Amedeo Resources Regulatory News (AMED)

29 Jun 2007 10:01

Creon Corporation PLC29 June 2007 Creon Corporation plc Annual Report Creon Corporation plc ("the Company" or "Creon") is pleased to announce its results for the year ended 31 January 2007. Chairman's Statement I am delighted to present this annual report to shareholders for the year ended31 January 2007. Creon Corporation plc ("Creon" or the "Company") wasincorporated on 27 August 2004 to provide mezzanine finance to residentialproperty developers in the UK. The Company's business is based upon theexperience of the Directors in managing a quoted company and upon the experienceof the members of Creon Equity LLP in the property sector generally and theprovision of mezzanine finance in particular. Creon achieved admission of its ordinary shares to trading on AIM on 25 November2004. This was an important step in the development of Creon's business as itwas at this time that the first significant funds were invested in the Company.The admission helped to increase Creon's profile in the property developmentsector which, in turn, has helped in the generation of new business. I am delighted to be able to report that Creon has reported its first profitsfor the year of £265,295 after tax. This equates to a profit per share of 2.64pence and compares with a loss per share of 0.77 pence last year. The level ofprofit achieved for the current year is particularly pleasing as it has been generated from a total equity investment of just £3,252,960 (excluding issue costs), representing a return of 8.2% on the equity funds invested. I amconfident that, should the Company have access to an increased level of funding(either through equity, debt or a combination of the two), then significantlylarger profits will be achievable. Fundraising No new equity funds have been raised during the current year. The total equityfunds raised by the Company since its incorporation therefore remains at£3,252,960 (excluding issue costs). During the course of the year ended 31January 2007 the Company established a revolving debt facility with the Bank ofScotland for up to £1 million. This facility is for the provision of mezzaninefinance and whilst it remains to be utilised as at 31 January 2007 we expectthat it will be used during the course of 2007 as new financings are made. The Directors believe that, from an operational point of view, it would be inthe Company's interests to have access to further funds to enable it tosubstantially increase its lending capacity and also to spread its operationalcosts over a larger portfolio of loans. The Directors have, during the course ofthe year, been in discussions with a number of financial organisations with aview to generating additional funding for Creon. The loan facility with the Bankof Scotland is a result of some of these discussions and the Directors hope toachieve further finance during the course of the year ended 31 January 2008. Strategy The Directors believe that the market for the provision of equity finance forsmall and medium-sized residential developers remains poorly served by existingsources which are often expensive or of an informal and uncertain nature. Thishas allowed Creon the opportunity to develop a business providing mezzaninelevel finance to developers for an attractive level of return and within anacceptable level of risk. Creon aims to maximise the return on its funds, at the same time as minimisingits exposure to uncontrollable external risks such as a general market declinein property prices. The preference is consequently to provide finance onprojects that can be completed within 18 months from acquisition of the site andfor the residential development to appeal to a large pool of potentialpurchasers. Operations Creon intends to keep operating costs to a minimum in order to maximise thefunds available for lending. In addition the Directors wish to ensure that thereis a wide spread of financing opportunities available to the Company which arereviewed by an independent and experienced team. Creon therefore entered into aconsultancy agreement with Creon Equity LLP (the "Manager") which provides theDirectors with specialist advice regarding the provision of finance todevelopers. The details of this management agreement were finalised and enteredinto at the time of our admission to AIM. In summary the Manager is expected to: (i) Identify, evaluate, negotiate and process suitableopportunities for Creon to provide mezzanine finance to small and medium sizedresidential property developers; (ii) Provide to Creon's Board sufficient information on suitableopportunities to enable the Directors to make informed decisions on financingopportunities; (iii) Provide all necessary documentation to the Board in respect ofeach project; (iv) Manage the related transaction and keep under review theunderlying property developments to ensure that Creon is repaid, together withits agreed fee, on time and in full; and (v) Provide to Creon, in a timely manner, appropriate accountingrecords in respect of each project undertaken. It is