SGM.L Regulatory News (SGM)

29 April 2015

AIM: SGM

SIGMA CAPITAL GROUP PLC

("Sigma" or "the Group")

Audited final results for the year ended 31 December 2014

KEY POINTS

· Significant progress made in the delivery of Sigma's Private Rented Sector ("PRS") strategy

· Two milestone events:

- commencement of first phase of PRS Joint Venture with Gatehouse Bank plc - 927 new rental homes, with total development cost of £100m

- strategic partnership signed with Grainger plc to create a large scale PRS portfolio focused on key English cities outside Greater London

· Share placing completed to raise £8.0m gross to support Sigma's next stage of development

· Sigma's non-PRS regeneration activities made encouraging progress

· Exit from historic venture capital activities completed

Financial:

· Results for 2014 in line with market expectations

· Revenues of £3.87m, including £0.61m from North Arran Way development ("NAW") (2013: £5.81m, including £3.69m from this development)

· Profit from operations of £0.19m (2013: loss of £0.36m) - represents £0.55m turnaround

· Profit before tax of £0.21m (2013: loss of £0.86m) - represents £1.07m turnaround

· Basic earnings per share of 0.38p (2013: loss per share of 1.87p)

· Net assets per share increased to 17.4p (2013: 5.5p)

· Cash balances increased to £5.22m (2013: £1.07m)

· Board remains confident about growth prospects supported by long term macro drivers

David Sigsworth, Chairman, said:

"Sigma made significant progress over 2014 as we focused on the delivery of our Private Rented Sector strategy. Most importantly, we achieved two milestone events both in November 2014 - the launch of construction of PRS homes under our Joint Venture with Gatehouse Bank and the signing of a major PRS partnership agreement with Grainger plc.

We believe that the scale of venture with Gatehouse, which is targeting a PRS portfolio of 6,600 new homes and our new relationship with Grainger firmly establishes Sigma as a leading participant in unlocking the PRS opportunity in the UK.

The new homes under both agreements will be built on land procured and developed by Sigma, through our local authority partnerships and house building partners. Looking ahead, we have set ourselves the target of delivering in excess of 10,000 new homes in the next five years, with these new homes comprising a mix of PRS, market for sale and social housing. We also expect to participate in these opportunities using the Group's own capital.

With our PRS Joint Venture with Gatehouse gaining momentum and our relationship with Grainger now underway, we are confident of further progress to come over 2015."

Enquiries

Notes to editors:

About Sigma Capital Group plcwww.sigmacapital.co.uk

Sigma is a PRS, residential development and urban regeneration specialist, with offices in Manchester, London and Edinburgh. Sigma's principal focus is now on the delivery of large scale housing schemes, initially for the Private Rented Sector. It has a well-established track record in assisting with property-related regeneration projects in the public sector, acting as a bridge between the public and private sectors.

CHAIRMAN'S STATEMENT

We described 2013 as a turning point in Sigma's development as we focused on the delivery of our Private Rented Sector strategy. 2014 has been an equally important year for the Group, with the end of the year culminating in both the launch of construction of PRS homes under our Joint Venture with Gatehouse Bank plc ("Gatehouse") and the signing of a major PRS partnership agreement with Grainger plc ("Grainger"), the UK's largest listed residential property owner and manager. This agreement is for the creation of a large scale PRS portfolio outside Greater London and complements our Joint Venture with Gatehouse.

The first phase of PRS homes, with total development costs of approximately £100m, was launched in November 2014, and will deliver new rental homes in the North West over a period of two years creating one of the first large scale PRS schemes in the UK. Some four months after the start of construction, the first tenants have already moved in with rental demand very strong, and construction currently remains ahead of schedule.

We are now actively engaged with Gatehouse in the preparation for the second phase of investment and delivery. We have also been working with Gatehouse to simplify and accelerate the delivery process as we further increase the number of houses and sites that we aim to deliver. We are currently targeting a PRS portfolio with Gatehouse of around 6,600 new rental homes, with a total development cost of £700m. We believe that the scale of this venture and our new relationship with Grainger firmly establishes Sigma as a leading participant in unlocking the PRS opportunity in the UK.

