TIDMSARS
RNS Number : 8979F
Sarossa PLC
26 February 2015
26 February 2015
Sarossa Plc
("Sarossa" or the "Company")
Half Year Report
Sarossa Plc today publishes its half year report for the six
months ended 31 December 2014.
Enquiries :
Sarossa Plc
Mike Bretherton, Chairman 01534 719760
WH Ireland Limited (Nominated adviser)
Chris Fielding, Head of Corporate Finance 020 7220 1650
Chairman's Statement
Sarossa Plc (the "Company" or "Sarossa") together with its
subsidiaries, (the "Group") delivered a Group profit after tax for
the six months ended 31 December 2014 of GBP1.30 million compared
to a profit of GBP0.47 million in the previous 2013 half year. The
reported profit mainly reflects unrealised valuation gains
amounting to GBP1.32 million on portfolio investments in the six
month period.
The Board has continued to adopt a highly selective investment
approach in these times of global economic uncertainty.
Consequently, whilst the Board identified and reviewed a number of
potential opportunities in the period, only one further follow on
investment of GBP0.32 million was made. We did not seek any
realisations of existing investments in the six months ended 31
December 2014.
The Company currently holds 4 principal portfolio investments,
all of which are quoted on AIM, and for which the carrying value at
31 December 2014 was GBP12.23 million (30 June 2014: GBP10.62
million represented by 3 quoted holdings).
The Group continues to benefit from a strong balance sheet with
cash balances of GBP6.29 million at 31 December 2014 compared to
cash balances of GBP6.13 million at the previous 30 June 2014 year
end. Net assets attributable to holders of Sarossa at 31 December
2014 were GBP18.53 million compared with GBP17.22 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 3.0 per cent., and which
represent 73.1 per cent. of the carrying value of portfolio
investments at 31 December 2014, is given below:
Silence Therapeutics Plc (Silence) is AIM listed and is a global
leader in the discovery, development and delivery of novel RNAi
therapeutics for the treatment of serious diseases. RNA
(ribonucleic acid) is one of the two types of nucleic acids found
in all cells, the other being DNA (deoxyribonucleic acid). RNA is
the messenger that takes a copy of the genetic information stored
in DNA in a cell's nucleus and translates it into instructions for
the manufacture of proteins in that cell. RNA interference (RNAi)
is a method of reducing or 'silencing' the genes which cause some
diseases. Drug development is entering the age of genetic medicine
and through Silence's leading technologies and collaborations, the
company is giving the UK and Europe a central role in this ground
breaking area of medicine. Silence has a robust IP estate
protecting its proprietary RNAi technology and is working to
translate this technology into therapeutic clinical product
candidates. One of these is already in the clinic in a Phase 2a
pancreatic cancer trial and there are many others in pre-clinical
development including in relation to lung vasculature, pulmonary
arterial hypertension, pre-eclampsia, acute liver injury and ocular
melanoma.
Sarossa held at 31 December 2014, and continues to hold, 4.2 per
cent. of the issued share capital of Silence.
Plant Health Care Plc (PHC) is AIM listed and is a leading
provider of novel patent protected biological products to the
global agriculture markets. PHC offers products to improve the
health, vigour and yield of crops by enhancing natural processes
within the plant. The company has a portfolio of established
products based on its proprietary Harpin and Myconate(R)
technologies and has a dual-track strategy of substantially growing
revenue from existing products whilst aggressively pursuing
research and development of its PREtec (Plant Response Elicitor
technology) platform. That R&D is focused on generating a large
number of new peptide products with the aim of becoming a
multi-product company. PHC has already formed partnerships with
several of the leading agrochemical companies including, Arysta
Life Science, to commercialise its existing products and underlying
sales of Harpin <ALPHA><BETA> and Myconate are on a
firmly growing track. PHC has also reported that the R&D
platform pipeline is showing promise in delivering a range of
benefits for farmers, including drought tolerance, disease
resistance and increased yield and the company now plans to engage
with those agricultural majors that have the development and
commercialisation capabilities to exploit the full potential of
this platform. Sarossa's holding in PHC at 31 December 2014 was,
and continues to be, 5.3 per cent.