expected that all investment decisions will be based upon recommendationsmade by the Manager but there is no obligation upon the Directors to accept arecommendation. The partners of Creon Equity LLP are as follows: Jonathan Lavy FCA Jonathan Lavy is a Chartered Accountant with many years experience inprofessional practice. He has subsequently been involved in the propertyindustry as a principal over the last 23 years and has built up extensiveexperience of commercial property investment, debt and equity financing andresidential property development. He has invested in property as principal andin conjunction with partners and been responsible for evaluating opportunities,related financial modelling, sensitivity and long term risk analysis togetherwith management of refurbishment and renovation projects. He has also been aprovider of mezzanine finance to residential property developers. Roger Holbeche FRICS Roger Holbeche is a Chartered Surveyor and has been involved in residential andcommercial property development since qualifying. He was co-founder, chairmanand chief executive of The Embassy Property Group plc, an AIM traded companywhich was primarily involved in commercial property development and investment,construction and house building. Roger had specific responsibility for promotingand co-ordinating strategy for the Embassy Property Group plc as well as formanaging the development subsidiary and commercial development financing. He hasalso subsequently been responsible for investing in and project managingwarehouse, office and residential development schemes in a private capacitywhere he had responsibility for negotiating the purchase of sites and subsequentsale of the developments. He has also been a provider of mezzanine finance forresidential developers. Loans In December 2006 two loans were redeemed in full producing realised fee incomeof £453,750. Of this, £335,777 was recognised as income in the current year and£117,973 in the prior year. This is in addition to the repayment of the originalloans of £1,090,997. The loans committed as at 31 January 2007 were for £600,000, £500,000 and£759,204 for developments of houses and flats in Suffolk, Surrey and the WestMidlands. Two of these developments are expected to be completed and therespective loans to be repaid during the financial year ending on 31 January2008, the third is expected to complete in February 2008. The Directors haverecently agreed a further new loan of £300,000 and are considering a range ofother development proposals. Investments In our annual report for the period ended 31 January 2006 we stated that theDirectors were planning to broaden Creon's operational base by setting up aproperty investment subsidiary to complement its mezzanine finance activities.We have investigated a number of investment opportunities during the year buthave not found anything so far that can be recommended to the shareholders. TheDirectors will continue to explore potential investment opportunities as part ofthe Company's overall strategy. Share Price Creon's share price and market liquidity has been disappointing during thefinancial year ended 31 January 2007. This is especially so when one considersthe fall from 50.5 pence per share (mid-market price) on 1 February 2006 to 42pence per share as at 31 January 2007 in the context of the substantial progressthat Creon has made and can be seen by the first profits for the year of£265,295 after tax. The Board's objective remains to grow the size and profitability of the Company, and to promote the Company to potential investors,with the hope that the share price will improve as the Company becomes more widely known. Outlook The Directors believe that Creon has made good progress in the development ofits business in a niche area of property finance. We have moved the Company froma post tax loss of £55,715 for the period to 31 January 2006 to a post taxprofit of £265,295 for the year to 31 January 2007. We are very aware that weneed to expand and further the activities of the Company in order to achieve theplanned growth. We intend to achieve this by increasing the amount of finance wehave available to lend and by sourcing more property development opportunities.We continue to review a wide range of potential mezzanine finance opportunitiesand are confident that those investments we have made to date will be realisedin a profitable and timely manner. We therefore remain optimistic about thefuture of the Company. Jonathan Freeman 28 June 2007 Board of Directors Jonathan Freeman (aged 42) Executive Director Jonathan graduated with a degree in Business Studies from Stirling University in1988 and gained an MBA from Warwick University in 1993. From 1988 to 1993 he wasa contract manager of a property refurbishment company, becoming a director in1991. Since 1993 he has worked within corporate finance being involved in thecreation and launch of the pan European stock market EASDAQ, which wassubsequently taken over by NASDAQ. In 1997 he joined the investment bank BeesonGregory, becoming a director in 1998. He joined