SGM.L Regulatory News (SGM)

19 April 2016

AIM: SGM

SIGMA CAPITAL GROUP PLC

("Sigma" or "the Group")

Audited final results for the year ended 31 December 2015

Key Points

Financial

· Strong results - benefits of Private Rented Sector ("PRS") strategy coming through

· Revenues increased by 74% to £6.72m (2014: £3.87m)

· Profit from operations up 877% or £1.63m to £1.82m (2014: £0.19m)

· Profit before tax up nearly 10 times to £2.14m (2014: £0.21m)

· Basic earnings per share up 626% to 2.76p (2014: 0.38p)

· Net assets per share more than doubled to 35.9p (2014: 17.4p)

· Cash at year end increased to £25.14m (2014: £5.22m)

Operational

· Another landmark year in the development of PRS activities

· PRS joint venture with Gatehouse Bank plc making strong progress:

- first homes completed and let in March 2015 - with demand above initial expectations

- as of today, 549 homes are currently completed and let

- annualised rental income forecast at over £7m (gross) by end of Q3 2016

· Second phase of 813 homes, with a gross development cost of over £100m, launched in Dec 2015:

- supported by UK PRS Properties - a fund principally backed by the Kuwait Investment Authority and institutional shareholders from the State of Kuwait

· Launch of self-funded PRS portfolio in Dec 2015:

- initial phase of 346 new family homes with a gross development cost of £44m in Greater Manchester, Merseyside and Sheffield

- 550 new homes targeted, with a gross development value of over £60m by the end of 2017

· Run-rate of 3,000 PRS units expected by end of 2016 across sites in process

· Share placing completed in September 2015 raised £20m (gross) - to support self-funded PRS portfolio

· Regeneration housing activities continued to make a good contribution

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

David Sigsworth, Chairman, said:

"This has been another landmark year for Sigma and we are delighted to report that the Group's results are now beginning to show the benefits of our PRS strategy, with profit before tax up nearly ten times to £2.14m.

We achieved two key milestones in 2015. Firstly we started our second phase of PRS homes, with a new fund, UK PRS Properties, which is principally backed by the Kuwait Investment Authority and institutional shareholders from the State of Kuwait. Secondly we launched our own self-funded PRS portfolio, having raised £20m of equity, and started the first phase of delivery in December. The creation of our own portfolio of PRS assets marks an important step in Sigma's development. It will significantly enhance our returns from our PRS infrastructure as well as generate material additional long-term recurring income. We are targeting a self-funded portfolio of c. 550 family homes, with a total development value in excess of £60m by the end of 2017.

Sigma is now firmly established as a leading participant in unlocking the PRS opportunity in the UK, delivering family homes across the regions, which the UK needs. Macro drivers of undersupply of new homes and historic poor management of rental stock mean that our PRS platform is gaining significant traction. With our PRS venture with Gatehouse performing ahead of expectations on the first phase, our launch of a second phase, with UK PRS Properties, and our own PRS portfolio underway, we are confident of further progress during 2016."

Enquiries

Notes to editors:

About Sigma Capital Group plc

www.sigmacapital.co.uk

Sigma is a PRS, residential development and urban regeneration specialist, with offices in Edinburgh, Manchester and London. 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

Introduction

I am delighted to report Sigma Capital Group plc's ("Sigma" or "the Group" or "the Company") results for the year to 31 December 2015. It has been an outstanding year for Sigma and the Company's financial results are now beginning to show the benefits of its Private Rented Sector ("PRS") strategy. Revenues for the year have increased by 74% to £6.72m and profit before tax has risen by nearly 10 times to £2.14m, ahead of original market expectations.

Sigma's financial performance reflects the increasing momentum in the business as we successfully execute our PRS strategy, which is focused on the delivery of high quality family homes in the UK regions.

We achieved a number of key milestones during the year. In the first half, we completed the delivery of our first rental homes under our joint venture with Gatehouse Bank plc ("Gatehouse"), with our first tenants moving in. Subsequently we agreed a second phase of delivery with a new fund, UK PRS Properties (a fund principally backed by the Kuwait Investment Authority and institutional shareholders from the State of Kuwait) which is for a further 813 units with an estimated gross development cost in excess of £100m.