Under both the Gatehouse and Grainger partnerships, the new homes will be built on land procured and developed by Sigma, through our local authority partnerships and house building partners. We have set ourselves the target of delivering in excess of 10,000 new homes in the next five years, with these new homes comprising a mix of PRS, market for sale and social housing. We also expect to participate in these opportunities using the Group's own capital.

Whilst our core focus is centered on our PRS activities, our regeneration activities, which support the objectives of our local authority partners, continue to produce good results. These activities are focused on the delivery of a mix of residential homes, including social housing, retail, commercial and community facilities, including medical centres and schools. Our financial results for the year largely reflect this activity, with the benefits of our PRS activities to come through more fully in 2015 and beyond.

The shortage of housing and urgent requirement for new housing stock in the UK is well known and particularly acute set against a rising UK population, forecast to grow by 16% to 73m by 2035. The UK is also increasingly moving towards a rental market with the percentage of owner-occupied homes falling to 65%, its lowest level since 1988. This trend is expected to continue, underpinned by rising house prices and tighter mortgage regulation. These macro developments support Sigma's growth objectives and with our two major funding relationships and growing pipeline of opportunities, we are increasingly well positioned to deliver professionally managed and large scale PRS housing stock.

Placing

In April 2014, we completed a placing of ordinary shares to raise £8.0m before expenses in order to support our early mover advantage in the rented residential sector and to assist in the execution of large scale development opportunities. The placing at 70p per share comprised 11,428,571 new ordinary shares of 1p each and was supported by both existing and new institutional shareholders.

Results

The Group generated revenues of £3.87m for the financial year to 31 December 2014 (2013: £5.81m). These results include significant revenues from the NAW, completed in April 2014, which added £3.69m of income to results in 2013 and £0.61m of income to results in 2014. Excluding this development and discontinued venture capital activities, Group revenues increased by 96% to £3.24m (2013: £1.65m).

The Group moved into profitability with profit from operations of £0.19m (2013: loss £0.36m). This comprised a profit on operations of £0.58m from the Group's property activities (2013: loss of £0.02m) and a loss on operations of £0.39m (2013: loss of £0.34m) from venture capital and other holding company activities. As previously announced we completed Sigma's exit from its historic venture capital activities in the first half, leaving the Group wholly focused on its property-related operations.

Administrative expenses increased by 20% during the year, reflecting increased professional costs and one-off bonus payments resulting from the joint venture arrangements agreed during the year.

The profit before tax for the year was £0.21m (2013: loss before tax of £0.86m, which includes an exceptional cost of £0.53m arising from the purchase of the deferred share in Sigma Inpartnership). Basic earnings per share were 0.38p (2013: loss per share of 1.87p).

Net assets per share at the year-end increased to 17.4p (2013: 5.5p) and cash balances increased by 488% to £5.22m (2013: £1.07m). This largely reflects the placing completed in April 2014.

At this stage of Sigma's development, the Directors are not recommending the payment of a dividend for the year.

Operational Overview

In November 2014 we launched the first phase of our PRS Joint Venture with Gatehouse ("PRS Fund"), comprising 927 new rental homes across 14 sites in Greater Manchester and Liverpool, and the first tenants have already moved in. We are creating a mix of high quality 2, 3 and 4 bedroom houses and construction is currently underway on a total of six of the 14 sites, with the development of further sites scheduled to begin during spring and summer 2015. Construction is ahead of schedule and tenant demand is strong and generating higher than originally expected rents.

In February 2015, together with Gatehouse and our lettings partner Direct Lettings Ltd, we also launched a dedicated bespoke lettings brand "DIFRENT" which will be used for all rental units constructed under the PRS Fund.

This first phase of the PRS Fund is being built on land procured and developed by Sigma through its existing local authority partnerships with Liverpool City Council and Salford City Council, and its house building partner, Countryside Properties (UK) Ltd ("Countryside"). The second and further phases are now under discussion with Gatehouse. Each phase will deliver an initial transaction fee to Sigma as well as development management fees. On completion of the new homes, Sigma earns recurring asset management fees and will retain a share of the net disposal profits on the assets, subject to a minimum return to investors.