Gambit Corporate Finance in 2002and left in 2003. He is currently a non-executive Director of Cobra CapitalLimited and Equity Pre IPO Investments Limited, both of which are strategicinvestment companies traded on AIM, Futura Medical plc, a healthcare companyquoted on AIM and where he is the senior independent director and SyndicateAsset Management plc, a fund management company traded on AIM. James Barder (aged 47) Non- Executive Director James previously worked in the field of insurance and finance. In 1995 he wasinstrumental in setting up and was Managing Director of a new investment bankingdivision within AON Corporation called Aon Capital Markets Limited. James iscurrently Chief Executive of Futura Medical plc, a healthcare company traded onAIM. He is also a director of Lorega Claims and Underwriting Ltd, an insuranceclaims and loss adjusting service company. Corporate Governance Creon Corporation plc was admitted to trading on AIM on 25 November 2004. Assuch it is not governed by the Combined Code on Corporate Governance. However,the Board is committed to complying with best practice where appropriate. Thisincludes evaluating Directors' performance, the management of the Company, andensuring that it maintains full and effective control over appropriatestrategic, financial, operational and compliance issues. There is no separate Audit Committee as the Board considers, that given itscurrent size, all members of the Board should participate in those roles andresponsibilities normally reserved for such a committee. Therefore, the fullBoard of Directors will provide a forum for reporting by the Company's externalauditors. During the year ended 31 January 2007 the Board discharged theseresponsibilities by: •Reviewing the Company's draft annual financial statements and interim results statement prior to Board approval and reviewing the external auditor's detailed reports when applicable •Reviewing the appropriateness of the Company's accounting policies •Reviewing the audit fee •Reviewing the terms of engagement for the audit •Reviewing the internal controls operated in relation to the Company's business •Reviewing the performance of the Company's advisers The Company does not have an independent internal audit function as it is notdeemed appropriate given the size of the Company and the nature of the Company'sbusiness. However the Board considers annually whether there is a need for sucha function. Relations with Shareholders The Directors seek to build a mutual understanding of objectives between theCompany and its shareholders. The Company reports formally to shareholders inits interim and annual reports setting out details of its activities. Inaddition, the Company keeps shareholders informed of events and progress duringthe year through the issue of press releases. The Company has created aninvestor relations page on its website (www.creoncorporation.com). Shareholders have the opportunity to meet the Board at the AGM. The Board isalso happy to respond to any written queries made by shareholders during thecourse of the year, or to meet with major shareholders if so requested. At the AGM, in addition to undertaking the formal business of the meeting, theBoard and representatives of the management team are available to answer anyquestions shareholders may have. The Registrars collate proxy votes and the results (together with the proxyforms) are forwarded to the Company Secretary immediately prior to the AGM. Inorder to comply with the revised Combined Code, proxy votes are announced at theAGM, following each vote on a show of hands, except in the event of a poll beingcalled. Where possible the Annual Report is sent to shareholders at least 20 workingdays before the Annual General Meeting. Directors are required to attend AnnualGeneral Meetings of the Company unless unable to do so for personal reasons ordue to pressing commercial commitments. Shareholders are given the opportunityto vote on each separate issue. The Company counts all proxy votes and willindicate the level of proxies lodged on each resolution, after it has been dealtwith by a show of hands. Internal Control The Directors of the Company have overall responsibility for the Company'ssystem of internal control. Internal control systems are designed to meet theparticular needs of the Company and the risks to which it is exposed. By theirnature these controls can provide reasonable but not absolute assuranceagainst material misstatement or loss. The Board's appointment of Noble Corporate Management Limited as CompanySecretary has delegated much of the administration of the Company to NobleCorporate Management Limited which has an established system of control,including internal financial controls, to enable it to ensure that properaccounting records are maintained and that the financial information for usewithin the business and for reporting to shareholders is accurate and reliableand that the Company's assets are safeguarded. This delegation of administrationby the Board, and the use of Noble Corporate Management Limited, is monitored bythe