 months
                                                   ended      ended       ended
                                               31.7.09 £  31.7.08 £   31.1.09 £
                                                    '000       '000        '000
Revenue                                   2            4         43           9
Cost of Sales                                       (10)         20        (16)
Exceptional item: Loans impairment                     -          -     (2,328)
                                                  ______     ______      ______
Gross (loss) / profit                                (6)         63     (2,303)
Administrative expenses                   3        (101)    (2,007)       (282)
Exceptional items: Loss on sale of                     -          -     (1,100)
                                                  ______     ______      ______
Loss from operations                               (107)    (1,944)     (3,685)
Financial income                          4           11          4           5
Financial expense                         4            -        (8)        (19)
                                                  ______     ______      ______
Loss on ordinary activities before tax              (96)    (1,948)     (3,699)
Tax on (loss) on ordinary activities      5            -          -           1
                                                  ______     ______      ______
Loss on ordinary activities after                   (96)    (1,948)     (3,700)
                                                  ______     ______      ______
Loss per share                            6      (0.22)p   (19.41)p     (1.22)p

Consolidated unaudited interim balance sheet

                                        Note        As at      As at      As at
                                                31.7.09 £  31.7.08 £  31.1.09 £
                                                     '000       '000       '000
Non CurrentAssets                                                              
Investment properties                     7           335        250        335
Investment in unquoted preference         8           400          -        400
                                                    _____      _____      _____
                                                      735        250        735
Current Assets                                                                 
Investments in quoted shares                            6          -         19
Loans receivable                          9           135        990          -
Other receivables                                      22         78        241
Cash and cash equivalents                               -         11          2
                                                    _____       ____       ____
                                                      163      1,079        262
Total Assets                                          898      1,329        997
Current Liabilities                                                            
Trade and other payables                            (101)       (65)      (104)
Interest bearing loan                     10        (250)      (250)      (250)
                                                    _____       ____       ____
Total Liabilities                                   (351)      (315)      (354)
Net Assets                                            547      1,014        643
Capital and Reserves                                                           
Called up equity share capital            11          440        100        440
Share premium account                               3,816      2,775      3,816
Retained earnings                                 (3,709)    (1,861)    (3,613)
                                                     ____       ____       ____
Total Equity                                          547      1,014        643

Unaudited consolidated cash flow statement

                                          6 months    6 months     12 months
                                          ended       ended        ended
                                          31.7.09     31.7.08      31.1.09

                                          £'000       £'000        £'000
Reconciliation of operating profit                                             
to net cash flow from operating                                                
Loss for the year before tax              (96)        (1,948)      (3,699)     
Adjustments for:                                                               
Finance cost                              -           8            19          
Investment income                         (11)        (4)          (5)         
Loss on disposal of investment            -           -            1,100       
Impairment of property                    -           -            65          
Impairment of investment                  13          -            24          
Loan impairment                           -           1,406        2,231       
Property accepted in lieu of cash         -           -            (400)       
Change in receivables                     219         271          139         
Change in payables                        (3)         (100)        (30)        
                                          ________    ________     ________    
Cash flows from operating activities      122         (367)        (557)       
Interest received                         11          4            5           
Taxation refunded/(paid)                  -           3            33          
                                          ______      ______       ______      
                                          133         (360)        38          
Investing activities                                                           
Mezzanine finance loans advanced          -           (286)        -           
Mezzanine finance loans repaid            -           336          -           
Purchase of investments                   -           -            (43)        
Purchase costs of acquisition of          -           -            (105)       
Other loans advanced                      (200)       (403)        (404)       
Other loans repaid                        65          -            -           
Interest paid                             -           (8)          (19)        
                                          _______     _______      _______     
Net cash used in investing                (135)       (361)        (571)       
Financing activities                                                           
Issue of ordinary shares                  -           -            360         
Proceeds from bank borrowings             -           250          250         
                                          ______      ______       ______      
Net cash from financing activities        -           250          610         
Net (decrease) in cash and                (2)         (471)        (480)       
Cash and equivalents at beginning of      2           482          482         
Cash and equivalents at end of year       -           11           2           


1. Accounting policies

The principal accounting policies are summarised below. They have all been
applied consistently throughout the year and the preceding year unless stated.

Basis of accounting

The interim accounts of the Group and the Company 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 interim accounts have been prepared on the historical cost basis, except
where IFRS requires an alternative treatment. The principal variations from
historical cost relate to financial instruments (IAS 39).

Going concern

The Directors have reviewed the current budgets and cash flow projections for a
period of more than 12 months from the date of these results. The forecasts
take into account the current cash balances and assume repayment in full of the
loan of £0.2 million made in February 2009, £0.09 million of which has already
been repaid (together with fees due thereon), with the balance of £0.11 million
(plus interest) due to be repaid in November 2009.

Various sources of additional financing have been considered by the board to
strengthen the balance sheet, including injecting additional fresh equity,
although a final decision regarding the source of financing has not yet been

Accordingly the Directors have prepared the interim accounts on the going
concern basis.     