In November 2014, we also announced a strategic partnership with Grainger for delivery of larger PRS sites in excess of 100 homes, in the regions of England. Under the terms of the agreement, Sigma has granted Grainger the exclusive option for an initial four year term to acquire development opportunities of 100 units or more sourced by Sigma. In addition to sourcing development opportunities, Sigma expects to act as development manager on the majority of projects. Sigma will earn a profit share on each housing development, split into a sourcing fee and a development management fee. We are now actively engaged in the delivery of the first site and expect this relationship to grow during 2015.

To support our plans for the delivery of PRS homes in the UK, we are actively looking to source new opportunities in new cities and regions for our model.

The Group's regeneration activities, which support our local authority partners, continued to make progress. We completed the delivery of a major new retail and office development at NAW in North Solihull in early 2014. The financial benefit of this substantial development was principally felt in 2013. The development has helped to fulfill Solihull Metropolitan Borough Council's regeneration plans for a 1,000 acre area in North Solihull. Our role included securing planning permission, five key pre-lettings and the forward sale of the development. We also procured the construction contract and finance for the build phase. Over the year, we completed the delivery of 80 residential market for sale homes on a six acre site in the Higher Broughton area of Salford with our partner Countryside as part of our Salford Partnership. All the homes were pre-sold prior to finalisation of construction.

Together with our house building partner, Countryside, we are currently delivering in excess of 350 new market for sale homes on two sites in Liverpool with more to come in 2015. These support Liverpool City Council's ambitious plans for new housing stock across the City. In March 2015, with Countryside we have also commenced the delivery of a phase of 56 units for social housing on behalf of Liverpool Mutual Homes. Sigma's remuneration from these developments is governed by the terms of the relevant partnership agreements and is in addition to the income now being generated from our growing PRS model.

Board changes

There have been a number of Board changes in the year. In March 2014, following Sigma's exit from its historic venture capital activities, Mark Hogarth, Investment Director, stepped down from the Board. In September 2014, as we ceased the Winchburgh development contract, our Scottish Residential Development Director, John Hamilton who had prime responsibility for this contract also stepped down from the Board.

In January 2015, Malcolm Briselden, who joined Sigma as Group Financial Controller in April 2012, was appointed as Finance Director following the retirement of Marilyn Cole.

On behalf of the Board, I am delighted to welcome Malcolm to his new position on the Board. I also wish Marilyn a very happy retirement after her 15 years as Sigma's Finance Director - her dedication and wise counsel have been invaluable. I also extend our thanks to Mark and John for their contribution to Sigma.

Staff

Particular thanks is due to all Sigma staff members for the major success that has been achieved this year. Sigma has transformed its business to lead the way in the delivery of PRS homes and this could not have been achieved without the skill, hard work and dedication of all our staff. Everyone should be proud of what they have achieved and I look forward to the future with confidence as we continue to grow and expand the business.

Outlook

We believe we have created a robust PRS model, capable of significant growth and have been first to market with a viable model of scale in PRS delivery in the UK. Macro trends underpin our confidence, with unparalleled demand for the underlying product, ever growing shortage of housing delivery in the UK and a growing appetite amongst investors to participate in this sector.

In particular, reflecting the acute under-supply of new housing since 2008, local authorities across England are keen to discuss new housing investment and delivery. Our track record of both PRS and non-PRS housing delivery in the North West of England, and the key PRS relationships we have established, position us strongly as we engage with local authorities for housing delivery across additional regions in England.

With our PRS Joint Venture with Gatehouse progressing well and gaining momentum, and our relationship with Grainger now underway, we are confident of further progress to come over 2015.

David Sigsworth

Chairman

STRATEGIC REPORT

The Directors have pleasure in presenting their Strategic Report for the year ended 31 December 2014.

Principal activity

Sigma, together with its subsidiaries, is a property group principally focused on the PRS sector but with both residential and commercial activities within its urban regeneration and property asset management sectors.

Sigma is a public limited liability company incorporated in England. It acts as a holding company and at 31 December 2014 had four principal wholly owned subsidiaries:

· Sigma Capital Property Limited ("SCP")

· Sigma Inpartnership Limited ("SIP")

· Strategic Property Asset Management Limited ("SPAM")

· Sigma Technology Investments Limited ("STI")

The Group's PRS activities are carried out by its subsidiary SCP. Its first joint venture with Gatehouse Bank plc commenced in November 2014 with the start of construction of 927 homes for the private rental market. A strategic partnership was also agreed with Grainger plc for PRS development opportunities of 100 units or more.