Board with regards to its appropriateness and with regard to the performanceof Noble Corporate Management Limited in carrying out its work on behalf ofCreon. Going Concern After due consideration, the Directors believe that the Company has adequateresources for a period of at least 12 months from the date of approval of thefinancial statements, and consequently that it is appropriate to apply the goingconcern principle in preparing the financial statements. Financial Reporting The Directors' statement of responsibilities for preparing the financialstatements is set out on page 12 and a statement by the Auditors about theirreporting responsibilities is set out in the Auditors' Report on page 13. Directors' Report The Directors have pleasure in presenting their report together with thefinancial statements for the year ended 31 January 2007. Activities The principal activity of the Company is the provision of mezzanine finance tosmall and medium sized UK residential property developers. Results and review of business The results for the year to 31 January 2007 are set out in the accompanyingfinancial statements and attached notes. The Directors consider that theCompany's performance was satisfactory. The Directors propose that no dividendbe paid in respect of the year. Further details are included in the Chairman'sstatement on pages 3 to 5. Issue of shares No shares were issued during the year to 31 January 2007. Directors The Directors of the Company during the year were: Jonathan Freeman James Barder None of the Directors who held office at the end of the financial year had anyinterest in the share capital, loan capital or share options of the Company, nordoes any person connected with the Directors have any such interests, whetherbeneficial or non-beneficial. Directors' Service Agreements and Letters of Appointment On 22 October 2004, Combined Management Services Limited ("CMS") entered intotwo separate consultancy agreements with the Company, the terms of which are asfollows: (i) pursuant to the first agreement, CMS has agreed to provide theCompany with the services of Jonathan Freeman as an executive director for a feeof £26,508 per annum. The agreement is terminable by 3 months' notice on eitherside; and (ii) pursuant to the second agreement, CMS has agreed to provide theCompany with the services of Jonathan Freeman to perform various administrativeand support services to the Company for a fee of £26,508 per annum. Theagreement is terminable by 3 months' notice on either side. Jonathan Freeman owns 50% and is a director of CMS. Management Creon Equity LLP is appointed as a manager to identify, evaluate, and processsuitable opportunities for the Company to provide mezzanine finance toresidential property developers. Creon Equity LLP receive 3% per annum of thevalue of funds already invested and funds still available for investment plus15% of the gross profits on each individual loan made by the company. Creon Equity LLP is not a related party. Financial instruments The nature and extent to which financial instruments have an effect on theCompany are disclosed in note 12 to the financial statements. Substantial Shareholdings Shareholders on the Shareholder Register with a 3% or more interest in theCompany's share capital at 31 January 2007 are detailed below: Number of Percentage of issued ordinary share capital ordinary sharesHSBC Custody NomineeLimited 5,047,510 50.29%E\* Trade SecuritiesLimited 1,925,000 19.18%ROY Nominees Limited 637,500 6.35%Chase NomineesLimited 620,000 6.18%Pinnacle Limited 612,500 6.10%Alderwood ManagementLimited 500,000 4.98% We have also conducted a limited investigation into the underlying holders of 3%or more of our share capital. As far as we are aware, as of 31 January2007, the following shareholders held 3% or more of our share capital: Number of Percentage of issued ordinary share capital ordinary sharesNewton Nominees 2,371,110 23.63%Equity SpecialSituations Limited 1,910,000 19.03%Cobra CapitalLimited 1,000,000 9.96%RBC Trustees(Guernsey) Limited 637,500 6.35%Pinnacle Limited 612,500 6.10%J. Olafsson 600,000 5.98%Alderwood ManagementLimited 500,000 4.98% Creditors Payment Policy and Practice It is the Company's payment policy and actual practice to ensure settlement ofsuppliers' invoices in accordance with the stated terms of the invoices. At theyear end trade creditors had been outstanding for 9 days. Auditors A resolution to reappoint BDO Stoy Hayward LLP as auditors will be proposed atthe Annual General Meeting to be held on XX June 2007. All of the current Directors have taken all the steps that they ought to havetaken to make themselves aware of any information needed by the Company'sauditors for the purposes of their audit and to establish that the auditors areaware of that information. The Directors are not aware of any relevant auditinformation of which the auditors are unaware. By order of the Board Louise LawrieFor and on behalf of Noble Corporate Management LimitedCompany SecretaryLondon28 June 2007 Directors' Remuneration Report Whilst the Board has prepared