Amedeo Resources Regulatory News (AMED)

8 July 2013

Creon Resources Plc

("Creon", "the Group" or "the Company")

Audited results for year ended 31 January 2013 and notice of AGM

Creon Resources Plc (AIM: CRO), the resources related investment company, is pleased to announce the consolidated audited results of Creon Resources plc for the year ended 31 January 2013.

Period highlights

·; Group's net asset value up 18-fold year-on-year to 0.41 pence (2012: 0.023 pence);

·; New investment funds of more than £12.0 million raised via an open offer to all shareholders;

·; Invested US$15.3 million (£9.7 million) in new oil and gas rig construction joint venture with multi-billion dollar shipbuilding giant, Yangzijiang Shipbuilding (Holdings) Ltd ("Yangzijiang"), for a 46.45% stake in YZJ Offshore;

·; YZJ Offshore's associate, YZJOE, a company in which Creon has an 18.6% indirect interest, secures first rig order worth US$170 million for delivery in mid-2015; and

·; Board strengthened with appointments of Mr Ghanim Al Saad as Non-executive Chairman and Mr Glen Lau as Chief Executive Officer.

Post period highlights

·; Acquired 49% stake in ferrous metal and ore trader, MGR Resources;

·; Delivery of YZJOE's first rig order on track with enhanced specification; and

·; Development of YZJOE's new rig-yard near Shanghai progressing well with land compacting continuing and skidway construction expected to start shortly.

Glen Lau, CEO of Creon, commented:

"The year ended 31 January 2013 has clearly been an exceptional one for Creon, transforming itself into a well capitalised and well respected investment company with investments in sectors with high growth potential over both the short and long term. We are delighted with our JV Investment alongside Yangzijiang into YZJ Offshore, which is on schedule to deliver its first order on budget and on time. The development of YZJOE's rig yard just north of Shanghai ought to deliver significant value uplift to Creon as construction on that site continues apace. Our recent investment in MGR is starting to bear fruit and we anticipate receiving our first returns from that investment in the second half of the year. We are financially secure with a strong management team and we look forward to updating shareholders on further developments during the course of the current financial year."

The Company's Report and Accounts for the year ended 31 January 2013, together with the notice of Annual General Meeting ("AGM") will be posted to shareholders today and the full report is available to view and download from the Company's website at www.creonresources.com. The AGM is to be held at the Company's registered office at 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT at 11:00am on 31 July 2013.

For further information please contact:

ENDS

CHAIRMAN'S STATEMENT

I am pleased to present these audited results of Creon Resources plc ("Creon" or the "Company") and its subsidiaries (the "Group") for the year ended 31 January 2013.

Introduction

The 2012/13 year has been a transformational one for Creon:

·; In June 2012, we raised more than £12.0 million from new and existing shareholders;

·; In July 2012, we made our first significant resources investment when we invested US$15.3 million into YZJ Offshore Engineering PTE Ltd ("YZJ Offshore"), a joint venture with multi-billion dollar shipbuilding giant, Yangzijiang Shipbuilding (Holdings) Ltd ("Yangzijiang"), for a 46.45% stake in YZJ Offshore;

·; In December 2012, the 40% associate of YZJ Offshore, Jiangsu Yangzijiang Offshore Engineering Co Ltd ("YZJOE"), secured its first rig order worth US$170 million for delivery in mid-2015; and

·; In April 2013, we acquired a 49% stake in ferrous metal and ore trader, MGR Resources PTE Ltd.

Background

Creon is an investment company with a broad investment policy which has focused on the resources sector. Its aim is to deliver significant shareholder returns through capital growth and to provide the services of its directors and management to its investee companies, when necessary. The background and experience of the Company's directors ("Directors") and its advisory network are crucial to the Group's success, providing it with the necessary access to value enhancing deals, particularly in the high growth regions such as the Middle East and South East Asia.

Review of Creon's investments

YZJ Offshore

Creon made its largest investment to date in July 2012, when the Company, entered into a joint venture with multi-billion dollar China based shipbuilding giant, Yangzijiang, in the offshore oil and gas infrastructure sector ("JV Agreement").

Under the terms of the JV Agreement, Creon and Yangzijiang each invested in a joint venture company, YZJ Offshore, a Singapore registered company specifically set up by Yangzijiang to be a leading player in the design and construction of marine offshore oil and gas vessels (jack-up and semi-submersible rigs) ("the JV Investment"). Creon invested US$15.33 million into YZJ Offshore with Yangzijiang and its associates having invested a further US$14.67 million.