The Group's property regeneration activities are largely carried out by its subsidiary, SIP, which undertakes large scale property-related regeneration projects, working as a bridge between public and private sector organisations. Founded in 2000 and operating from offices in Manchester, SIP has three established partnerships, with Liverpool City Council, Salford City Council and Solihull Metropolitan Borough Council. The partnerships hold option arrangements with each local authority partner for the delivery of a mix of residential, commercial, education and health schemes.

Most of the Group's property management activities outside PRS and its local authority relationships are undertaken by SPAM. Through SPAM, the Group acts as property manager for its remaining historic property limited partnership, SI Property Limited Partnership No 7. This partnership holds the investment in the City Wharf development in Aberdeen. The Group has a 19.3% holding in SI Property Limited Partnership No 7, although this investment was written down to nil in 2009.

As anticipated, the Group completed the exit from its venture capital management activities in early 2014. The Group still has an interest in one venture capital fund and the investment is held in STI.

Key strategy

Our core strategy is to utilise our property and capital raising expertise whilst working with our established local authority partnerships and house building partners, along with our funding partners, to build on our initial PRS activities. Another key part of our strategy is to progress the land that is under our control by accessing funding to accelerate the delivery of residential regeneration developments and commercial developments. This strategy allows us to grow our income and profit and increase the proportion of the Group's business that is contracted, which provides for a more stable and predictable income stream.

The PRS model is the key component of our strategy for 2015 and beyond. The initial joint venture with Gatehouse, which commenced in November 2014, together with our new strategic partnership with Grainger provides us with a strong platform for growth in this sector. Sigma's strategy is to extend its geographic coverage for its PRS model beyond its existing local authority partnerships to other cities in the UK and to extend it to other tenures such as social housing.

Overview of the business

Private Rented Sector residential portfolio

Our PRS model which has been designed to address the need for new homes in the UK allows us to move residential land assets with planning predominately from local authority partnerships to our fund structure. The key advantage of this for local authorities is that they are able to deliver large scale high quality housing quickly, meeting an urgent social need, with the PRS model delivering houses typically at five to six times the rate of those built 'for sale'. In addition, local authorities also benefit from council tax receipts on the new homes and from the Government's new homes bonus. Typically local authorities' wider regeneration objectives are also boosted. The faster timescales are also attractive to house builders who can work with us on the delivery of PRS units to reduce their risk on certain sites. We are now beginning to see PRS site opportunities from both local authorities and the house building sector. The initial focus of our PRS activity with both Gatehouse and Grainger is on the regions of England outside Greater London. Accordingly, Sigma is not currently seeking sites in Greater London

Joint Venture with Gatehouse Bank plc

In November 2014, construction commenced on the first phase of 927 new privately rented residential properties comprising a mix of high quality family homes and apartments on 14 sites in the North West of England - ten in Greater Manchester and four in the Liverpool area. The new homes are being built by Countryside and construction is scheduled to be completed in approximately two years with a total development cost of c. £100 million. Direct Lettings Limited (part of the Shepherd Direct Group), with whom Sigma has a well-established association, are managing all lettings.

This first phase of homes is built on land procured by Sigma and is underpinned by our existing three local authority partnerships. Gatehouse, a leading London-based Shariah compliant investment bank with a real estate portfolio worth in excess of £1 billion across the UK and US, is delivering the equity element of the venture whilst Barclays Bank plc is providing the debt financing.

The first homes have now been completed with the first tenants having moved in. On-going rental demand is strong and the majority of properties scheduled for release over the coming months have already been pre-let or reserved. A new brand, "DIFRENT", has also been launched which will support the PRS Fund platform and be utilised for the rental of all units across this and further phases with Gatehouse therefore creating a national lettings brand.

Sigma is fully engaged with Gatehouse on the next phase of delivery and is currently exploring with them more efficient financial structures for the quicker delivery of the future phases.

The PRS Fund generates fees for the Group through each stage of its life. An upfront fee is paid on the commencement of construction, a management fee is paid quarterly over the duration of the delivery period and a quarterly asset management fee is paid once the properties are completed. Sigma will also retain a share of the net disposal profits on the assets subject to a minimum return to investors. In addition, Sigma has made a loan to the PRS Fund in respect of the first phase which may be converted to equity conditional on the final construction costs of the initial investments.

