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Creon Corporation plc (AMED)

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Friday 31 July, 2009

Creon Corporation plc

Preliminary Results for the year ended 31 Janua...


For immediate release: Friday 31 July 2009, 7AM

                             Creon Corporation Plc                             

            Preliminary Results for the year ended 31 January 2009             

Creon Corporation Plc (AIM: CRO), today announces its preliminary results for
the year ended 31 January 2009.

CHAIRMAN'S STATEMENT

Introduction


I am pleased to present the annual results of Creon Corporation Plc ("Creon",
the "Group", or the "Company") for the year ended 31 January 2009. As notified
in previous announcements, the last financial year has been another extremely
challenging one for Creon. The collapse in UK property lending during 2008 and
the first half of 2009 caused a complete stalling of activity in the property
development sector and a material decline in property prices. Interest rate
cuts and increased government spending, which has the intention of mitigating
the current economic downturn, do not yet appear to have had time to take
effect and lenders to developers remain scarce. We therefore believe that
activity in the property market sector will be, at best, at its current low
levels during 2009 and that property values are likely to decline further,
though hopefully not at the same rates as have recently been experienced.

During the financial year under review we made one new mezzanine finance loan
of £0.25 million, at the beginning of the year in February 2008, when the scale
of the economic slowdown was not yet so apparent. We have struggled to make
headway in recovering any of the mezzanine loans that were outstanding at the
beginning of the financial year under review, all four of which are now well
overdue for repayment. In addition the loan which we made in February 2008 has
also, since the financial period end, become overdue. We are pursuing a variety
of options in order to try to generate at least some repayment of the five
loans and fees that are outstanding, including pursuing all the loan guarantees
that have been provided. However, in the circumstances, we believe that it is
prudent to write down all the outstanding mezzanine loans (including accrued
fees) to £zero (31 January 2008: £2.23 million; 31 July 2008: 0.58 million).

Turnover for the year under review was £0.01 million, comprising rental income
only, down from £0.4 million in the previous year, due to the fact that none of
the mezzanine loans are now considered to be `performing'. The total amount of
loans advanced during the year under review was £0.27 million, (including
follow-on loans) compared to £1.05 million in the previous year. Full year loss
was £3.70 million, compared to a post tax loss of £0.12 million last year,
equating to a loss per share of 24.9 pence (LPS of 1.22 pence the previous
year). The full year loss was higher than the previous year due partly to the
Directors decision to provide against all of the Company's accrued loans and
fees totaling approximately £2.4 million, which are included in administration
expenses, and partly due to the loss associated with the sale of Pinnacle Plus
Limited of approximately £1.1 million, which is also included in administration
expenses. Creon had cash balances of £0.002 million at the year end (2008: £
0.48 million). Given the slowdown in the property sector, the Directors believe
that it was appropriate to be cautious during most of the last financial year
and feel justified in stopping all new investments into mezzanine property
loans after the loan that was made in February 2008. The Directors do not
expect to provide any further mezzanine loans in at least the short term and
until conditions in the property sector begin to improve.

Historically, Creon's focus has been on providing mezzanine finance for
property development but, as outlined above, we do not believe that it is
likely that any further loans of this nature will be made in the short term at
least. As a consequence, the Board recognises that it should re-appraise
Creon's business model in order to make better use of its available assets and,
having consulted with a number of shareholders, began to seek additional
investment opportunities in the middle of last year.

Pinnacle

To this end, the Directors announced on 1 July 2008 the conditional acquisition
("Acquisition") of Pinnacle Plus Limited ("Pinnacle") for £0.65 million,
payable by the issue of 2,005,381 new ordinary shares of 1 pence each in Creon
(Ordinary Shares"), together with associated acquisition costs of approximately
£0.10 million. The Acquisition was approved by Creon's shareholders at the
Company's AGM and completed on 1 August 2008. It was envisaged at the time of
the Acquisition that Creon would provide sufficient working capital in order
for Pinnacle to continue with its growth plans. This working capital
requirement was expected to be financed from the repayment of certain of
Creon's existing property mezzanine loans during the second half of 2008.
However, the significant and sudden deterioration in the UK property market
meant that the mezzanine loans have not been repaid as was expected at that
time. This in turn resulted in Creon not being in a position to continue to
provide Pinnacle with the working capital as envisaged. The unfortunate
consequence was that we announced, on 3 October 2008, that we had agreed to
sell Creon's shareholding in Pinnacle to Felbright Limited, a vehicle
principally owned by Pinnacle's management, for the sum of £1 ("Sale"). The
Sale resulted in a loss on disposal during the year of approximately £1.1
million. In addition, as announced in the Company's interim results to 31 July
2008, we agreed, as part of the Sale, to the novation to Creon of loans (and
interest accrued thereon) provided by certain third parties to Pinnacle which
had been guaranteed by Creon as part of the Acquisition. The aggregate value of
these loans and accrued interest was £319,598. These loans, together with
certain other creditor balances of the Company were converted into new ordinary
shares of 1 pence each in the Company on 6 November 2008.

