Sarossa : Annual Report and Financial Statements 2015

Sarossa Plc

Annual Report and Financial Statements 2015

25 September 2015



AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2015

Sarossa Plc ("Sarossa" or the "Company) announces its audited financial results for the year ended 30 June 2015.

Highlights:

- Net assets at 30 June 2015 of £18.31 million (2014: £17.22 million).

- Profit after tax of £2.69 million (2014: £3.69 million inclusive of an exceptional income release of a legacy biotechnology provision).

- Operating profit before exceptional items of £2.64 million (2014: £2.08 million).

- Portfolio investments at 30 June 2015 valued at £12.84 million represented by 4AIM quoted holdings (2014: £10.62 million represented by 4 quoted holdings ).

- Share buyback programme undertaken with 93.08 million shares bought and cancelled at a cost of £1.60 million.

- Cash and deposits at 30 June 2015 of £5.51 million (2014: £6.13 million).

Michael Bretherton, Chairman, said:

" The Board remains committed to delivering additional value for our shareholders and will continue to maintain a rigorous and highly selective investment approach with a view to exploiting opportunities as they emerge".

A letter will shortly be posted to shareholders advising that a full copy of the Company's Annual Report 2015 is now available on the Company's website atunder the Investor Centre/Financial Reports section and that this contains on page 34, a Notice of the Annual General Meeting to be held at 11.00 a.m. on 26 November 2015 at the Company's registered office at 17 The Esplanade, St Helier, Jersey, JE2 3QA.

Enquiries :

Sarossa Plc

Mike Bretherton, Chairman 01534719760

WH Ireland Limited (Nominated adviser)

Chris Fielding, Head of Corporate Finance 02072201650

Chairman's Statement

Sarossa Plc (Sarossa or the Company) delivered a strong performance in the year ended 30 June 2015, with Group profits after tax for the period of £2.69 million compared to a profit of £2.09 million in the previous year (excluding an exceptional release of a legacy biotechnology cost provision of £1.60 million which increased the total prior year profit to £3.69 million). The profit in the year includes unrealised revaluation gains of £2.41 million (2014: unrealised gains of £1.08 million) on the carrying values of Sarossa's investment portfolio holdings and includes no further biotechnology income (2014: biotechnology income of £0.59 million).

The results for the year also include the benefit of a partial disposal of one of the Company's investments which generated cash proceeds of £0.91 million and realised a gain of £0.40 million. The balance of this investment, which was in a care sector support services business, was sold post the end of the year and increased the total cash generated on disposal of this investment to £1.77 million.

As a mechanism for enhancing capital efficiency, the Company used part of its investment disposal proceeds towards undertaking the buy-back and cancellation of 93.08 million of its own shares at a cost of £1.60 million, representing an average buy-back price of 1.72p per share.

During the year, the Company spent £0.32 million on the purchase of additional shares in an existing portfolio investment.The Company holds currently 4 portfolio investments, all of which are quoted on AIM, and for which the carrying value at 30 June 2015was £12.84 million ( 30 June 2014: £10.62 million represented by 4 quoted holdings).

Subsequent to the year end, the Company entered into an agreement to subscribe for up to £2.0 million of new ordinary shares potentially issuable by GVC Holdings Plc ("GVC") in which Sarossa has an existing investment, in connection with its recommended bid offer for bwin.party digital entertainment plc ("bwin.party"). The subscription will only proceed if GVC is able to complete the bwin.party transaction, which it hopes will become effective in late Q4 2015 or in early 2016.

Net assets attributable to holders of Sarossa at 30 June 2015 were £18.31 million (equivalent to 3.35p per share) compared with £17.22million (equivalent to 2.69p per share) at the previous year end. The increase in net assets per share reflects both the profit performance in the year and the lower share capital base as reduced by the share buy-backs and cancellations.

The Group continues to benefit from a strong balance sheet with cash and short term deposit balances of £5.52 million at 30 June 2015 compared to cash and short term deposit balances of £6.13 million at 30 June 2014.

Sarossa is an investment holding and management company whose principal activity is investment in and growth and development of businesses which present opportunities for value creation. The Company is mainly focused on portfolio businesses with product and service platforms targeting major international markets through customers and partners with an international profile.