In the second half of the year, we achieved a long term aim for Sigma, raising £20m (before expenses) to launch our own self-funded PRS portfolio. The creation of our own portfolio of PRS assets marks an important step in Sigma's development and will significantly enhance returns on our PRS infrastructure as well as generate material additional long-term recurring income. Construction of the first phase of our self-funded PRS family homes started in December and is progressing well. We expect to commence construction on a further two sites over the next few months and have agreed terms for two more, which we will look to commence in the summer of 2016. These sites will deliver 346 new homes with a gross development cost of £44m and an estimated gross rent of circa £3.0m once fully let. As previously stated, we are targeting a portfolio of approximately 550 self-funded family homes, with a total development value in excess of £60m by the end of 2017, producing a gross rental income in excess of £4.5m per annum. 

Whilst our principal focus is on PRS, our regeneration activities which support the objectives of our local authority partners continued to produce good results, principally in the provision of market-for-sale and social housing. Historically, we have delivered a mix of residential, retail, commercial and community facilities, and we continue to be involved in a number of mixed use developments.

The new financial year has started very positively. We expect the first of our own PRS homes to be completed and let by the summer. Our first phase of PRS delivery with Gatehouse, 918 family homes, is on track to complete by the end of 2016, with 549 new homes already constructed and let. Once fully let, the expected rental from the 918 homes is expected to be excess of £7.5m per annum. Our second phase of delivery, with UK PRS Properties, which will deliver approximately 813 new rental homes across Greater Manchester and Liverpool, is also progressing very well, with the first homes due to be completed this summer. We are currently preparing further phases for launch this year, with sites identified in the Midlands and the South.

We anticipate that Sigma's activities should deliver a run rate of 3,000 PRS units by the end of the year across sites in process with this delivery creating one of the first large scale PRS portfolios throughout the regions in the UK.

Both short and medium term prospects for Sigma look very strong and, as we execute our growth plans over the coming year, we will continue to seek ways to capitalise on our PRS platform and position as a leading participant in this emerging sector. We remain very excited about ongoing opportunities and are confident that Sigma will continue to make good progress.

Results

Revenues increased by 74% to £6.72m for the financial year to 31 December 2015 (2014: £3.87m). Profit from operations rose by £1.63m to £1.82m (2014: £0.19m), a more than nine-fold increase. The Group's property activities contributed profit of £2.54m (2014: £0.58m) to this result, with the venture capital and other holding activities generating a loss of £0.72m (2014: loss of £0.39m).

Administrative expenses fell slightly by 0.9% to £3.17m during the year (2014: £3.19m).

Profit before tax for the year rose by nearly ten times to £2.14m (2014: £0.21m) with basic earnings per share increasing by 626% to 2.76p (2014: 0.38p).

Net assets per share at the year end increased by 106% to 35.9p (2014: 17.4p) and cash at the year end stood at £25.14m (2014: £5.22m). This largely reflects the placing completed in September 2015.

Dividends

At this stage of Sigma's development, the Board is not recommending the payment of a dividend for the year. However, the Board intends that the Company will recommend or declare dividends at a future date, subject to the performance of the business, and will therefore keep the dividend policy under review.

Placing

In September 2015, we successfully completed a placing of new ordinary shares, at 75p per share, to raise £20m before expenses in order to allow Sigma to build its own PRS portfolio. The placing comprised 26,666,666 new ordinary shares of 1p each and we were pleased to receive the support of both existing and new institutional shareholders.

Operational Overview

The first phase of PRS homes to be delivered by Sigma with its partner Gatehouse ("PRS Fund"), has a total development cost of approximately £100m and was launched in November 2014. This first phase is delivering a total of 918 new family rental homes in the North West of England and will create one of the UK's first large scale PRS schemes of new family homes. The first tenants moved into the first of the newly completed homes in March 2015 and currently 549 are fully complete and let. The balance of this first phase remains on track to be delivered during 2016, with approximately 50 houses per month completing and renting on our sites. Rental demand has been very strong and rents are on average higher than that initially forecast, with properties being let either prior to or shortly after construction.