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The
consolidated financial statements present the results of the Company and its
two active subsidiary undertakings, Creon Investments Limited ("Investments")
and Creon Estates Limited ("Estates") ("the group") as if they formed a single
entity. Intercompany transactions and balances between group companies are
therefore eliminated in full.


Turnover represents rental income which is spread on a straight-line basis over
the period of the lease.

Investment property

The Group applies the fair value model in accounting for investment property.
The Group's investment property is revalued annually to open market value, with
changes in the carrying value recognised in the consolidated income statement.

Investments in unquoted and quoted shares

Investments in unquoted and quoted shares are initially measured at cost,
including transaction costs. Subsequent measurement of all investments is at
fair value. The fair values of listed investments are based on bid prices at
the balance sheet date.

Assets held by the Group at the period end include unlisted redeemable
preference shares and listed investments received in lieu of repayment of a
mezzanine loan.

When managing its investments, the Group aims to profit from changes in the
fair value of equity investments. Accordingly, all quoted equity investments
are designated as "at fair value through the profit and loss" and are
subsequently recorded in the balance sheet at fair value.

Loans receivable

Loans receivable are valued at nominal amount less provisions against
recoverability. No hedging transactions have been entered into with respect to
the loan portfolio.


At each balance sheet date, the Group reviews the carrying amounts of its
property and equipment and intangible assets with finite lives to determine
whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amounts of the asset is
estimated in order to determine the extent of the impairment loss. Where it is
not possible to estimate the recoverable amount of the individual asset, the
Group estimates that recoverable amount of the cash-generating unit to which
the asset belongs.


Cash and cash equivalents comprise cash at bank and in hand.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of
the financial instrument's contractual obligations rather than the financial
instrument's legal form. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of its

Trade payables

Trade payables are not interest bearing and are stated at their nominal value.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.

2. Revenue

Revenue in the period ended 31 July 2009 represents rental income received by
Creon Estates Ltd from the two investment properties acquired during the period
in lieu of repayment of a mezzanine loan. There was no revenue received in
respect of the mezzanine finance advances in the period ended 31 July 2009.

Subsequent to 31 July 2009, the Group disposed of its two investment properties
for an aggregate of £340,000, before payment of fees and costs associated with
their sale.

3. Administrative expenses

Administrative expenses include costs for premises, legal, accounting,
regulatory, plc and consultancy costs, together with impairment costs of the
quoted investments during the period.

4. Finance income and finance costs

Finance income represents interest income on short-term deposits and loans.
There was no finance cost in the period under review due to an over-payment of
interest made in the prior year in respect of the £250,000 loan.

5. Taxation

The Company is subject to UK corporation tax. No allowance has been made for
tax credits on current year losses.

6. Loss per share

The basic and diluted loss per share for the period ended 31 July 2009 was
0.22p. The calculation of loss per share is based on the loss of £96,000 for
the period ended 31 July 2009 and the weighted average number of shares in
issue during the period of 43,990,545.

7. Investment property

The Directors valued the properties at £335,000 as at 31 January 2009 and for
part of the period ended 31 July 2009, the properties were let on assured
short-hold tenancies. During August and September 2009, the Group sold both
investment properties for an aggregate £340,000, before the payment of fees and
associated selling costs.

8. Investment in unquoted preference shares

The investment in unquoted preference shares represents 400,000 £1 non-voting
redeemable preference share held in Pinnacle Plus Limited ("Pinnacle"). The
preference shares accrue interest at an annual rate of 7.0 per cent., payable
on the date of redemption, with redemption being at Pinnacle's discretion at
any time up to September 2013, upon which date they will be automatically

9. Loans receivable

Loans receivable represents a short-term loan made by the Company in February
2009 of £200,000, £90,000 of which has been repaid, including interest due
thereon, with the balance of £110,000 due for repayment in November 2009,
unless deferred to a later date, as agreed between the Company and the

10. Interest bearing loan

Fixed bank loan secured against the Company's assets and charged at base rate
plus 2%. Repayment was made by the Company in full by the due date of 30
September 2009.

11. Share capital

                                                  As at       As at       As at
                                              31.7.09 £   31.7.08 £   31.1.09 £
                                                   '000        '000        '000
                                                      £           £           £
100,000,000 (2008:50,000,000) ordinary        1,000,000     500,000   1,000,000
shares of 1 p each                                                             
Allotted, called up and fully paid                                             
43,990,545 Ordinary shares of 1p each           439,904     100,361     439,904
(2008:10,036,110 Ordinary shares of 1 p                                        

12. Preparation of interim report

This report was approved by the Directors on 22 October 2009.

The Company's interim report for the period ended 31 July 2009 will be posted
to shareholders today and the report is available to view and download from the
Company's website at

For further information please contact:

Creon Corporation Limited        

Guus Berting +44 (0)20 7752 0215

Daniel Stewart & Company Plc      

Oliver Rigby                                                               +44
(0)20 7776 6550

GTH Communications                     

Hall                                                                    +44 (0)
20 7153 8039

Christian Pickel                                                          +44
(0)20 7153 8036



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