Strategic Partnership with Grainger plc

In November 2014, Sigma entered into a major strategic partnership with Grainger, the UK's largest listed residential property owner and manager, to create a large-scale PRS portfolio across the key cities of England outside Greater London. Under the terms of the agreement, Sigma has granted Grainger the exclusive option for an initial four year term to acquire development opportunities of 100 units or more sourced by Sigma. This agreement is complementary to the PRS Fund established with Gatehouse.

Sigma has created a significant pipeline of opportunity through its local authority relationships and house building partners, which can be utilised over the course of the relationship with Grainger.

Grainger will appraise each development opportunity individually and we are in the process of delivering the first site with a gross development cost in excess of £18m. A number of further sites have already been identified which we are looking to progress with Grainger.

At present, Grainger expects to fully own the initial developments sourced by Sigma, although in the future it may also seek to syndicate its investment to third party investors, including Sigma. In addition to sourcing development opportunities, the Group expects to act as development manager on the majority of projects. The Group will earn a profit share on each housing development, split into a sourcing fee and a development management fee.

Urban regeneration

Liverpool Partnership (also referred to as Regeneration Liverpool)

Our Liverpool Partnership is a limited liability partnership formed in 2007 between SIP and Liverpool City Council. The partnership was given an initial ten year option over a 60 acre residential development site, known as Norris Green, which had outline planning consent for around 800 new homes, with a total development value of c. £120 million. The partnership was established with the flexibility to develop additional sites at the discretion of Liverpool City Council and over the last two years, Liverpool City Council has increased the number of sites under option. Key sites added are Gateacre, the former Queen Mary school site and Lime Street/Knowledge Quarter.

In 2012, we formed a joint venture company with a major local commercial property development company, Neptune Developments Limited, to help accelerate the delivery of the commercial regeneration projects in Liverpool. In 2013, we established a second joint venture company with house building specialist, Countryside, to assist us in the delivery of residential regeneration projects in the City.

Land in the Liverpool Partnership can be developed using any one of the following three ways: by the Liverpool Partnership (with SIP earning a management fee and participating in a profit share); by SIP (with SIP earning a fee and an agreed priority profit); or by the Liverpool Partnership selling a site on the open market, with SIP earning a percentage of the sales price achieved. At least 20% of the land must be disposed of by sale on the open market. The majority of the land will be developed by SIP through our venture companies with Countryside and Neptune Developments Limited.

Residential Projects

The regeneration of the site at Norris Green has made much progress and the upturn in the residential market has been helpful in bringing forward additional phases. The completion of our PRS Fund with Gatehouse has also been extremely positive for the regeneration effort.

We have now completed the first three phases at Norris Green, delivering 202 units and have delivered 83 of the 170 units on the fourth phase. There are 20 PRS units within the fourth phase, all of which have now been completed. Lettings demand has been strong with all 20 units let at the asking rents. Sales of the new homes are also progressing well at a rate of four per month.

By the end of May, we will have built or will be contracted on 560 of the 828 master planned units. This is real transformational change for the scheme over the last 12 months.

Construction on the former Queen Mary School site, which is approximately one mile from Norris Green, commenced in January 2015. The detailed consent is for 200 new homes with 64 designated homes for our PRS Fund. The balance of 136 homes for sale are being constructed by our affiliate Countryside Sigma Limited. Infrastructure and remediation works are underway and we expect the first completed units in the summer of this year. We expect all the PRS units to be completed by the end of 2015.

Detailed planning consent on our large private for sale site at Gateacre, a 19 acre former secondary school site was submitted in March 2015. The application is for 200 new family homes ranging from two and three bedroom town houses up to five bedroom executive detached homes. There have been extensive pre-planning discussions with the Liverpool City Council and several community consultation events. Development is forecast to commence in the second half of 2015.

Commercial Projects

The Liverpool Partnership secured a land option agreement to develop three key sites within the Knowledge Quarter in March 2013. This is a major flagship mixed-use opportunity to the south and east of Lime Street railway station in the centre of Liverpool, with a development value for the initial three to five year phase of c. £96 million. Together with our commercial joint venture company, we are initially bringing forward a development scheme for Lime Street Eastern Terrace and the former ABC cinema to be followed by the redevelopment of the Mount Pleasant Car Park as part of the redevelopment strategy for the wider area.