In December 2015, we launched the second phase of PRS homes, with a new fund, UK PRS Properties, which is supported principally by the Kuwait Investment Authority and institutional shareholders from the State of Kuwait. This second phase will comprise a further 813 rental properties across nine sites and has a total development cost in excess of £100m. To date, construction has started on two of those sites with a further two sites due to commence shortly. While most of the new homes will be in the North West of England, we are currently progressing sites in other regions.

In September 2015, the Group raised £20m (gross) to launch a substantial portfolio of self-funded PRS assets, leveraging our existing PRS platform and relationships. We commenced our first site, in Liverpool, in December 2015 and delivery is now well underway and we are in the process of acquiring further sites. Our initial delivery comprises 346 new family homes with a gross development cost of £44m and we forecast an annualized gross rental of circa £3.0m from these homes once fully let. We expect the first homes to be let in August 2016 and are aiming to establish a portfolio of 550 new homes by the end of 2017. Once fully let, this portfolio is expected to produce gross annual rental income in excess of £4.5m.

It is clear that that the success and development of our PRS platform could not have been achieved without the support and commitment of our delivery partners, Countryside Properties ("Countryside") and Shepherd Direct Lettings and our funding partners, Gatehouse, UK PRS Properties and Barclays Bank. We look forward to continuing to work with them over the years to come. In addition, we have progressed our relationship with our second house building partner, Keepmoat Limited, and expect to launch our first site with them later this year. We are also continuing to engage with other funding partners, where it is complementary to our existing funding relationships, to broaden our model and provide greater opportunity for Sigma. I would also like to thank our existing and new shareholders for their support and backing during the year.

Our regeneration activities, which support our local authority partners, continued to make progress over the year. In December, with our partners Liverpool City Council and Countryside, we procured the delivery of a 200 market-for-sale housing site at Gateacre, in Liverpool. We also directly acquired the balance of 15.7 acres of residential development land at Norris Green in Liverpool and before the year end disposed part of this site to Countryside for the development of 200 market-for-sale housing. Since the year end, the remaining acreage, which will deliver 69 private rented units, has been acquired by UK PRS Properties in our second phase of PRS. Norris Green is an award winning regeneration project delivering 829 new homes across a variety of tenures. Once complete it will be one of the most successful housing regenerations schemes in England and our team, along with our partners, can take pride in what has been achieved in regenerating the community and improving the lives of residents. Across all sites in Liverpool, the residential regeneration effort by all will result in the delivery of 1,229 homes across all tenures.

We are currently working with Liverpool City Council and our commercial development partner, Neptune Developments on a number of other regeneration projects in Liverpool, which should start later in 2016.

The Board

In January 2015, we were pleased to welcome Malcolm Briselden to the Board as Finance Director following the retirement of Marilyn Cole. Malcolm joined Sigma as Group Financial Controller in 2012 and has significant experience of property investment and development. Earlier this month, Bill MacLeod left the Board and we wish him well as he pursues other activities.

Staff

On behalf of the Board, I would like to thank our staff members for the major successes that have been achieved this year. Sigma has transformed its business and has shown that it can lead the way in the delivery of PRS homes in the UK. This could not have been accomplished without the hard work, skill and enthusiasm of all involved, and everyone can be extremely proud of what has been achieved. Their dedicated efforts are much appreciated.

Outlook

There is an urgent and growing need for new housing stock in the UK, which is fueled both by the current shortage of homes and by a rising UK population, forecast to increase by 16% to 73m by 2035. Demand for rental homes is also growing, with the percentage of owner-occupied homes currently at 65%, its lowest level since 1988. These macro developments and historic poor management of rental stock mean that our PRS platform is gaining significant traction. As we look forward, we believe that Sigma is well placed to deliver large scale, professionally managed PRS housing stock and expect the business to make further encouraging progress over 2016. We will also seek ways to accelerate this process.

David Sigsworth OBE

Chairman

STRATEGIC REPORT

The Directors have pleasure in presenting their Strategic Report for the year ended 31 December 2015.

Business activities and Group structure

Sigma, together with its subsidiaries, is a property group principally focused on the PRS sector. Its activities also encompass urban regeneration and property asset management.