The joining of forces with Yangzijiang under this JV Agreement represented a substantial endorsement of Creon's standing and that of its management in the oil and gas infrastructure sector. The Directors are confident of identifying and executing further significant deals with similar industry heavyweights in order to deliver material shareholder value.

The Offshore oil and gas market

The Directors believe demand for newly designed rigs will be underpinned by the phasing out of the existing stock of rigs over the next few years. The Directors consider that based on the current stock and new rig builds in the pipeline, there could be an under supply by almost 200 jack-up rigs by 2020, given that almost half the current fleet of jack-up rigs are more than 30 years old. Both Creon and Yangzijiang believe the requirement to provide higher specification rigs to enable even deeper and more efficient drilling represents an excellent investment opportunity.

About Yangzijiang Shipbuilding (Holdings) Ltd

Yangzijiang was established in 1956 and is listed on the main board of the Singapore stock exchange. Yangzijiang is the largest non-state owned container shipbuilder in China. In the year ended 31 December 2012, Yangzijiang generated sales of approximately US$2.3 billion and net profits of approximately US$0.6 billion. Yangzijiang reported net assets of approximately US$2.6 billion as at 31 December 2012. The Directors were aware that Yangzijiang had been exploring opportunities to diversify from its traditional container shipbuilding sector into the offshore oil and gas infrastructure sector for some time and were open to collaborating with partners with expertise, such as Creon.

As a consequence, Yangzijiang invited Creon to participate in the JV Investment to further enhance YZJ Offshore's access to the necessary skills and expertise in rig design, sales and procurement so as to enable YZJ Offshore to grow into a successful and significant business.

First new rig order

In December 2012, Creon was delighted to announce that YZJ Offshore's 40% associate, YZJOE, the entity in which Creon has an indirect 18.58% shareholding, had secured a US$170 million order for a drilling rig to be delivered in mid-2015. The order, to deliver one unit of a Le Tourneau Super 116E Class design self-elevating Mobile Offshore Jack-up Drilling Rig ("First Rig"), is currently on track for delivery, albeit now designed to an even higher specification with an increased order value.

The First Rig is currently being built at one of Yangzijiang's existing yards, with the laying of the keel due to take place later this month.

Long term strategy

Not only does YZJ Offshore have aspirations to become a leading player in the provision of front end engineering, design and management consultancy services for the construction, fabrication and repair of oil and gas marine vessels and platforms, but YZJ Offshore's longer term strategy is to own and construct its own purpose built rig-building yard in China. To that end, in July 2012, YZJOE secured the land rights to approximately 1.6 million square metres of prime shorefront land in Taicang, Jiangsu Province on China's east coast, some 50 miles north of Shanghai ("Land"). The Land is the ideal location for the construction of YZJOE's new rig yard ("New Yard") due to its deep water and absence of bridges en route to the open sea. Since July 2012, Creon can report that the Land is currently being compacted in order to prepare for construction thereon and building of the skidway is expected to get underway shortly.

MGR Resources

In early April 2013, Creon's wholly owned subsidiary, Creon Resources (Asia) PTE Ltd ("Creon Asia") acquired 49% of MGR Resources PTE Ltd ("MGR"). MGR is a wholesale trader of ferrous metals and ore, sourced principally from Africa, India and the Middle East and sold on to buyers in East Asia, including China.

As part of the investment into MGR, Creon also provided MGR with an US$1.95 million three year convertible loan with a coupon of 15%.

Although only a recent investment, Creon can announce that MGR is in advanced negotiations over long term supply contracts from sub-Saharan Africa for iron ore and chromium ore. These contracts, if secured on the current expected terms, will generate significant returns for MGR and accordingly, Creon. Trading in MGR since Creon's investment is in line with MGR's management's expectations and Creon anticipates receiving a return on its investment in the second half of the year.

Other legacy investments

Creon retains its holding of 400,000 unquoted preference shares of £1 each in privately owned Pinnacle Plus Limited ("Pinnacle") made in 2008 ("the Preference Share"). Pleasingly, Pinnacle traded profitably during its latest financial year ended 30 April 2012 and as such, although the Directors continue to account for the Preference Share prudently, having previously made significant provisions against the carrying value of the Preference Share, the Directors now believe that a material proportion, if not all, of the par value of this investment (£0.4 million), together with interest due thereon (£0.14 million), may now be realizable on its due date in September 2013.

Financial review

The Directors' focus during the year was to strengthen the Company's balance sheet, which was successfully achieved through the raising of more than £12.0 million via the open offer to all shareholders in June 2012, and to contemplate on and then execute its investment strategy, which resulted in the Company's US$ 15.3 million investment into YZJ Offshore in July 2012.