this report it is not intended to be in accordancewith the requirements of Schedule 7A to the Companies Act 1985. Directors' Fees The Board considers at least annually the level of the Directors' fees, inaccordance with the Combined Code on Corporate Governance. The Company Secretaryprovides information on comparative levels of Directors' fees to the Board inadvance of each review. The Board concluded following the review of the level of Directors' fees for theforthcoming year that the amounts should remain unchanged at present. Policy on Directors' Fees The Board's policy is that the level of remuneration should be sufficient toattract and retain the Directors needed to properly oversee the Company and toreflect the specific circumstances of the Company, the duties andresponsibilities of the Directors and the value and amount of time committed tothe Company's affairs. It is intended that this policy will continue for theyear ending 31 January 2008 and subsequent years. The fees for the non-executive Directors are determined in accordance with theCompany's Articles of Association. Non-executive Directors are not eligible forbonuses, pension benefits, share options, long term incentive schemes or otherbenefits. Directors' service contracts Jonathan Freeman's services as Director are provided through an open endedagreement with Combined Management Services Limited, with a 3 month noticeperiod. A service agreement exists between the Company and James Barder with a 3 monthnotice period. Directors' emoluments for the year (audited) The Directors who served during the year received remuneration either in theform of fees or emoluments: Fees or emoluments: Jonathan Freeman* £53,016 (2006 - £54,520) James Barder £12,000 (2006 - £14,000) *fees paid to a third party in respect of Directors' services Emoluments are stated net of employer's national insurance contributions whereappropriate. No pension scheme contributions or other retirement benefit contributions werepaid. There are no share option contracts held by the Directors or long term incentiveschemes. No Directors' contract has a notice period in excess of one year. No Director had any interest in any contract to which the Company is a party. The Directors' Remuneration Report on page 11 was approved by the Board ofDirectors on 28 June 2007 and signed on its behalf by Jonathan Freeman. On behalf of the Board, Jonathan Freeman Director 28 June 2007 Statement of Directors' Responsibilities The directors are responsible for preparing the annual report and the financialstatements in accordance with applicable law and United Kingdom GenerallyAccepted Accounting Practice. Company law requires the directors to prepare financial statements for eachfinancial period which give a true and fair view of the state of affairs of theCompany and of the profit or loss of the Company for that period. In preparingthose financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make adjustments and estimates that are reasonable and prudent; - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of theCompany and to enable them to ensure that the financial statements comply withthe Companies Act 1985. They are also responsible for safeguarding the assets ofthe Company and hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities. Financial statements are published on the Company's website in accordance withlegislation in the United Kingdom governing the preparation and dissemination offinancial statements, which may vary from legislation in other jurisdictions.The maintenance and integrity of the Company's website is the responsibility ofthe Directors. The Directors' responsibility also extends to the ongoingintegrity of the financial statements contained therein. Independent Auditor's Report To The Shareholders Of Creon Corporation plc We have audited the financial statements of Creon Corporation plc for the yearended 31 January 2007 which comprise the Profit and Loss Account, the BalanceSheet, the Cash Flow Statement and the related notes. These financial statementshave been prepared under the accounting policies set out therein. Respective responsibilities of directors and auditors The Directors' responsibilities for preparing the financial statements inaccordance with applicable law and United Kingdom Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice) are set out in the Statement ofDirectors' Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards onAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and have been properly prepared in accordance with the CompaniesAct 1985 and whether the information given in the Directors' Report isconsistent with those financial statements. We also report to you if, in ouropinion, the Company has not kept proper accounting records, if we have notreceived all the information and explanations we require for our audit, or ifinformation specified by law regarding directors' remuneration and othertransactions is not disclosed. We read other information contained in the Annual Report and consider whether itis consistent with the audited