In addition to the above, Sarossa has holdings of below 3.0 per
cent. in a profitable AIM listed care sector support services
business with a solid dividend yield and good growth record and a
multinational sports betting and gaming group also with a solid
dividend yield.
Outlook
Looking ahead, there remain many threats to a sustained global
recovery including the conflicts that have no quick solutions in
the Ukraine and the Middle East, the potential spectre of a
European Union (EU) breakup following the change of government and
strategy in Greece and U.K. elections which could pave the way for
a referendum on its EU membership. Your Board will, therefore,
continue to maintain a rigorous and highly selective investment
approach with a view to exploiting opportunities as they emerge. We
remain committed to delivering additional value for shareholders
going forward.
Michael Bretherton
Chairman
26 February 2015
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months ended 31 6 months ended 31 December
December 2014 2013 Year ended 30 June 2014
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
--------------------------- ------ -------------------------- --------------------------- ------------------------
Gain on portfolio
investments 1,415 524 1,816
Other income - - 594
--------------------------- ------ -------------------------- --------------------------- ------------------------
Portfolio return and
revenue 1,415 524 2,410
--------------------------- ------ -------------------------- --------------------------- ------------------------
Administrative expenses (153) (67) (424)
Research and development
(expenditure)/credit - (1) 6
Release of legacy
biotechnology provision - - 1,603
Exchange gains - 41 91
--------------------------- ------ -------------------------- --------------------------- ------------------------
Operating profit 1,262 497 3,686
--------------------------- ------ -------------------------- --------------------------- ------------------------
Finance income 40 24 47
Finance cost - (53) (43)
--------------------------- ------ -------------------------- --------------------------- ------------------------
Profit before taxation 1,302 468 3,690
Taxation - - -
Profit and comprehensive
income for the period 1,302 468 3,690
--------------------------- ------ -------------------------- --------------------------- ------------------------
Earnings per ordinary
share
Basic and diluted 5 0.20p 0.07p 0.58p
--------------------------- ------ -------------------------- --------------------------- ------------------------
The profit for the period arises from the Group's continuing
operations.
There were no items of other comprehensive income for the
periods covered by these statements and therefore the profit for
the period is also the total comprehensive income for the period,
net of tax.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other reserve Merger Accumulated
capital premium retranslation Reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
At 1 July 2013 10,725 122,091 8,282 - (127,564) 13,534
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
Total comprehensive
income for - - - - 468 468
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
At 31 December 2013 10,725 122,091 8,282 - (127,096) 14,002
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
Group re-organisation (4,331) (122,091) (8,282) 126,422 8,282 -
Total comprehensive
income for the period - - - - 3,222 3,222
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
At 30 June 2014 6,394 - - 126,422 (115,592) 17,224
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
Total comprehensive
income for the period - - - - 1,302 1,302
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
At 31 December 2014 6,394 - - 126,422 (114,290) 18,526
------------------------- ------------ ------------- ----------------- ------------ ----------------- --------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December As at 31 December As at 30 June
2014 2013 2014
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
----------------------------- ------ --------------------- ----------------------- ---------------
ASSETS
Non-current assets
Portfolio Investments 6 12,262 7,819 10,624
12,262 7,819 10,624
----------------------------- ------ --------------------- ----------------------- ---------------
Current assets
Trade and other receivables 32 17 594
Derivative trading assets - 464 -
Short-term deposits - - 2,603
Cash and cash equivalents 6,296 7,438 3,530
--------------------- ----------------------- ---------------
6,328 7,919 6,727
----------------------------- ------ --------------------- ----------------------- ---------------
Total assets 18,590 15,738 17,351
----------------------------- ------ --------------------- ----------------------- ---------------
LIABILITIES
Current liabilities
Trade and other payables (64) (67) (127)
Provisions - (1,669) -
----------------------- ---------------
Total liabilities (64) (1,736) (127)
----------------------------- ------ --------------------- ----------------------- ---------------
Net current assets 6,264 6,183 6,600
----------------------------- ------ --------------------- ----------------------- ---------------
Net assets 18,526 14,002 17,224
----------------------------- ------ --------------------- ----------------------- ---------------
Shareholders' equity
Share capital 7 6,394 10,725 6,394
Share premium 8 - 122,091 -
Merger reserve 8 126,422 - 126,422
Other reserves 9 - 8,282 -
Retained earnings deficit (114,290) (127,096) (115,592)
----------------------- ---------------
Total equity 18,526 14,002 17,224
----------------------------- ------ --------------------- ----------------------- ---------------
Approved by the Board and authorised for issue on 26 February
2015.