Construction of the St John Bosco secondary school site at Stonebridge, with a development cost of c. £18 million completed in August 2014, ready for the new school year commencing September. We are pleased to report that this project won the Royal Institute of British Architects North West Region award for Building of the Year 2015.

Salford Partnership (also known as Higher Broughton Partnership)

The Salford Partnership is our partnership with Salford City Council and Royal Bank of Scotland.

Housing developer, Countryside, completed construction of 80 new family homes on a six acre site in April 2014. The development realised a base fee of £400,000 for Sigma spread over 2012 and 2013 and generated a profit share of £240,000 in 2014 as all the units were sold.

Sigma is working closely with Salford City Council to bring additional land for delivery for PRS. A total of four sites and 206 units will be developed as part of the initial phase of our PRS Fund with Gatehouse and we are in the process of reviewing more.

North Solihull Partnership

The Partnership was set up in 2007 by Solihull Metropolitan Borough Council, Bellway Homes, West Mercia Housing Association and SIP with the remit to coordinate and deliver the regeneration of an area of circa 1,000 acres in North Solihull. The key objectives of the Partnership are to deliver new and replacement housing stock, ten new or refurbished primary schools and five new village centres incorporating neighborhood council, medical and retail facilities. Our key role is the provision of development management services, including strategic development planning, coordination and procurement of development works, in return for agreed fees for these services. Thereafter there are specific sites which we have the right to develop directly on a commercial basis.

The schools programme is well advanced with four completed and a further two on site due for completion in mid 2015. The remaining four schools will be comprehensive refurbishments of existing facilities.

We have been involved in the redevelopment of two Village Centres during the year. Acting as development manager at Chelmund's Cross, we completed the procurement and delivery of a £6 million contract for new infrastructure which will enable further phases of development including the construction of an Enterprise Centre.

At the second village centre at NAW, SIP completed the development and sale of a new 30,000 sq ft neighborhood retail and office scheme in March 2014. The sale allowed us to repay the Growing Places loan secured to fund the construction of the building. SIP earned fees and development profit c. £144,000 and £180,000 respectively, most of which was recognised in 2013.

We continue to work with NHS England, Solihull Council and the local GPs on the plans for the development of a new medical practice building at Smiths Wood, which will enable the two existing GP practices to merge and benefit the local community. After some delays due to the reorganisation of NHS England, we are now aiming to commence development in the fourth quarter of 2015.

We are also working with our partners on the early strategic planning stages of Kingshurst, the third village centre to be redeveloped. We anticipate providing further development management services on infrastructure improvements to the village centre that will in turn provide some direct development opportunities for SIP to undertake during 2016 and 2017.

We are also actively in discussions with the council in relation to land for PRS development.

City Wharf, Aberdeen

Sigma continues to provide asset management services to SI Limited Partnership No. 7 and its lender National Asset Management Agency ("NAMA"). During 2014 we completed the refurbishment of the vacant office accommodation in Exchequer House, successfully negotiated an uplift in the rent for the Grosvenor Casino (in relation to the rent review that fell due in late 2013), and secured a further letting of one of the vacant leisure units to Pure Gym who have expanded their existing facility within the development. Principal letting terms on a further retail unit have also been agreed with legal completion due in the next few weeks. NAMA is currently in the process of the disposal of the loans in respect of this asset and we await further developments in this regard.

Historic property management contracts

The property management contract with Regenco Trading Limited ("Regenco") for the management of Winchburgh development in Scotland ceased at the end of September 2014 reflecting the focus of our efforts on large scale residential and regeneration activities in England.

The Placing

The placing of new shares to raise £8.0 million gross was completed in April 2014 and gives the Group enhanced financial strength to execute the large-scale projects in which it is currently involved. In particular, this financial strength will enable the Group to: fund pre-development spend and thereby accelerate the development of existing projects; make equity investment in current and future projects so providing Sigma with greater participation in returns; and demonstrate intent to our PRS partners and local authority partnerships.