Furthermore, short term funding provided to Pinnacle by Creon ahead of the
Acquisition of approximately £0.4 million, was converted into preference shares
in Pinnacle earning interest at 7% per annum and redeemable by Pinnacle within
5 years. At 31 January 2009, these have been fair valued at £0.4 million.

Loans

As at 31 January 2008, the Company had five outstanding mezzanine loans to UK
property developments, four for ongoing development projects totalling £1.65
million, and one with a completed development project which has been partially
sold with an outstanding balance owing of £0.58 million. During the course of
the year to 31 January 2009, a total of £0.17 million of capital was repaid to
Creon from the completed development.

Creon provided one new loan to a UK property development during the year to 31
January 2009 totalling £0.25 million, which was due to be repaid in February
2009. In addition Creon provided loans to Pinnacle of approximately £0.4
million, as detailed above.

Creon now has five loans that have passed their original repayment date and an
outstanding £25,000 bank retention. In addition Creon has taken possession of 2
residential properties in lieu of fees and re-payment which, at 31 January
2009, had a combined resale value of approximately £0.34 million.

Creon's operations

When Creon was set up in 2004, it was set up in a way that aimed to keep
operating costs to a minimum in order to maximise any available funds for
lending. Accordingly, the Company entered into a consultancy agreement with
Creon Equity LLP (the "Manager") that provided the Directors with specialist
advice regarding the provision of finance to property developers. Given the
Directors do not envisage providing any further finance for any new property
projects in the short term, the agreement with the Manager is currently under
review and it is intended that the ongoing responsibilities of the Manager will
be focused solely on recovering loans and fees previously made.

On 2 February 2008, the Company acquired three wholly owned subsidiaries, Creon
Estates Limited ("Estates"), Creon Investments Limited ("Investments") and
Creon Properties Limited ("Properties"). All three companies were shell
companies and were acquired to allow Creon to hold assets to be received by the
Group in lieu of finance repayments and associated fees and also in
anticipation of making non-property related investments.

During the year under review, Estates took ownership of the two residential
properties received in lieu of loans previously made by Creon and Investments
made an investment of £0.04 million in an AIM listed company, such investment
remaining on the Group balance sheet as at the date of these results. As at the
year end and as at the date of these results, Properties remains dormant.

Investment policy

The Board remains committed to continue to provide mezzanine finance that can
provide a suitable return with an acceptable risk profile when the market for
such finance returns. However, the Board believes that it is in the best
interests of shareholders to broaden Creon's investment strategy to enable the
Group to provide finance to, and make investments in, other industry sectors
rather than being confined to the UK property sector. The Directors will be
seeking approval of, inter alia, the broader investment policy as set out below
at the Annual General Meeting of shareholders, which is to be held on 24 August
2009.

The Group will broaden its investment policy to also include investments in
private companies, publicly quoted companies and partnerships. The Group will
not focus on any particular industry sector but will seek investments in
sectors where there is potential for suitable returns. This is expected to
include sectors such as financial services and property, where values have
declined markedly over the last 12 months. The Company will primarily focus on
European based businesses but will also consider investments in other
geographical areas if appropriate. The Group will not seek to limit the size of
the investment or the size of the entities in which it invests.

The Group will not be limited to a fixed number of investments or seek to
diversify the investments over particular sectors or particular indexes,
however it is envisaged that the total number of investments at any given time
will not exceed 50 investments. The Group does not envisage at this stage
gearing its investments but may consider doing so in the future. The Board is
currently reviewing a number of investment opportunities and will make an
investment within the next three years.

The Company will generally be a passive investor in the entities in which it
invests but if the Board or the Group's consultants are able to add value to
the investee entities then the Group may take a more activist stance.

The Group plans to locate its non-property related investments through the
extensive network of contacts of the Board and the Group's financial advisers
and consultants. Once potential investments have been identified, the Board
will evaluate them on the basis of research prepared and presented to the Board
by its financial advisers and consultants. The Board believes that this
investment policy will help maintain the Group's low cost base whilst having
the potential to deliver improved returns for shareholders.