Michael Bretherton
Chairman
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
6 months ended 31 December 6 months ended 31 December 30 June
2014 2013 2014
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------ --------------------------- --------------------------- --------------------------
Cash flows from operating
activities
Profit/(loss) for the
period/year 1,302 468 3,690
Add back:
Foreign exchange (gain)/loss (25) 12 (48)
Finance income (15) (24) (47)
Unrealised (gain)/loss on
revaluation of portfolio
investments (1,322) (213) (1,763)
Unrealised gain on
revaluation of a derivative
asset - (294) -
Release of legacy
biotechnology provision - - (1,603)
------------------------------ --------------------------- --------------------------- --------------------------
Operating cash flows before
movement in working capital (60) (51) 229
Purchase of portfolio
investments (316) - (1,085)
Decrease/(increase) in trade
and other receivables 562 680 87
(Decrease)/increase in trade
and other payables (63) (29) 31
------------------------------ --------------------------- --------------------------- --------------------------
Cash flows from operations 123 600 (738)
Finance income 15 24 47
------------------------------
Net cash flows from operating
activities 138 624 (691)
------------------------------ --------------------------- --------------------------- --------------------------
Cash flows from investing
activities
Decrease/(increase) in cash
placed on deposit - 1,500 (1,103)
--------------------------- --------------------------- --------------------------
Net cash generated from/(used
in) investing activities - 1,500 (1,103)
------------------------------ --------------------------- --------------------------- --------------------------
Net increase/(decrease) in
cash and cash equivalents 138 2,124 (1,794)
Exchange gain/(loss) on cash
balances 25 (53) (43)
Cash and cash equivalents at
beginning of the period 6,133 5,367 5,367
--------------------------- --------------------------- --------------------------
Cash and cash equivalents at
end of the period 6,296 7,438 3,530
------------------------------ --------------------------- --------------------------- --------------------------
Short term deposits at the
end of the period - - 2,603
------------------------------ --------------------------- --------------------------- --------------------------
Cash, cash equivalents and
short term deposits at end
of period 6,296 7,438 6,133
------------------------------ --------------------------- --------------------------- --------------------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PREPARATION
The interim financial statements of Sarossa Plc are unaudited
condensed consolidated financial statements for the six months
ended 31 December 2014. These include unaudited comparatives for
the six months ended 31 December 2013 together with audited
comparatives for the year ended 30 June 2014.
Sarossa Plc was incorporated in Jersey on 7 March 2014. The
Company was specifically created to implement a re-organisation in
relation to Sarossa Capital Limited (formerly Sarossa Capital Plc
and prior to that Antisoma Plc). Under the re-organisation, Sarossa
Capital Limited became a wholly owned subsidiary of Sarossa Plc on
2 May 2014 at which time Sarossa Plc was also admitted to the AIM
market of the London Stock Exchange.
Shareholders in Sarossa Capital Limited at the time of
re-organisation received shares in Sarossa Plc in the same
proportionate interest as they had in Sarossa Capital Limited
immediately prior to the re-organisation. The business, operations,
assets and liabilities of the Sarossa Group under the new Jersey
holding company immediately after the re-organisation were no
different from those immediately before the re-organisation and the
Directors have therefore treated this combination as a simple
re-organisation using the pooling of interests method of
accounting.
The financial information for the six months ended 31 December
2014 does not constitute statutory financial statements within the
meaning of the Companies (Jersey) Law 1991. A copy of the audited
financial statements for the year ended 30 June 2014 has been
delivered to the Jersey Registrar of Companies. The auditor's
opinion on those financial statements was unqualified, did not draw
attention to any matters by way of an emphasis of matter paragraph,
and contained no statement under section 113B(3) or section 113B(4)
of the Companies (Jersey) Law 1991.