Venture Capital activities

During the first half of 2014, the management of the last of the venture funds, Sigma Sustainable Energy Fund II, was transferred to Shackleton Ventures Limited together with the remaining business advisory contracts of certain of the investee companies and also disposed of its residual interest in the fund assets. Sigma continues to be a limited partner in one venture fund which was transferred in the prior year with its investment in the fund held by STI.

Financial Review of 2014

The Group's revenue decreased by 33% to £3,868,000 (2013: £5,808,000) due to the large impact on revenue in 2013 from NAW (2014: £604,000, 2013: £3,690,000). Excluding the revenue both from NAW and from the discontinued venture capital activities, other property revenue increased by 96% to £3,245,000 (2013: £1,652,000). Gross profit increased by 42% to £3,208,000 (2013: £2,257,000). Excluding the NAW and the discontinued venture capital activities gross profit increased by 90% to £3,147,000 (2013: £1,652,000).

The Group made a trading profit in the year of £16,000 (2013: trading loss £409,000), with property activities driving the turnaround and generating a trading profit of £576,000 (2013: trading loss of £18,000). The discontinued venture capital activities generated a trading loss of £179,000 (2013: trading loss £75,000) and the trading profit was also adversely impacted by the costs incurred by the holding company on Group matters. Full detail of the results for the year by business segment is given in note 3 to the financial statements.

Administrative costs increased by 20% to £3,192,000 (2013: £2,666,000), with the rise principally reflecting increased legal and professional costs. The legal and professional costs were higher as a result of the two joint venture arrangements entered into during the year. There was also an increase in employment costs of 12% mainly due to the payment of one-off bonuses following the signing of the two joint venture agreements. Excluding these bonuses, employment costs only rose by 1%.

The Group made a profit from operations of £186,000 (2013: loss £355,000) benefitting from an unrealised profit on investments of £171,000 (2013: loss £28,000) offset by a small loss on disposal of equity investments of £1,000 (2013: profit £82,000). Overall the Group made a net profit in the year of £214,000 (2013: net loss of £856,000). The results in the prior year were adversely affected by an exceptional item of £531,000 being the excess of the price paid for the deferred share in SIP over the deferred consideration provided for in 2012.

Net assets of the Group increased to £10,620,000 at 31 December 2014 (31 December 2013: £2,636,000) benefiting from the share placing which raised £7.63 million net of expenses. Net assets at 31 December 2014 were equivalent to 17.4p per share (31 December 2013: 5.5p per share).

Balance sheet

The principal items in the balance sheet are goodwill of £533,000 (2013: £533,000), the investment in the venture capital fund of £502,000 (2013: £520,000), other unquoted securities £171,000 (2013: £nil), two loans to the PRS Fund totalling £3,500,000 (2013: £nil) and cash of £5,220,000 (2013: £1,070,000).

The goodwill relates to the acquisition of SIP and is reviewed each year for impairment. The investment is in one venture capital fund which holds investments in 8 companies (2013: 14 companies). The unquoted security is an investment in Nandi Proteins Ltd ("Nandi") which the Group has held for some years. During the year, certain third parties invested a substantial amount into Nandi and the value of the Group' investment reflects the price paid by those third parties. The loans to the PRS Fund comprise two loans of £2,000,000 and £1,500,000 which were key for the PRS Fund to commence. The loan of £2,000,000 is expected to be repaid in 2015 and the loan of £1,500,000 is expected to be repaid over the period to the end of 2016.

The Group's current assets exceed its current liabilities by £8,015,000 (2013: £1,061,000). The Group has no long term liabilities.

Cash flow

The Group's cash balances increased by £4,150,000 to £5,220,000 (2013: increased by £46,000 to £1,070,000). The cash outflow from operating activities of £131,000 (2013: £494,000). The cash inflows from the issue of shares was £7,747,000 (2013: £33,000) offset by cash outflow in respect of other investing activities of £3,466,000 (2013: £507,000).

Key performance indicators

With the transfer of the remaining fund activities over the year, the key performance indicators are concentrated on the property activities.

The Group's key performance indicators include:

Principal risks and uncertainties

The specific financial risks of price risk, interest rate risk and credit risk are discussed in the notes to the financial statements. The broader risks - financial, operational, cash flow and personnel - are considered below.