Changes in share capital

As stated in the Company's 2008 interim results, on 21 October 2008, in order
for the Group to continue to operate and to pay creditors as they fall due, the
Company raised £0.12 million via a subscription at 3 pence per Ordinary Share
through the issue of 4.0 million new Ordinary Shares. In addition, at the
general meeting of the Company held on 6 November 2008, the Company's
shareholders approved the issue of further new Ordinary Shares, such that
11,974,527 new Ordinary Shares were issued in November 2008 to cancel Group
debts of approximately £0.33 million and a further 15,974,527 new Ordinary
Shares were issued in January 2009, pursuant to the exercise of warrants. No
further issues of Ordinary Shares have been made since 31 January 2009 and no
options or warrants remain outstanding as at 31 January 2009.

Annual General Meeting

The Company's Annual General Meeting ("AGM") is be held at its registered
office, being 11 Grosvenor Crescent, Belgravia, London SW1X 7EE on Monday 24
August 2009 at 10:00 a.m. The notice of AGM, together with a form of proxy for
use at the AGM, has today been sent to shareholders.

Current position and outlook

Given the continued uncertainty within the property market, the directors
believe that it is in the Group's best interests to diversify the Group's
activities away from providing mezzanine finance to UK property developers. The
directors continue to seek out interesting and potentially profitable projects
and the adoption of the Group's new investment strategy, if approved at the
upcoming Annual General Meeting, will allow the Group to scope out additional
investment opportunities. It is the Group's intention to dispose of its two
residential properties during the course of 2009 and use the proceeds to repay
the Group's bank borrowings.

The proceeds from the exercise of warrants in January 2009 allowed the Group to
make one short-term mezzanine loan of £0.2 million in February 2009. £0.07
million of this loan has already been repaid (together with fees due thereon),
with the balance of £0.14 million (including interest) due to be repaid during
November 2009. This performing loan, together with the Group's cash balances of
£0.07 million as at 12 June 2009, is sufficient to cover the ongoing operating
and administration costs for the Group for the foreseeable future.
Notwithstanding this, the directors are in discussions with the Company's
existing shareholders about providing further working capital to the Group.

CREON CORPORATION PLC

CONSOLIDATED INCOME STATEMENT

for the year ended 31 January 2009

                                                          2009             2008
                                                                               
                                       Note                  £                £
                                                                               
Revenue                                 2                9,275          401,862
                                                                               
Cost of sales                           3               16,172        (145,985)
                                                                               
Exceptional item: Loans impairment      4          (2,328,493)                -
                                                                               
                                                   ---________         ________
                                                                               
Gross profit                                       (2,303,046)          255,877
                                                                               
Administration expenses                              (282,437)        (425,166)
                                                                               
Exceptional items: Loss on sale of      10         (1,100,034)                -
investment                                                                     
                                                                               
                                                      ________         ________
                                                                               
Loss from operations                               (3,685,517)        (169,289)
                                                                               
Finance income                          5                4,635           26,736
                                                                               
Finance costs                           5             (18,634)         (10,435)
                                                                               
                                                     _________         ________
                                                                               
Loss on ordinary activities before                 (3,699,516)        (152,988)
taxation                                                                       
                                                                               
Taxation                                6                (751)           30,598
                                                                               
                                                     _________         ________
                                                                               
Retained loss for the year                        (3,700,26 7)        (122,390)
                                                                               
Basic and diluted loss per share        7              (24.9)p          (1.22)p

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

Group

                            Share  Share premium    Retained       Total equity
                          capital        account     earnings   attributable to
                                                              equity holders of
                                                                         parent
                                                                               
                                £              £            £                 £
                                                                               
At 1 February 2007        100,361      2,774,949      209,580         3,084,890
                                                                               
Loss for the year               -              -    (122,390)         (122,390)
                                                                               
                        _________      _________    _________         _________
                                                                               
At 31 January 2008        100,361      2,774,949       87,190         2,962,500
                                                                               
Issue of shares           339,543      1,040,939            -         1,380,482
                                                                               
Loss for the year               -              -  (3,700,267)       (3,700,267)
                                                                               
                        _________      _________    _________         _________
                                                                               
At 31 January 2009        439,904      3,815,888  (3,613,077)           642,715
                                                                               
                        _________      _________    _________         _________

Company

                            Share  Share premium   Profit and      Total equity
                          capital        account loss account   attributable to
                                                              equity holders of
                                                                         parent
                                                                               
                                £              £            £                 £
                                                                               
At 1 February 2007        100,361      2,774,949      209,580         3,084,890
                                                                               
Loss for the year               -              -    (122,390)         (122,390)
                                                                               
                        _________      _________    _________         _________
                                                                               
At 31 January 2008        100,361      2,774,949       87,190         2,962,500
                                                                               
Issue of shares           339,543      1,040,939            -         1,380,482
                                                                               
Loss for the year               -              -  (3,611,397)       (3,611,397)
                                                                               