Investment portfolio update

An overview of the activities of the portfolio businesses in which Sarossa has a holding of over 3 per cent. is given below:

Silence Therapeutics Plc ('Silence'), which is AIM listed, is a global leader in the discovery, development and delivery of novel RNAi therapeutics for the treatment of serious diseases.The core technology of Silence is its proprietary form of a short interfering RNA molecule, known as AtuRNAi, which enables the development of novel molecular entities that "silence" or inactivate the genes expressed in some diseases. As well as the ability to switch genes off using its modified siRNA and delivery systems, the company has added the ability to switch genes on by using the same delivery systems with a messenger RNA. The discovery of the significance of RNA activity in cell protein production is one of the most important medical breakthroughs in recent years. Silence Therapeutics has developed its own RNA technology, along with proprietary delivery systems. Combined, these enable the development of therapeutics for diseases with high unmet medical needs.Atu027 is the company's leading Oncology product and the company achieved a further key milestone during 2105 when it announced highly encouraging data in its phase 2a pancreas cancer trial. Silence now expects to begin recruitment for a Phase 1b combination study for Atu027 in head and neck cancer. Additionally, initial pre-clinical results have been encouraging in pulmonary arterial hypertension and the potential shown by the Company's newest delivery formulation, MacPLEX, is exciting, targeting liver macrophages which are key immune cells. The Company continues to review its plans for Atu111 which targets acute lung injury. Silence is working on several further projects and collaborations which are at earlier stages. It currently has collaborations in place with world-leading academic institutions, including the University of Oxford, the University of Cambridge and Imperial College London. The company has a robust IP estate protecting its proprietary technology and also has a strong balance sheet with net cash and deposits at 31 March 2015 of £19.2m. Silence further strengthened its balance sheet in May 2015 with an additional share issue f undraise of £40.0 million.Sarossa's shareholding at 30 June 2015 was, and continues to be, 4.21 per cent. of the issued share capital of Silence .

Plant Health Care Plc (' PHC') which is AIM listed, is a leading provider of novel patent protected biological products to the global agriculture markets. The company has a portfolio of established products based on its proprietary Harpin and Myconate® technologies. PHC's products increase crop yields by enhancing natural processes within the plant. Revenues in the year to December 2014 were US$ 6.9 million and during the first half of 2015, sales grew by 7.1% in constant currency terms. Accelerating revenues of existing products will be driven through existing partnership and distribution agreements, including with Arysta LifeScience, SymAgro and Dux Agri, as well as by concluding new agreements with strong partners who can develop sales in-market. PHC is also focused on the discovery and development of new patent-protected products and in late 2014 the company released a platform of peptide products as Innatus 3G. These show great potential in delivering yield improvements and invoking disease and pest resistance in crop plants. During the first half of 2015, PHC announced the first 2 evaluation agreements for Innatus with major industry players which envisage completion of evaluation at the end of 2016, with a competitive licensing process for rights to develop Innatus based products from 2017 onwards. Progress on evaluation agreements with major industry players is an important validation of the technology and is a key driver of long-term value for PHC shareholders.PHC continues to maintain a sound b alance sheet and at 30 June 2015 had no debt and US$12.6 million in cash and investments . Sarossa'sholding in PHCat 30 June 2015 was, and continues to be, 5.35 per cent.

In addition to the above, Sarossa has holdings of below 3 per cent. in two profitable AIM listed c ompanies, one of which operates in the online gaming and sports betting markets and the other is a care sector support services business. Both of these companies have solid dividend yield and favourable growth records.

Outlook

The potential for volatility in capital markets remains, given the continued worries over persistent geopolitical risks in Ukraine and the Middle East and the need for further structural reforms to restore European public finances to a sustainable path, as well as an outlook for slowing global growth.

We remain committed, however, to delivering additional value for our shareholders and will continue to maintain a rigorous and highly selective investment approach with a view to exploiting opportunities as they emerge. We will also retain the management disciplines and shareholder alignment under which Sarossa now operates, whilst running a low cost base. We are confident that this approach will enable us to build considerable value for shareholders going forward.

Michael Bretherton

Chairman

25 September 2015

Consolidated Statement of Comprehensive Income for the year ended 30 June 2015

There are no other items of other comprehensive income.

Consolidated Statement of Changes in Equity as at 30 June 2015

Consolidated Statement of Financial Position at 30 June 2015

Consolidated Statement of Cash Flows for the year ended 30 June 2015