In June 2012, shareholders approved the Company issuing approximately 2.4 billion new ordinary shares of 0.5 pence each ("Ordinary Shares") via an open offer to all shareholders ("Open Offer") in order to raise approximately £12.0 million (US$18.8 million) of new funds for the Company. The Company had secured a partial underwriting of the Open Offer from Qatar Investment Corporation ("QIC"), a company controlled by Mr Ghanim Al Saad, who became non-executive Chairman of Creon in October 2012.

Having undertaken extensive research on a number of possible investments, the Directors invested US$15.3 million (£9.96 million) into YZJ Offshore through its wholly owned subsidiary, Creon Asia, which was specifically set up to hold its Asian-based investments.

The Group reported a consolidated loss for the year of £1.09 million (2012: £0.65 million). This was primarily made up of administration costs of £0.74 million, comprised of £0.35 million costs incurred in connection with the investment in YZJ Offshore, £0.1 million of which were professional fees relating to the Open Offer and £0.29 million were the Company's normal cost administration fees, which includes a £0.1 million non-cash charge on the issue of warrants to Directors' in lieu of fees. £0.2 million of the Group's overall costs of £1.09 million was the non-cash loss on foreign exchange due to the strengthening of the US$ against £Sterling between the making of the JV Investment in July 2012 and the end of the financial year. The balance of costs of £0.15 million was Creon Asia's 46.65% share of YZJ Offshore's reported losses during the period.

There was no income generated in the year.

The Group's net assets as at 31 January 2013 of £11.21 million (2012: £0.07 million) were made up primarily of the carrying value at cost of Creon Asia's 46.45% in YZJ Offshore of £9.52 million. Cash at the year-end was £1.75 million (2012: £0.1 million). Since the year end, Creon has made an equity investment of £0.05 million into MGR and has also provided MGR with a three year 15% coupon convertible loan of US$1.95 million (£1.23 million). As at the date of this announcement, Creon has cash of approximately £0.25 million and normal annualised running costs of less than £0.2 million.

Net asset value as at 31 January 2013 was up almost 18-fold to 0.41 pence per share (2012: 0.023 pence).

Investment policy

The Company's investment policy is set out below and remains unchanged from that approved by its shareholders at the Company's annual general meeting held on 31 July 2012 ("2012 AGM").

The investment policy allows the Company to invest principally, but not exclusively, in the resources and/or resources infrastructure sectors, with no specific national or regional focus. The Company may be either an active investor and acquire control of a single company or it may acquire non-controlling shareholdings.

The proposed investments to be made by the Company may be either quoted or unquoted; made by direct acquisition or through farm-ins; may be in companies, partnerships, joint ventures; or direct interests in resources projects. Target investments will generally be involved in projects in the exploration and/or development stage. The Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership.

The Company will initially focus on projects located in Asia and the Middle East but will also consider investments in other geographical regions, including Europe.

The Company will identify and assess potential investment targets and where it believes further investigation is required, intends to appoint appropriately qualified advisers to assist.

The Company proposes to carry out thorough project review processes in which all material aspects of any potential investment will be subject to appropriate due diligence, as appropriate. It is likely that the Company's financial resources will be invested in either a small number of projects or potentially in just one investment which potentially may or may not be deemed to be a reverse takeover under the AIM Rules, depending on the circumstances.

Where this is the case, the Company intends to mitigate risks by undertaking appropriate due diligence processes. Any transaction constituting a reverse takeover under the AIM Rules will be subject to shareholder approval. The possibility of building a broader portfolio of investment assets has not, however, been excluded.

The Company intends to deliver shareholder returns principally through capital growth rather than income distribution via dividends. Given the nature of the Company's investment policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value.

Warrants

During the year, the Company issued a total of 87.0 million warrants to acquire Ordinary Shares ("Warrants"), of which 82.0 million were granted to Directors (or entities connected with the Directors) and 5.0 million to key advisers. The Warrants, all of which have vested, have exercise prices of either 0.5 pence (5 year exercise period) or 0.75 pence (10 year exercise period) per Warrant and were granted as incentives and in part in lieu of fees. The Warrants represent approximately 3% of the Company's current issued share capital. No Warrants have been exercised during the year or after the year end. The overall non-cash cost to the Company of issuing the Warrants was £0.15 million, which has been expensed in the year. It remains the intention of the Directors to implement a long term incentive plan at the appropriate time.