                        _________      _________    _________         _________
                                                                               
At 31 January 2009        439,904      3,815,888  (3,524,207)           731,585
                                                                               
                        _________      _________    _________         _________

BALANCE SHEETS

as at 31 January 2009

                                 Group                     Company               
                                                                                 
Assets                     Note            2009       2008        2009       2008
                                                                                 
Non-current assets                            £          £           £          £
                                                                                 
Investment property          8          335,000          -           -          -
                                                                                 
Amounts owed by              9                -          -     443,021          -
subsidiaries                                                                     
                                                                                 
Investment in subsidiaries  10                -          -           6          -
                                                                                 
Investment in unquoted      11          400,000          -     400,000          -
preference shares                                                                
                                                                                 
                                         ______     ______      ______     ______
                                                                                 
                                        735,000          -     843,027          -
                                                                                 
                                         ______     ______      ______     ______
                                                                                 
Current assets                                                                   
                                                                                 
Loan receivables             4                -  2,230,907           -  2,230,907
                                                                                 
Investments in quoted       12           19,151          -           -          -
shares                                                                           
                                                                                 
Other receivables           13          241,254    414,557     241,254    414,557
                                                                                 
Cash and cash equivalents                 1,925    481,749       1,925    481,749
                                                                                 
                                     ----______   ________      ______   ________
                                                                                 
                                        262,330  3,127,213     243,179  3,127,213
                                                                                 
Total assets                            997,330  3,127,213  1,086, 206  3,127,213
                                                                                 
Liabilities                                                                      
                                                                                 
Current liabilities                                                              
                                                                                 
Trade and other payables    14        (104,615)  (164,713)   (104,621)  (164,713)
                                                                                 
Interest bearing loan       15        (250,000)          -   (250,000)          -
                                                                                 
                                 ----______--__   ________    ________   ________
                                                                                 
Total liabilities                     (354,615)  (164,713)   (354,621)  (164,713)
                                                                                 
                                 ----______--__  _________    ________  _________
                                                                                 
Net assets                              642,715  2,962,500     731,585  2,962,500
                                                                                 
Equity                                                                           
                                                                                 
Called up share capital     16          439,904    100,361     439,904    100,361
                                                                                 
Share premium account       17        3,815,888  2,774,949   3,815,888  2,774,949
                                                                                 
Retained earnings                   (3,613,077)     87,190 (3,524,207)     87,190
                                                                                 
                                        _______   ________     _______   ________
                                                                                 
Total equity                            642,715  2,962,500     731,585  2,962,500

CASH FLOW STATEMENTS

                                          Group                 Company        
                                                                               
                             Note 2009        2008      2009        2008       
                                                                               
                                            £         £           £           £
                                                                               
Reconciliation of operating                                                    
profit to net cash flow from                                                   
operating activities                                                           
                                                                               
Loss for the year before tax      (3,699,516) (152,988) (3,610,646) (152,988)  
                                                                               
Adjustments for:                                                               
                                                                               
Finance cost                      18,634      -              18,634 -          
                                                                               
Investment income                 (4,635)     (26,736)      (4,635) (26,736)   
                                                                               
Loss on disposal of               1,100,034   -           1,100,034 -          
investment                                                                     
                                                                               
Impairment of property            65,000      -                   - -          
                                                                               
Impairment of investment          23,870      -                   - -          
                                                                               
Loan impairment                   2,230,907   -           2,230,907 -          
                                                                               
Property accepted in lieu of      (400,000)               (400,000)            
cash settlement oloan                                                          
                                                                               
Change in receivables             139,361     (255,949)     139,361 (255,949)  
                                                                               
Change in payables                (30,581)    670          (30,581) 670        
                                                                               
Change in loans to                -           -            (43,021) -          
subsidiaries                                                                   
                                                                               
                                  ________    _______       _______ ______     
                                                                               
Cash flows from operating         (556,926)   (435,003)   (599,947) (435,003)  
activities                                                                     
                                                                               
Interest received                 4,635       26,736          4,635 26,736     
                                                                               
Taxation refunded/(paid)          33,191      (52,225)       33,191 (52,225)   
                                                                               
                                  ______      ______         ______ ______     
                                                                               
                                  37,826      (25,489)       37,826 (25,489)   
                                                                               
Investing activities                                                           
                                                                               
Purchase of investments           (43,021)    -                   - -          
                                                                               
Purchase costs of             18  (105,187)   -           (105,187) -          
acquisition of Pinnacle                                                        
                                                                               
Other loans                       (403,500)   8           (403,500) 8          
                                                                               
Interest paid                     (18,634)    -            (18.634) -          
                                                                               
                                  _______     _______       _______ _______    
                                                                               
Net cash used in investing        (570,342)   8           (527,321) 8          
activities                                                                     
                                                                               