These interim condensed consolidated financial statements have
been prepared on the basis of the accounting policies expected to
apply for the financial year to 30 June 2015 which are based on the
recognition and measurement principles of International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU),
in accordance with the provisions of the Companies (Jersey) Law
1991 applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared under the historical cost
convention. The Group's presentation and functional currency is
Sterling.
The interim financial statements do not include all of the
information required for full annual financial statements and do
not comply with all the disclosures in IAS 34 'Interim Financial
Reporting', and should be read in conjunction with the Group's
annual financial statements to 30 June 2014. Accordingly, whilst
the interim statements have been prepared in accordance with IFRS,
they cannot be construed as being in full compliance with IFRS.
The preparation of financial statements in conformity with IFRS
as adopted by the European Union requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The accounting policies adopted are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 30 June 2014.
Going concern
Information on the business environment, financial position and
the factors underpinning the Group's future prospects and portfolio
are included in the Chairman's Statement. The Directors confirm
that they are satisfied that the Group has adequate resources to
continue in business for the medium term based on the current
liquid resources available. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
2) SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted are consistent with those
followed in the preparation of the consolidated annual financial
statements of Sarossa Plc for the year ended 30 June 2014 and
include the following policy:
The re-organisation on 2 May 2014 under which the Company became
a 100 per cent. holding company of Sarossa Capital Limited, has
been accounted for as a re-organisation using the pooling of
interests ('merger') method of accounting and the Group's activity
has been treated as a continuation of that of the legal subsidiary,
Sarossa Capital Limited and its subsidiaries. Comparative numbers
presented in the Group condensed financial statements are those
reported in the Group condensed financial statements issued in the
name of the legal subsidiary, Sarossa Capital Limited, for the six
months to 31 December 2013 (unaudited) and in the Group financial
statements issued in the name of Sarossa Plc, for the year to 30
June 2014 (audited).
3) SEGMENTAL REPORTING
The Directors are of the opinion that the under IFRS 8 -
'Operating Segments' the Group has only one reportable segment,
being Portfolio Investment Return. Segmental profit or loss is
therefore equal to Group profit or loss and this basis of
segmentation is consistent with the annual audited consolidated
financial statements of the Group to 30 June 2014.
4) TAXATION
The accrued tax charge for the six month interim period is based
on an estimated worldwide effective tax rate of nil percent, (six
months to 31 December 2013: nil percent; year to 30 June 2014: nil
percent).
5) EARNINGS PER SHARE (BASIC AND DILUTED)
Basic earnings per share is calculated by dividing the gain
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares.
6 months ended 31 December 6 months ended 31 December
2014 2013 Year ended 30 June 2014
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------- ---------------------------- ----------------------------- ------------------------
Gain for the period
(GBP'000) 1,302 468 3,690
Weighted average number of
shares ('000) 639,360 639,360 639,360
----------------------------- ---------------------------- ----------------------------- ------------------------
Basic earnings per ordinary
share 0.20p 0.07p 0.58p
Diluted earnings per
ordinary share 0.20p 0.07p 0.58p
----------------------------- ---------------------------- ----------------------------- ------------------------
The Group had no dilutive potential ordinary shares in issue
during the six months to 31 December 2014 and to 31 December 2013,
or during the year to 30 June 2014 and consequently there was also
no dilutive impact for those periods.
6) PORTFOLIO INVESTMENTS
Quoted Equity Shares
GBP'000
--------------------------------------------------- ---------------------
Fair value at 31 December 2013 7,819
Additions 1,085
Transfer from derivative trading assets 854
Unrealised gain on the revaluation of investments 866
Fair value at 30 June 2014 10,624
Additions 316
Unrealised gain on the revaluation of investments 1,322
--------------------------------------------------- ---------------------
Fair value at 31 December 2014 12,262
--------------------------------------------------- ---------------------
All portfolio investments are held by Sarossa Plc are valued at
closing bid market price at the reporting date.