Director changes

Mr Ghanim Al Saad joined the board of the Company as Non-executive Chairman on 5 October 2012 and Mr Glen Lau joined the board of the Company as Chief Executive Officer on 19 September 2012, replacing Mr Jeswant Natarajan, who stepped down as Chief Executive Officer on the same day having been appointed to the position on 4 April 2012.

Current position and outlook

The year ended 31 January 2013 has clearly been an exceptional one for Creon, transforming itself into a well capitalised and well respected investment company with investments in sectors with high growth potential over both the short and long term.

We are delighted with our JV Investment alongside Yangzijiang into YZJ Offshore, which is on schedule to deliver its first order on budget and on time. The development of YZJOE's rig yard just north of Shanghai ought to deliver significant value uplift to Creon as construction on that site continues apace. Our recent investment in MGR is starting to bear fruit and we anticipate receiving our first returns from that investment in the second half of the year.

We are financially secure with a strong management team and we look forward to updating shareholders on further developments during the course of the current financial year.

Lastly, I would like to thank all our shareholders for their continuing support and commitment.

Annual general meeting

The Company has today posted to shareholders a notice convening the annual general meeting of the Company ("AGM"), together with form of proxy, to be held at 201 Temple Chambers, Temple Avenue, London EC4Y ODT at 11:00 a.m. on 31 July 2013.

CREON RESOURCES PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 January 2013

All of the Group's activities are classed as continuing and there were no recognised gains or losses in either year other than those included above.

STATEMENTS OF CHANGES IN EQUITY

Group

Company

STATEMENTS OF FINANCIAL POSITION

as at 31 January 2013

STATEMENTS OF CASH FLOWS

NOTES TO THE AUDITED RESULTS

1. Administrative expenses

Expenses included in administrative expenses (net) are analysed below

£96,000 of the Directors' fees expense of £185,000 was the charge incurred in the issue of warrants to Directors. See note 10. Unrecovered VAT represents input VAT incurred during the periods which the Directors have decided to prudently provide for whist the Company is in dispute with HMRC over its ability to recover input VAT. See note 8. The auditor's fees in the year ended 31 January 2013 were £19,500 (2012 - £10,000)

2. Share of loss of associate

The Company's wholly owned Singapore registered subsidiary, Creon Asia holds a 46.45% investment in YZJ Offshore, a Singapore registered company. £148,000 represents Creon Asia's share of YZJ Offshore's loss for the period from the date of the investment on 17 July 2012 to 31 January 2013. See note 5.

3. Foreign exchange losses

During the year, the Company made a number of foreign currency denominated interest free, unsecured loans to its wholly owned subsidiary, Creon Asia. An unrealised loss on foreign exchange of £0.19 million arose on one such loan, for US$15.5 million (£9.96 million), made in July 2012 to enable Creon Asia to make the investment into YZJ Offshore ("Investment Loan"). At 31 January 2013, the Investment Loan was translated at £9.77 million. As at the date of this announcement, the Investment Loan is carried at £10.06 million, resulting in an unrealised gain on foreign exchange of approximately £0.29 million in the current financial year to date. In August 2012, the Company made a further loan of approximately £0.2 million to Creon Asia. The Company does not hedge against movements in foreign exchange rates.

4. Loss per share

The basic and diluted loss per share for the year ended 31 January 2013 was 0.07p. (2012: 0.83p) The calculation of loss per share is based on the loss of £1,094,000 for the year ended 31 January 2013 (2012: £645,000) and the weighted average number of shares in issue during the year of 166,122,339 (2012: 77,613,559). 87.0 million Warrants were granted in the year ended 31 January 2013, see note 10, all of which were outstanding as of 31 January 2013 (2012: nil). The outstanding Warrants represent approximately 3% of the Company's current issued share capital and, due to losses, are considered by the Directors to be anti-dilutive.

5. Investment in associates

Creon's wholly owned subsidiary, Creon Asia has a 46.45% holding in YZJ Offshore, which was acquired in July 2012 ("JV Investment"). The JV Investment is held at cost less share of losses. Creon provided an interest free unsecured loan to Creon Asia to make the JV Investment. See note 3.

6. Investment in unquoted preference shares

The investment in unquoted preference shares represents 400,000 £1 non-voting redeemable preference shares held in Pinnacle Plus Limited ("the Preference Share") and is held at the Directors' valuation. The Preference Share, which was acquired in 2008, accrues interest at a rate of 7.0 per cent. per annum, payable on the date of redemption, with redemption being at Pinnacle's discretion at any time up to 30 September 2013, upon which date the Preference Share will be automatically redeemed. The Company has not recognized any interest income accrued on the Preference Share to date.