Financing activities                                                           
                                                                               
Issue of ordinary shares      16  359,618     -             359,618 -          
                                                                               
Proceeds from bank                250,000     -             250,000 -          
borrowings                                                                     
                                                                               
                                  ______      ______         ______ ______     
                                                                               
Net cash from financing           609,618     -             609,618 -          
activities                                                                     
                                                                               
Net (decrease) in cash and        (479,824)   (460,485)   (479,824) (460,485)  
equivalents                                                                    
                                                                               
Cash and equivalents at           481,749     942,234       481,749 942,234    
beginning of year                                                              
                                                                               
Cash and equivalents at end       1,925       481,749         1,925 481,749    
of year                                                                        

NOTES TO THE FINANCIAL STATEMENTS

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 financial statements 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,.
This is the first time the company has prepared its financial statements in
accordance with IFRS, having previously prepared its financial statements in
accordance with UK GAAP. There are no adjustments between UK GAAP and IFRS in
the period or the prior period which require to be reported in these financial
statements.

The financial statements 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).

At the date of authorisation of the financial statements there were Standards
and Interpretations, which have not been applied in the financial information,
that were in issue but not yet effective. The Directors anticipate that the
adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group or the Company, except
for additional disclosures when the relevant Standards and Interpretations come
into effect."

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
short-term mezzanine loan of £0.2 million made in February 2009, £0.07 million
of which has already been repaid (together with fees due thereon), with the
balance of £0.14 million (including interest) due to be repaid in November
2009. In addition, the Directors have taken into account the expected net
proceeds realisable from the sale of two residential properties, offers on both
of which have recently been accepted. The Directors have assumed that the bank
loan will be repaid in full from the proceeds of the sale of the properties.
Furthermore, no new mezzanine finance loans are anticipated to be made during
the next 12 months.

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
made.

Accordingly the Directors have prepared the financial statements 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.

Revenue

Turnover represents arrangement fees due in respect of mezzanine finance
advances and additional fees arising from the extension of loans beyond their
original repayment date. These are spread on a straight-line basis over the
loan terms.

Rental income

Rent income 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 subsidiaries

Investment in subsidiary companies is stated at cost less provision for any
impairment in value. Subsequent measurement of all investments is at fair
value.

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 year 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. The maximum exposure of the Company in respect of the loan
portfolio at the year end is the amount receivable shown in note 4. No hedging
transactions have been entered into with respect to the loan portfolio.

Impairment

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. In 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

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
liabilities.

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.

Current and deferred tax

The charge for current tax is based on the results for the year as adjusted for
items which are non-assessable or disallowed. It is calculated using rates that
have been enacted or substantively enacted by the balance sheet date.

2. Revenue

Revenue in the year ended 31 January 2009 represents rental income received by
Creon Estates Ltd from the two investment properties acquired during the year
in lieu of repayment of a mezzanine loan. There was no rental income during the
previous year. The Group's revenue in the year ended 31 January 2008 represents
the arrangement fees due in respect of mezzanine finance advances and
additional fees arising from the extension of loans beyond the original
repayment date. There was no revenue received in respect of the mezzanine
finance advances in the year ended 31 January 2009.

3. Expenses by nature

Expenses included in administrative expenses (net) are analysed below

                                                     2009           2008
                                                                        
                                                        £              £
                                                                        
Administrative expenses                                                 
                                                                        
Auditor's remuneration - for audit work            29,694         18,212
                                                                        
Provision against doubtful fee income                   -        250,685
                                                                        
Premises costs                                     10,543          3,954
                                                                        
Administration costs                               55,966         61,201
                                                                        
Other legal, professional and financial            58,239         51,739
costs                                                                   
                                                                        
Employment costs and directors fees                39,095         39,375
                                                                        
Impairment of assets                               88,870              -
                                                                        
Sundry                                                 30              -

4. Loans impairment

                                                       2009           2008
                                                                          
                                                          £              £
                                                                          
Balance brought forward                           2,230,907      1,859,204
                                                                          
New loans advanced in year                          282,881      1,049,206
                                                                          
Loans repaid                                      (165,017)      (677,503)
                                                                          
Property accepted in lieu of cash                 (400,000)              -
settlement                                                                
                                                                          
Loans written off                               (1,948,771)              -
                                                                          
                                                     ______         ______
                                                                          
Balance carried forward                                   -      2,230,907
                                                                          
                                                     ______         ______

As at 31 January 2008, the Company had five outstanding mezzanine loans to UK
property developments, four for ongoing development projects totalling £1.65
million, and one from a completed development project which has been partially
sold with an outstanding balance owing of £0.58 million. During the course of
the year to 31 January 2009, a total of £0.17 million of capital was repaid to
Creon from the completed development.