financial statements. The other informationcomprises only the Chairman's Statement, the Directors' Report, the Directors'Remuneration Report and the Corporate Governance Statement. We consider theimplications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the financial statements. Our responsibilities donot extend to any further information. Our report has been prepared pursuant to the requirements of the Companies Act1985 and for no other purpose. No person is entitled to rely on this reportunless such a person is a person entitled to rely upon this report by virtue ofand for the purpose of the Companies Act 1985 or has been expressly authorisedto do so by our prior written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purpose andwe hereby expressly disclaim any and all such liability. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgments made by the Directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the Company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. Opinion In our opinion: • the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Company's affairs as at 31 January 2007 and of its profit for the year then ended; • the financial statements have been properly prepared in accordance with the Companies Act 1985; and • the information given in the Directors' Report is consistent with the financial statements. BDO Stoy Hayward LLP Chartered Accountants and Registered Auditors London 28 June 2007 Profit and Loss Account for the year ended 31 January 2007 Year ended Period ended 31 January 2007 31 January 2006 (restated) Note £ £ Turnover 2 806,882 219,233 Cost of sales (264,728) (67,385) ________ ________ Gross profit 542,154 151,848 Administrative expenses (206,521) (253,388) ________ ________ Operating profit/(loss) 3 335,633 (101,540) Interest receivable and similar income 23,381 45,825 -------- --------Interest payable and similar charges 7 (44,837) - -------- -------- Profit/(loss) on ordinary activitiesbefore taxation 314,177 (55,715) Taxation 8 (48,882) - ________ ________ Retained profit/(loss) for the year 15 265,295 (55,715) ======== ======== Basic and diluted earnings per share 4 2.64p (0.77)p -------- -------- All recognised gains and losses in the current year and prior period areincluded in the profit and loss account. All amounts relate to continuing activities. Balance Sheet as at 31 January 2007 2007 2006 Note £ £ Fixed assetsInvestments 9 8 - Current assets Debtors 10 2,355,573 1,128,542Cash at bank 942,234 1,754,359 --------- --------- 3,297,807 2,882,901 --------- ---------Creditors: amounts falling due within one year 11 (212,925) (63,306) ________ ________ Net current assets 3,084,882 2,819,595 ________ ________ Total assets less current liabilities 3,084,890 2,819,595 =========== =========== Capital and reserves Called up share capital 13 100,361 100,361Share premium account 14 2,774,949 2,774,949Profit and loss account 15 209,580 (55,715) ________ ________ Shareholders' funds 16 3,084,890 2,819,595 =========== =========== The financial statements were approved by the board of Directors and authorisedfor issue on 28 June 2007. Jonathan Freeman Director Cash Flow Statement For the year ended 31 January 2007 Note 2007 2006 £ £ Net cash inflow/(outflow) from operating activities 17 110,044 (208,286) Net cash (outflow)/inflow from returns oninvestments and servicing of finance Interest received 23,381 45,825 Interest paid (44,837) - -------- ------- (21,456) 45,825 Net cash (outflow) from capital expenditure andfinancial investments Mezzanine finance loans advanced (1,991,710) (958,490) Mezzanine finance loans repaid 1,090,997 - -------- ------- (900,713) (958,490) Net cash inflow from financing New loans 377,000 - Repayment of loans (377,000) - Issue of ordinary share capital - 3,252,960 Share issue costs - (377,650) -------- --------- - 2,875,310 _________ _________ (Decrease)/increase in cash (812,125) 1,754,359 =========== ========== Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the year 18 (812,125) 1,754,359 _________ _________ Change in net funds resulting from cash flows 18 (812,125) 1,754,359 =========== ========= Net funds at the start of the year 1,754,359 - =========== ========= _________ _________ Net funds at the end of the year 942,234 1,754,359 Notes (forming part of the financial statements) 1 Accounting policies Basis of accounting The financial statements have been prepared under the historical cost conventionand in accordance with applicable accounting standards and the Companies Act1985 and cover the year ended 31 January 2007. Comparative figures cover theperiod from 27 August 2004, being the date of incorporation, to 31 January 2006. In accordance with section 229 (2) of the Companies Act 1985 the Company has notprepared consolidated financial statements on the basis that the inclusion of those subsidiary undertakings, which have not traded since incorporation, would not be material for the purpose of giving a true and fair view. Turnover Turnover represents the arrangement fees due in respect of mezzanine financeadvances and additional fees arising from the extension of loans beyond theoriginal repayment date. These are spread on a straight-line basis over the loanterms. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date, except that therecognition of deferred tax assets is limited to the extent that the Companyanticipates making sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are not discounted. Financial Instruments Financial instruments are recognised initially and subsequently at cost. Finance provided by the Company is in the form of mezzanine finance which isincluded in debtors and is stated at the amount of the funds advanced net of anyprovision for potentially irrecoverable amounts. For the purpose of the information in note 12 in the financial statementsshort-term debtors and creditors have been excluded from that information. Share Based Payments The Company has adopted FRS20 in the current year and this has not had a materialeffect on the financial statements. 2 Turnover Turnover is wholly attributable to the principal activity of the Company andarises solely within the United Kingdom. 3 Operating profit/(loss) 2007 2006 £ £This is arrived at after charging:Auditor's remuneration - for audit work 17,625 11,200 ======== ======== The auditors received non-audit remuneration fees of £nil (2006 - £11,820, inrespect of Corporate Finance work which were debited to the share premiumaccount). 4 Earnings per share The earnings per share for the year ended 31 January 2007 was 2.64p. Thecalculation of earnings per share is based on the profit of £265,295 for theyear ended 31 January 2007, and the number of shares in issue (10,036,110). The earnings per share for the period to 31 January 2006 was (0.77)p. Thecalculation of earnings per share for that period was based on the loss of£55,715 for the period from 27 August 2004 to 31 January 2006, and the weightednumber of shares in issue (7,212,616) from the date of admission to trading onAIM until 31 January 2006. Prior to admission, the Company had not startedtrading. All of the share warrants have been excluded from the earnings per sharecalculation as they are anti-dilutive as at 31 January 2007. These warrantscould be dilutive in future periods. 5 Asset Value per share The net asset value per share at 31 January 2007 was £0.31 (as at 31 January2006; £0.28). Net asset value is based on the net assets as at 31 January 2007of £3,084,890 (as at 31 January 2006; £2,819,595) and on the number of shares inissue at 31 January 2007 being 10,036,110 shares (as at 31 January 2006 -10,036,110 shares). 6 Staff numbers and costs The average monthly number of employees of the Company, including Directors,during the year, was 2 (2006: 2). The aggregate remuneration and associated costs of the Company's employees were: 2007 2006 £ £ Wages and salaries 12,000 14,000Social security costs 892 653Pension costs - - ------------ ------------ 12,892 14,653 ======== ======== Directors' emoluments 2007 2006 £ £ Amounts paid to third parties in respect of Directors'services 53,016 54,520Emoluments 12,000 14,000 -------- -------- 65,016 68,520 ======== ======== 7 Interest payable and similar charges 2007 2006 £ £On other loans 44,837 - ======== ======== 8 Taxation 2007 2006 £ £UK Corporation Tax Current tax on profit/(loss) for the year 48,882 - ============== =============== The tax assessed for the year is lower (2006 - higher) than the effective rateof corporation tax in the UK applied to the profit/(loss) before tax. Factors affecting tax charge in the year Profit/(loss) on ordinary activities before tax 314,177 (55,715) ========= ==========Profit/(loss) on ordinary activities at the effectiverate 59,693 (16,714)of corporation tax in the UK of 19% (2006 - 30%) Effect of:Utilisation of tax losses (10,811) -Losses carried forward - 16,714 ------- -------- Tax charge for the year 48,882 - ======== ======== As at 31 January 2007 the Company had trade losses of £nil (2006 - £55,715)available to carry forward to set off against future profits. 9 Fixed asset investments Shares in group undertakings At 1 February 2006 -Additions 8 ---------------- At 31 January 2007 8 ================ The Company holds investments in the following subsidiary undertakings: Company Percentage of Capital & Profit shares held reserves Creon PropertiesLimited 100% 2 - ====== === ===Creon InvestmentsLimited 100% 2 -Creon EstatesLimited 100% 2 -Creon PropertyInvestments Limited 100% 2 - All subsidiary undertakings are dormant. 