Sigma is a public limited liability company incorporated in England. It acts as a holding company and at 31 December 2015 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 SCP and its subsidiaries. During the latter part of 2015, SCP initiated the construction of its own self self-funded portfolio of private rented homes. Its first PRS joint venture with Gatehouse Bank plc commenced in November 2014 with a programme to deliver 918 new family homes for the private rental market with 549 now having been completed. In December 2015 a second phase of PRS homes was launched with UK PRS Properties (a fund principally backed by the Kuwait Investment Authority and institutional shareholders from the State of Kuwait). This second phase will deliver 813 new family rental homes across nine sites.

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 established three 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. Until early 2016, the Group acted through SPAM, as property manager for its historic property limited partnership, SI 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 Limited Partnership No 7, although this investment was written down to nil in 2009.

Whilst the Group ceased its venture capital management activities in 2014, it still holds an interest in a venture capital fund and in a direct non-quoted equity investment both of which are 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 and funding partners, to build on our PRS activities. A 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 2016 and beyond. The commencement of our own self-funded portfolio of PRS assets and the ventures with Gatehouse and UK PRS Properties provide 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. Our current delivery is in excess of 2,000 PRS homes in Greater Manchester and Merseyside however, we are actively looking at sites in the North East, Midlands and Southern regions of England to accelerate our delivery. In addition, we have developed a new house building relationship with Keepmoat to help deliver our strategy in these new areas. 

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 permission predominately from local authority partnerships and our house building relationships 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 housebuilders who can work with us on the delivery of PRS units to reduce their risk on certain sites. We are now seeing PRS site opportunities from both local authorities and the house building sector. The initial focus of our PRS activity with our own self-funded assets along with both Gatehouse and UK PRS Properties, is on the regions of England outside Greater London.

Sigma PRS

In September 2015, the Company raised £20m gross proceeds from a share placing to create a substantial portfolio of self-funded PRS assets leveraging its existing PRS infrastructure and relationships. The first site for 50 new rental homes in Merseyside has a development cost of c. £5.8m and is well underway, with the first properties expected to be let in August 2016. When complete and fully let this site is expected to generate a gross annual income of c. £0.42m.

Joint Venture with Gatehouse Bank plc - Phase 1

This first phase of homes is built on land procured by Sigma and is underpinned by our existing 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.

As reported last year construction commenced in November 2014 on the first phase of 918 new privately rented residential properties in the North West of England. During the year our house building partner, Countryside, was active on 13 of the 14 sites. The last site was acquired in February 2016 and construction is underway.

Of the 14 sites, nine have now completed construction and are fully let with rental levels in excess of those originally forecast. The properties have been let under our new brand 'DIFRENT' with Shepherd Direct Lettings (part of the Shepherd Direct Group), with whom Sigma has a well-established association, managing all lettings.

Joint Venture with UK PRS Properties - Phase 2

Our second phase of PRS homes in partnership with UK PRS Properties commenced in December 2015 and is targeting the delivery of 813 family homes with a development cost of over £100m. Nine sites across the North West of England have already been identified and our construction partner Countryside has commenced on two sites. As with phase 1, the new homes when built will be let under the 'DIFRENT' brand and will be managed by Shepherd Direct Lettings.

The PRS phases with Gatehouse and UK PRS Properties generate fees for the Group through each stage of its life. An upfront fee is paid on commencement, 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.

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 three years, the Council has increased the number of sites under option. The 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.

The regeneration of the site at Norris Green continues to make good progress and the upturn in the residential market has been helpful in bringing forward additional phases. Our PRS joint ventures are extremely positive for the regeneration effort.

The development at Norris Green consists of eight phases totaling 829 properties of which 394 properties are for sale, 214 are affordable homes and 221 are private properties for rent delivered by our PRS joint ventures. We are now on site on all eight phases and at the end of March we had completed 488 out of the 829 units proposed. Sales of the new homes continue to progress well and all of the affordable homes have been completed and transferred to the registered provider. The PRS units are being built across three phases with 54 units now complete and let.