Creon provided one new loan to a UK property development during the year to 31
January 2009 totalling £0.25 million, which was due to be repaid in February
2009.

All the five loans have passed their original repayment date. The company is
pursuing a variety of options in order to try to generate at least some
repayment of the five loans and fees that are outstanding, including pursuing
all the loan guarantees that have been provided. In addition Creon has taken
possession of 2 residential properties in lieu of a fee re-payment which, at 31
January 2009, had a combined resale value of approximately £0.34 million.

Notwithstanding this, the directors consider it prudent to write down all the
outstanding mezzanine loans (including accrued fees) to £zero (31 January 2008:
£2.23 million; 31 July 2007: 0.58 million). This, together with the write off
of accrued income on the loans of £379,722, results in a charge to the income
statement of £2,328,493 for the year (2008: £nil).

5. Finance income and finance costs

                                                      2009            2008
                                                                          
                                                         £               £
                                                                          
Finance income - interest income on                  4,635          26,736
short-term deposits                                                       
                                                                          
                                                    ______       _______  
                                                                          
Interest expense on bank loan                       18,634          10,435
                                                                          
                                                    ______       _______  
                                                                          

6. Taxation

                                                      2009          2008
                                                                        
                                                         £             £
                                                                        
UK Corporation Tax                                                      
                                                                        
Current tax on loss for the year                         -      (30,598)
                                                                        
Underprovision in prior year                           751             -
                                                                        
                                                    ______       _______
                                                                        
                                                       751      (30,598)
                                                                        
                                                    ______       _______
                                                                        
Factors affecting tax charge in the year                                
                                                                        
Loss on ordinary activities before tax         (3,700,267)     (152,988)
                                                                        
Loss on ordinary activities at the effective             -      (30,598)
rate of corporation tax in the UK of 20%                                
                                                                        
Underprovision in prior year                           751             -
                                                                        
                                                    ______       _______
                                                                        
Tax charge for the year                                751      (30,598)
                                                                        
                                                    ______       _______

7. Loss per share

The basic and diluted loss per share for the year ended 31 January 2009 was
24.9p. The calculation of earnings per share is based on the loss of £3,700,267
for the year ended 31 January 2009, and the weighted average number of shares
in issue during the year of 14,852,682. The Company issued 33,954,435 shares
during the year ended 31 January 2009, as set out in note 16 to these accounts.
No options or warrants remain outstanding as of 30 January 2009 and no further
shares have been issued since 30 January 2009.

The basic and diluted loss per share for the period to 31 January 2008 was 1.22
p. The calculation of loss per share for that period was based on loss of £
122,390 for the year to 31 January 2008 and the number of shares in issue
during the year of 10,036,110. No shares were issued by the Company during the
year ended 31 January 2008.

8. Investment property

Freehold                                               2009           2008
                                                                          
Cost or valuation                                         £              £
                                                                          
At 1 February                                             -              -
                                                                          
Additions                                           400,000              -
                                                                          
(Deficit) on revaluation                           (65,000)              -
                                                                          
                                                    _______        _______
                                                                          
At 31 January                                       335,000              -
                                                                          
                                                    _______        _______

The Directors valued the properties at £335,000 as at 31 January 2009. During
the year ended 31 January 2009, the properties were let on assured short-hold
tenancies

9. Amounts owed by subsidiaries

                                                        2009               2008
                                                                               
                                                           £                  £
                                                                               
Creon Estates Limited                                400,000                  -
                                                                               
Creon Investments Limited                             43,021                  -
                                                                               
                                                      ______            _______
                                                                               
                                                     443,021                  -
                                                                               
                                                      ______            _______

10. Investment in subsidiaries

                                                      2009                 2008
                                                                               
Cost or valuation                                        £                    £
                                                                               
At 1 February                                            -                    -
                                                                               
Additions                                          776,942                    -
                                                                               
Disposals                                        (776,936)                    -
                                                                               
                                                   _______              _______
                                                                               
At 31 January                                            6                    -
                                                                               
                                                   _______              _______

On 1 August 2008, the Company acquired 100% of the issued share capital of
Pinnacle Plus Limited ("Pinnacle"), a company engaged in the design and
manufacture of telematics products for businesses operating ground support
equipment at airports, for £651,749, payable by the issue of new ordinary
shares of 1 pence each in the company. There were associated acquisition costs
of £125,187.

On 3 October 2009, Creon's shareholding in Pinnacle was sold to Felbright
Limited, a vehicle principally owned by Pinnacle's management, for the sum of £
1.

In addition Creon agreed, as part of the sale, to the novation to Creon of
loans (and interest accrued thereon) provided by certain third parties to
Pinnacle which had been guaranteed by Creon as part of the acquisition. The
aggregate value of these loans and accrued interest was £319,598. These loans,
together with certain other creditor balances of the Company were converted
into new ordinary shares of 1 pence each in the Company on 6 November 2008.