10 Debtors 2007 2006 £ £ Prepayments and accrued income 496,370 170,052Mezzanine finance advances 1,859,203 958,490 ------------- ------------- 2,355,573 1,128,542 ============ ============ All amounts fall due for payment within one year. 11 Creditors: amounts falling due within one year 2007 2006 £ £ Trade creditors 4,600 -Accruals and deferred income 159,113 62,778Corporation tax 48,882 -Other taxation and social security 322 528Amounts due to group undertakings 8 - ---------- --------- 212,925 63,306 ========== ========= 12 Financial instruments 2007 2006 £ £ Cash at bank 942,234 1,754,359Mezzanine finance advances 1,859,203 958,490 There is no difference between the book values and fair values of the Company'sfinancial instruments. The Company's financial instruments consist of cash and mezzanine finance. Therisks associated with these are interest rate risk and the potentialnon-recoverability of the loans. Interest rate risk is monitored through cashflow management and the placing of cash on interest bearing deposit accounts.The risk of potential non-recoverability of the loans is reduced by closelyconsidering each loan applicant before agreeing to the loan facility and bysecuring the loans against property. No interest is receivable in respect of the mezzanine finance advances.Arrangement fees are charged and these are included within turnover. Mezzaninefinances are advanced by the Company for a maximum period of 18 months and arefor the purpose of property development. The finance is secured against theproperties being developed. The Company earns interest at 5.4% on its cash at bank balances. The Company has an undrawn revolving credit facility of £1million; 13 Share capital 2007 2006 £ £Authorised 50,000,000 Ordinary shares of 1p each 500,000 500,000 ============ ============ Allotted, called up and fully paid 10,036,110 Ordinary shares of 1p each 100,361 100,361 ============ ============ On 25 October 2004, the Company issued and allotted 300,000 warrants to each ofRoger Holbeche and Jonathan Lavy. In relation to each holding, 100,000 warrantswere exercisable from 25 November 2005 at a price of 60p per share, 100,000 wereexercisable on 25 November 2006 at a price of 70p per share and 100,000 areexercisable on 25 November 2007 at a price of 80p per share. Each warrantentitles the holder to subscribe for one new Ordinary share. The final exercisedate for all warrants is 25 November 2008. The warrants have been issued for noconsideration and to date no warrants have been exercised. The charge in respect of the warrants as required by FRS20: Share Based Payment is not significant and has therefore not been booked. 14 Share premium account £At 1 February 2006 2,774,949Shares issued -Share issue expenses - ------------ At 31 January 2007 2,774,949 ============ 15 Profit and loss account £ At 1 February 2006 (55,715)Profit for year 265,295 ----------- At 31 January 2007 209,580 ========== 16 Reconciliation of movements in shareholders' funds 2007 2006 £ £ Opening shareholders' funds 2,819,595 -Issue of shares - share capital - 100,361Issue of shares - share premium - 2,774,949Profit/(loss) for the financial period 265,295 (55,715) ------------ ------------ Shareholders' funds at 31 January 2007 3,084,890 2,819,595 ============ ============ 17 Net cash inflow/(outflow) from operating activities 2007 2006 £ £Operating profit/(loss) 335,633 (101,540)Increase in debtors (326,318) (170,052)Increase in creditors 100,729 63,306 ________ ________ Net cash inflow/(outflow) from operating activities 110,044 (208,286) =========== =========== 18 Analysis of net funds As at 1 Cash flow As at 31 January 2007 February 2006 £ £ £ Cash in hand and at bank 1,754,359 (812,125) 942,234 Debt payable within 1 year - - -Debt payable after 1 year - - - ________ ________ Net debt 1,754,359 (812,125) 942,234 ========== ======== ======= 19 Capital commitments There were no capital commitments at the year end (2006 - £nil). 20 Post balance sheet events Since 31 January 2007, the Directors have agreed one further loan to adeveloper. The loan is for £300,000, repayable within 12 months and is securedagainst property. 21 Related Party Transactions The following information is provided in accordance with Financial ReportingStandard 8 as being transactions with related parties for the year: Amount BalanceName of related party andnature of relation Transaction type 2007 2006 2007 2006 £ £ £ £Jonathan Freeman, Directorof Creon is a 50% shareholder in Directors fees 26,508 27,260 Nil NilCombined ManagementServicesLimited Jonathan Freeman, Directorof Creon is a 50% shareholder in Admin & support 26,508 27,260 Nil NilCombined ManagementServicesLimited 22 Restatement of prior year comparatives Prior year management and performance fees of £67,385 paid to Creon Equity LLP have been reclassified from administrative fees to cost of sales. The Directors' believe this provides a fairer representation of the results. Copies of the Annual Report for the year ended 31 January 2007 are being sent toshareholders. Further copies will be available from the Company Secretary's office:Noble Corporate Management Limited, 120 Old Broad Street, London, EC2N 1AR. For further information, please contact: Jonathan Freeman, Director Tel - +44 (0) 1600 750 432 John Riddell, Director of Noble & Company Limited Tel - +44 (0) 020 763 2200 Notice of the Annual General Meeting Notice is hereby given that the annual general meeting of the Creon Corporation Plc will be held at 3.00pm on 24th July 2007, at the offices of Noble Group, 120 Old Broad Street, London, EC2N 1AR. This information is provided by RNS The company news service from the London Stock Exchange