7) SHARE CAPITAL
Ordinary Shares Number GBP'000
-------------------------------------------------------- -------------- --------
Authorised ordinary shares of 1p:
Sarossa Plc
At 7 March 2014, 30 June 2014 and 31 December 2014 1,000,000,000 10,000
-------------------------------------------------------- -------------- --------
Sarossa Capital Limited
At 31 December 2013, 30 June 2014 and 31 December 2014 835,500,000 8,355
-------------------------------------------------------- -------------- --------
Allotted, issued and fully paid ordinary shares of 1p:
Sarossa Plc
At 7 March 2014 - -
Issue of shares 639,360,364 6,394
-------------------------------------------------------- -------------- --------
At 30 June 2014 and 31 December 2014 639,360,364 6,394
-------------------------------------------------------- -------------- --------
Sarossa Capital Limited
At 31 December 2013, 30 June 2014 and 31 December 2014 639,360,364 6,394
-------------------------------------------------------- -------------- --------
Sarossa Plc was incorporated in Jersey on 7 March 2014. The
Company was created to implement a re-organisation in relation to
Sarossa Capital Limited (formerly called Sarossa Capital Plc and
prior to that Antisoma Plc), under which Sarossa Capital Limited
became a wholly owned subsidiary of Sarossa Plc on 2 May 2014.
Shareholders in the company at the time of re-organisation received
639,360,364 ordinary shares of 1p issued by Sarossa Plc in the same
proportionate interest as they had in Sarossa Capital Limited,
immediately prior to the re-organisation.
Under the accounting principles governing the re-organisation,
as set out in note 2, the ordinary share capital presented for the
Group at 31 December 2014 and 30 June 2014 is that of the legal
parent, Sarossa Plc and the comparative at 31 December 2013 is that
of the legal subsidiary Sarossa Capital Limited.
Sarossa Plc had no preference share capital at 30 June 2014 but
Sarossa Capital Limited had 4,331,683 zero coupon, convertible,
redeemable, preference shares of GBP1 each at both 30 June 2014 and
30 June 2013. Given the terms of the preference shares, these are
considered to have a nil fair value on a going concern basis.
8) EQUITY CAPITAL AND MERGER RESERVE
Share capital Share premium Merger reserve
GBP'000 GBP'000 GBP'000
-------------------------------------------- ---------------- ------------------- -------------------
At 31 December 2013 10,725 122,091 -
Transfer on group re-organisation (note 1) (4,331) (122,091) 126,422
-------------------------------------------- ---------------- ------------------- -------------------
At 30 June 2014 and 31 December 2014 6,394 - 126,422
-------------------------------------------- ---------------- ------------------- -------------------
The merger reserve arose on the shares issued by the Company to
shareholders of Sarossa Capital Limited (formerly calledSarossa
Capital Plc and prior to that Antisoma Plc) under the
re-organisation on 2 May 2014 in a process that did not change the
economics, operations or shareholder structure of the Group.
The preference shares, which are considered to have a nil fair
value on a going concern basis, have been transferred from equity
capital to merger reserve on consolidation.
9) OTHER RESERVE
GBP'000
----------------------------------------------- --------
At 31 December 2013 8,282
Transfer to retained earnings deficit reserve (8,282)
----------------------------------------------- --------
At 30 June 2014 and 31 December 2014 -
----------------------------------------------- --------
The other reserve relates to foreign exchange movements on
consolidation in respect of certain assets and liabilities that
were previously held in its US subsidiaries. These subsidiaries
were all loss making and hold only net liabilities represented by
amounts owed to Group companies and which have been fully provided
against. The US subsidiaries are now dormant and abandoned and this
reserve has, therefore, been transferred to the retained earnings
deficit reserve.
10) RELATED PARTY TRANSACTIONS
During the six months ended 31 December 2014 the Company paid
management charges of GBP48,567 to ORA Limited; an entity which is
a controlled undertaking of a significant corporate shareholder. No
amounts were outstanding at the balance sheet date.
The Group has taken advantage of the exemptions contained within
IAS 24 - 'Related Party Disclosures' from the requirement to
disclose transactions between Group companies as these have been
eliminated on consolidation.
In addition, during the period the Company paid remuneration to
the Directors' in accordance with their service contracts and
letters of appointment.
11) HALF YEAR FINANCIAL REPORT
A copy of this half year report, as well as the annual statutory
accounts is available on the Company's website at
www.sarossaplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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