Furthermore, short term funding provided to Pinnacle by Creon ahead of the
acquisition of £403,500, was converted into 400,000 £1 preference shares in
Pinnacle earning interest at 7% per annum and redeemable by Pinnacle within 5
years. At 31 January 2009, these have been fair valued at £0.4 million.

The total cost of the above transactions which fell to be written off as loss
on disposal of investments £1,100,034.

During the period from 1 August 2009 to 3 October 2009, Pinnacle was a
subsidiary undertaking of the Group, however, in view of the short period of
ownership, the results of Pinnacle have not been consolidated. If it had been
consolidated there would have been no effect on the balance sheet or the
retained loss for the year.

The other subsidiaries of Creon, all of which have been included in these
consolidated financial statements, are as follows:

Name                      Country of       Proportion of ownership interest at 
                        incorporation                   31 January             
                                                                               
                                                  2009              2008       
                                                                               
Creon Investments          England                100%               0%        
Ltd                                                                            
                                                                               
Creon Estates Ltd          England                100%               0%        
                                                                               
Creon Properties           England                100%               0%        
Ltd                                                                            

The principal activity of Creon Investments Ltd is that of making
non-controlling investments in quoted and unquoted companies. Creon Estates
Ltd's principal activity is that of holding residential property for resale.
Creon Properties Ltd is dormant.

11. Investment in unquoted preference shares

                                                      2009           2008
                                                                         
Cost or valuation                                        £              £
                                                                         
At 1 February                                            -              -
                                                                         
Additions                                          400,000              -
                                                                         
                                                   _______        _______
                                                                         
At 31 January                                      400,000              -
                                                                         
                                                   _______        _______

The investment in unquoted preference shares represents 400,000 £1 non-voting
redeemable preference share held in 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 redeemed.

12. Investments in quoted shares

                                                       2009           2008
                                                                          
Cost or valuation                                         £              £
                                                                          
At 1 February                                             -              -
                                                                          
Additions                                            43,021              -
                                                                          
Impairment provision                               (23,870)              -
                                                                          
                                                    _______        _______
                                                                          
At 31 January                                        19,151              -
                                                                          
                                                    _______        _______

13. Other receivables

                                                        Group & Company        
                                                                               
                                                           2009            2008
                                                                               
                                                              £               £
                                                                               
Proceeds due from exercise of share warrants            232,299               -
                                                                               
Corporation tax                                               -          33,942
                                                                               
Prepayments and sundry debtors                            8,955             888
                                                                               
Accrued income                                                -         379,727
                                                                               
                                                         ______          ______
                                                                               
                                                        241,254         414,557

All amounts fall due for payment within one year.

14. Trade and other payables

                                                        Group & Company        
                                                                               
                                                           2009            2008
                                                                               
                                                              £               £
                                                                               
Trade creditors                                               -             488
                                                                               
Accruals and deferred income                            104,615         164,225
                                                                               
                                                         ______          ______
                                                                               
                                                        104,615         164,713

15. Interest bearing loan

Fixed bank loan secured against the Company's assets and charged at base rate
plus 2%. Repayment is due by 30 September 2009.

16. Share capital

                                                           2009            2008
                                                                               
                                                              £               £
                                                                               
Authorised                                                                     
                                                                               
100,000,000 (2008: 50,000,000) ordinary shares        1,000,000         500,000
of 1 p each                                                                    
                                                                               
Allotted, called up and fully paid                                             
                                                                               
43,990,545 Ordinary shares of 1p each                   439,904         100,361
                                                                               
(2008: 10,036,110 Ordinary shares of 1 p each                                  

During the year ended 31 January 2009, the Company issued and allotted
33,954,435 ordinary shares of 1p each as follows:

  * 2,005,381 issued and allotted on 24 July 2008 in relation to the
    acquisition of Pinnacle Plus Limited;
   
  * 4,000,000 issued and allotted on 21 October 2008 for cash at 3 pence per
    share;
   
  * 10,986,592 issued and allotted on 12 November 2008 in relation to the
    conversion of £329,598 of debts owed by the Company at 3 pence per share;
   
  * 987,935 issued and allotted on 19 November 2008 in relation to the
    conversion of £39,517 of debts owed by the Company at 4 pence per share;
    and
   
  * 15,974,527 issued and allotted on 30 January 2009 in relation to the
    exercise of warrants as approved by the Company's shareholders on 6
    November 2008.
   
15,974,527 warrants were issued during the year ended 31 January 2009 and all
were exercised during the year ended 31 January 2009. No warrants or options
were issued during the prior financial year or remained outstanding for
exercise post 31 January 2009.