The principal financial risk relates to the housing market where a deterioration in the macro-economic outlook, the cyclical nature of residential market and a fall in house prices may affect Sigma's income and its ability to raise finance for housing projects. The Group manages these risks by keeping abreast of any trends so that any likely down turn is anticipated, maintaining good funding relationships, ensuring a reputation of building a good quality product and having diversity in its income streams. An additional financial risk to the business is the recovery of the two loans in respect of the PRS Fund. Sigma is the development manager in respect of the PRS Fund and has implemented substantial cost control and monitoring procedures. The loans are expected to be repaid in full during 2015 and 2016.

A further financial risk is a reduction in the value of the Group's investment in the venture capital fund and in the unquoted security. This risk is mitigated to a certain extent as the funds are invested in eight underlying companies and the fund manager is also focused on ensuring that the companies remain properly funded whilst working with them on exit strategies.

The principal operational risks of the business reside around management's ability to secure new contracted property income streams from both residential and commercial property initiatives. The launch of the PRS Fund has significantly increased the proportion of the Group's contracted revenue compared with one-off income streams.

Where the Group undertakes property developments on its own balance sheet, development risk is managed by maintaining close control of pre-contract costs and by limiting the number of early stage developments financed by the Group at any one time.

The main cash flow uncertainties of the business centre around the timing of property project development fees, the receipt of profits arising out of the partnerships and the timing of the repayment of the loans provided in respect of the PRS Fund.

The Group is dependent on its Executive Directors and senior management for its success. There can be no assurance that the Group will be able to retain the services of these key personnel although historically the turnover of senior staff has been low. Incentives for senior staff include share options and carried interest in joint ventures and managed funds.

Employees

The Directors believe that employees are fundamental to the Group's success and are committed to the involvement and development of staff at all levels. The Group continues to keep its employees informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved effectively through regular informal meetings. There is an employee share scheme which is open to all employees.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort will be made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

For the year ended 31 December 2014

There were no comprehensive gains or losses in either year other than those included in the comprehensive income statement.

CONSOLIDATED BALANCE SHEET

At 31 December 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2014

CONSOLIDATED CASH FLOW STATEMENTS

For the year ended 31 December 2014

NOTES

1. This final results announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 28 April 2015.

2. Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 December 2014 or 31 December 2013. The report of the auditor on the statutory financial statements for each of the years ended 31 December 2014 and 31 December 2013 were (i) unqualified; (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the year ended 31 December 2013 have been delivered to the Registrar of Companies. The statutory financial statements for the year ended 31 December 2014 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 

While the financial information included in this final results announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as endorsed for the use in the European Union, this announcement does not itself contain sufficient information to comply with IFRS.  

3. Segmental information - business segments

At 31 December 2014 the Group is organised into three business segments: property and venture capital fund management plus holding company activities.

The segment analysis for the year ended 31 December 2014 is as follows:

The segment analysis for the year ended 31 December 2013 is as follows:

4. Unrealised profits/(losses) on the revaluation of investments

The total fair value adjustments made during the year relating to investments, both financial assets at fair value through profit and loss and trading investments are set out below.

5. Taxation

There is no charge to taxation as the Group did not generate taxable profits.

The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised in accordance with Group policy.

6. Profit(/loss) per share

The calculation of the basic profit/(loss) per share for the year ended 31 December 2014 and 31 December 2013 is based on the profits/losses attributable to the shareholders of Sigma Capital Group plc divided by the weighted average number of shares in issue during the year.

Diluted profit/(loss) per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potential dilutive ordinary shares. The Company has only one category of potentially dilutive ordinary shares, those share options granted where the exercise price is less than the average price of the Company's shares during the year. Diluted profit/(loss) per share is calculated by dividing the same profit/(loss) attributable to equity holders of the Company as above by the adjusted number of ordinary shares in issue during the year ended 31 December 2014 of 58,348,727 (2013: 47,918,521). For the year ended 31 December 2014, the diluted earnings per share is 0.37 pence. For year ended 31 December 2013, as the calculation for dilutive loss per share reduces the net loss per share, the diluted loss per share shown is the same as the basic loss per share.

7. Cash flows from operating activities

8. Availability of statutory financial statements

Copies of the full statutory financial statements will be available from the Company's offices at 41 Charlotte Square, Edinburgh EH2 4HQ no later than 1 June 2015 and are available on its website at www.sigmacapital.co.uk