Whilst the Directors continue to believe that a material part or all of the Preference Share may be redeemed when due, and the Directors will be taking every step to ensure that the full £400,000 of redeemable preference share, together with the full interest due of £140,000 is repaid, the Directors have taken a prudent view of the carrying value of the investment at the balance sheet date. The carrying value of the Preference Share will continue to be monitored closely by the Directors.

7. Loans receivable

During the year, the Company made a number of interest free, unsecured and repayment on demand loans to its wholly owned subsidiary, Creon Resources (Asia) PTE Ltd , totalling £9.97 million at the year end (2012: "nil). The Directors consider that the carrying amount of loans receivable approximates to their fair value.

8. Trade and other payables

The VAT provision of £25,000 represents the amount of VAT previously recovered by the Company which HMRC are now disputing. The Directors strongly refute HMRC's claim and maintain that the Company should have validly reclaimed such amounts. The Company is taking such legal and professional advice to protect its position. The £25,000 provision is included on the grounds of prudent accounting and in no way is an indication of the Directors' belief in the outcome of the dispute. See note 1. The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

9. Share capital

On 12 July 2012, the Company issued and allotted 2,416,429,088 ordinary shares of 0.1p ("Ordinary Shares") for cash at a price of 0.5p per via a partially underwritten open offer to all shareholders raising gross proceeds of £12.08 million for the Company.

The 44,190,545 deferred shares of 0.9p each ("Deferred Shares") do not entitle the holder thereof to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up unless the assets of the Company are in excess of £1,000,000,000,000. The Company retains the right to purchase the Deferred Shares from any Shareholder for a consideration of one penny in aggregate for all that shareholder's Deferred Shares. As such, the Deferred Shares effectively have no value. Share certificates have not and will not be issued in respect of the Deferred Shares.

10. Warrants

The Company had no outstanding Warrants or options over Ordinary Shares at the beginning of the year. During the year ended 31 January 2013, the Company issued Warrants as set out in the table below.

All of the Warrants granted during the year have vested and there are no outstanding conditions to exercise. The Company incurred a total charge in relation to the issue of the Warrants of £150,200. The Directors used the Black-Scholes option model when calculating the non-cash charge. The share prices used for 0.75 pence Warrants and the 0.5 pence Warrants were 0.64 pence and 0.6 pence, respectively. The expected volatility of the 0.75 pence Warrants and the 0.5 pence Warrants was 12.5% and 10%, respectively and was based on the historic closing mid-market share price of the Company's shares from the date of the grant of the respective Warrants to the date of this announcement. The Directors, having taken advice, deemed the Company's risk free interest rate to be 5%.

The following table sets out the Warrants held by Directors, or entities connected with the Directors, who served during the year and up to the date of this announcement:

Notes

* J Natarajan served as the Company's chief executive officer from 4 April 2012 until 19 September 2012.

^ Fulton Capital Management Limited is a company owned and controlled by Mr G Lau, the Company's chief executive office who was appointed on 19 September 2012.

11. Asset value per share

The net asset value per share at 31 January 2013 was £0.0043 (31 January 2012; £0.0002). Net asset value is based on the net assets as at 31 January 2013 of £11.21 million (31 January 2012: £73,000) and on the number of Ordinary Shares in issue at 31 January 2013 being 2,738,619,633 ordinary shares (31 January 2012: 322,190,545).

12. Related party transactions

As part of the investment made by the Company's wholly owned subsidiary, Creon Asia into YZJ Offshore in July 2012, Creon Asia paid a fee to Fulton Capital, a company owned and controlled by Mr G Lau, CEO of the Company, of £192,590 (2012: £nil).

On 10 April 2013, Creon Asia acquired a 49% equity interest in Singapore based MGR US$49,900 (the "Investment"). Creon Asia has acquired the Investment from Fortus PTE Ltd, a company of which Mr G Lau is a director, but not a shareholder. As part of the Investment, Creon has provided a three year unsecured 15% coupon convertible loan to MGR of up to US$1.95 million to assist MGR to increase its trading operations ("Convertible Loan"). The Convertible Loan can be converted at any time during the three year period at Creon's option into new shares in MGR at US$1 per new share.

The non-executive Director services of A Berting are provided to the Company through Melotti, a Company of which Mr A Berting is the sole shareholder and director. During the year, fees of £12,000 were paid to Melotti (2012: nil) and there were no balances outstanding at the year end.