17. Share premium account

During the year, 33,954,435 (2008: nil) Ordinary Shares were issued for a total
share premium of £1,040,939 (2008: nil). During the year (2008: nil), no
transaction costs were deducted from the share premium account.

18. Acquisition of Pinnacle

                                                              Cash     Non-cash
                                                                               
                                                                 £            £
                                                                               
Acquisition costs                                          105,187       20,000
                                                                               
2,005,381 Ordinary shares issued to Pinnacle                     -      651,749
shareholders at 32.5p each                                                     
                                                                               
Third party loans to Pinnacle transferred to Creon as            -      319,598
part of Pinnacle sale                                                          
                                                                               
                                                            ______       ______
                                                                               
Total                                                      105,187      991,347

19. Asset value per share

The net asset value per share at 31 January 2009 was £0.01 (31 January 2008; £
0.30). Net asset value is based on the net assets as at 31 January 2009 of £
642,715 (31 January 2008: £2,962,500) and on the number of Ordinary Shares in
issue at 31 January 2009 being 43,990,545 Ordinary Shares (31 January 2008:
10,036,110).

20. Staff numbers and costs

The average monthly number of employees of the Group, including Directors,
during the year, was 2 (2008: 2).The aggregate remuneration and associated
costs were:

                                                      2009          2008
                                                                        
                                                         £             £
                                                                        
Wages and salaries                                  12,000        12,000
                                                                        
Social security costs                                  681           867
                                                                        
                                                     _____         _____
                                                                        
                                                    12,681        12,867

Directors' emoluments

                                                      2009            2008
                                                                          
                                                         £               £
                                                                          
Amounts paid to third parties in respect of         52,828          54,142
Directors' services                                                       
                                                                          
Emoluments paid to a director                       12,000          12,000

21. Capital commitments

There were no capital commitments at the year end (2008 - £nil).

22. Related Party Transactions

The following information discloses the significant related-party transactions
during the year

Name of related party and nature of  Transaction  Amount paid     Balance    
relation                                type                   outstanding at
                                                                  year end   
                                                                             
                                                   2009   2008    2009   2008
                                                                             
                                                      £      £       £      £
                                                                             
Jonathan Freeman, Director of Creon   Directors  15,463 24,299  13,160  2,209
is a 50% shareholder of Combined        fees                                 
Management Services Limited ("CMS")                                          
                                                                             
Jonathan Freeman, Director of Creon    Admin &   15,526 25,631  13,160  2,272
is a 50% shareholder of CMS            support                               
                                      services                               
                                                                             
Jonathan Freeman, Director of Creon  Accountancy 16,113  1,958  15,630  1,958
is a 50% shareholder of CMS           services                               
                                                                             
Jonathan Freeman, Director of Creon   Provision   9,400  2,350   3,493  2,350
is a 50% shareholder of CMS           of Office                              
                                        space                                

Related party balances outstanding at the year end attract zero interest and
are payable on demand. The amounts included in the table above include expenses
and disbursements. In addition, gth Media Relations invoiced Combined
Management Services Limited ("CMS") a total of £14,075 (including VAT) for its
services to Creon. CMS re-charged Creon this amount.

23. Analysis of cash and cash equivalents

                                                          2009           2008
                                                                             
                                                             £              £
                                                                             
Cash at bank and in hand                                 1,925        481,749
                                                                             
Interest bearing loan                                (250,000)              -
                                                                             
                                                       _______         ______
                                                                             
                                                     (248,075)        481,749

24. Emphasis of matter - Going concern

In forming their opinion, the Company's independent auditors have considered
the adequacy of the disclosures made in Note 1 of the financial statements
concerning the preparation of the financial statements on a going concern
basis. The company incurred a net loss of £3,700,267 during the year ended 31
January 2009 and has written off all its mezzanine loans. These conditions,
along with the other matters explained in note 1 to the financial statements,
indicate the existence of a material uncertainty, which may cast significant
doubt about the company's ability to continue as a going concern. The financial
statements do not include any adjustment that would result if the company was
unable to continue as a going concern and our opinion is not qualified in this
respect.

The Company's Report and Accounts for the year ended 31 January 2009 will be
posted to shareholders today and the full report is available to view and
download from the Company's website at www.creoncorporation.com.

For further information please contact:

Creon Corporation Limited        

Jonathan
Freeman                                                                 
+44 (0)20 7752 0215

Daniel Stewart & Company Plc      

Oliver
Rigby                                                                           
+44 (0)207 776 6550

GTH Communications                     

Toby
Hall                                                                             
+44 (0)20 7153 8039

Christian Pickel                                                             
+44 (0)20 7153 8036




                                                                                                                                                                                                                                         

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