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. All of the PRS units have been constructed and fully let with rents in line with or in excess of that originally targeted. The balance of 136 homes for sale are being constructed by our affiliate Countryside Sigma Limited and to date 43 units have been sold with a further 19 sales progressing.

Infrastructure and remediation works are underway at Gateacre, a 19 acre former secondary school. The site consists of 200 new family homes for sale ranging from two and three bedroom town houses up to five bedroom executive detached homes. The first house completions are expected towards the end of 2016.

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. Working with our commercial joint venture partner, Neptune Developments we have now secured planning consent and a forward funding commitment for the redevelopment of Lime Street Eastern Terrace, which will incorporate a 400 bedroom student residence, a Premier Inn hotel and 30,000 sq.ft of retail/leisure units. We anticipate construction commencing by summer 2016.

Plans for the refurbishment of the former ABC cinema are being progressed along with discussions with a preferred end user/funder for the new media, live music and leisure facilities to be developed. Once the scheme has been finalised and a funding deal agreed, a planning application will be submitted, expected by the end of summer 2016.

Progress has been made in respect of the redevelopment of the site known as Mount Pleasant Car Park and plans for the site are being assessed as part of the redevelopment strategy for the wider area.

Salford Partnership (also known as Higher Broughton Partnership)

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

During the year, we dealt with residual matters arising from previous residential and commercial projects of the Salford Partnership.

Sigma is working closely with Salford City Council to bring additional land for delivery for PRS. A total of four sites and 206 units have been developed as part of the initial phase of our PRS Fund with Gatehouse and a further two sites consisting of 220 units are being developed as part of the joint venture with UK PRS Properties. 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 a remit of coordinating and delivering 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 neighbourhood 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. Over the course of the project objectives have been amended as priorities and budgets have altered. This has resulted in fewer commercially viable projects for us to undertake directly.

We have been involved in the redevelopment of two village centres. Acting as development manager at Chelmund's Cross, we procured and delivered a new enterprise centre along with major infrastructure improvement works in a contract worth £6 million. These works have enabled further phases of development to be undertaken including a new medical centre, pharmacy and dental surgery. At Smith's Wood, we initially acted as the development manager for the infrastructure investment into the village centre and subsequently undertook the development and sale of a new 30,000 sq. ft neighborhood retail and office scheme.

We continue to provide strategic advice to the Partnership on developments whilst our relationship with the Partnership allows us to look at PRS opportunities and we are actively in discussions with the council in that respect.

City Wharf, Aberdeen

Sigma continued to provide property management services to SI Limited Partnership No. 7 and its lender National Asset Management Agency ("NAMA"). In August 2015 NAMA disposed of the loan that supported the underlying property vehicles to OCM Albion Debtco DAC ("the Lender"). During 2015 the economic climate in Aberdeen deteriorated as a result in the fall of the oil price which resulted in two of the tenants, occupying three floors of City Wharf, exercising their right to break their leases. In light of these factors the Lender demanded immediate repayment of the loan and consequently the underlying property companies went into administration. The Group's role as asset manager therefore came to an end in February 2016.

The Placing

A placing of new shares to raise £20 million gross was completed in September 2015 and provides the Group with 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 the development of its own assets for the private rented sector. The first site in Liverpool has already commenced.

Venture Capital activities

Sigma continues to be a limited partner in one venture fund which was transferred to Shackleton Ventures Limited in 2013 with its investment in the fund held by STI. Sigma also holds one investment in an unquoted security.

Financial Review of 2015

The Group's revenue increased by 74% to £6,724,000 (2014: £3,868,000) due to the sale of development land at Norris Green, Liverpool and revenues from our PRS activities with Gatehouse and UK PRS Properties. Gross profit increased by 59% to £5,103,000 (2014: £3,208,000).

The Group made a trading profit in the year of £1,938,000 (2014: £16,000), with property activities contributing a significantly increased trading profit of £2,544,000 (2014: £576,000). The discontinued venture capital activities generated a trading loss of £6,000 (2014: trading loss of £179,000) and the trading profit was also 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 decreased slightly by 1% to £3,165,000 (2014: £3,192,000).

The Group made a profit from operations of £1,818,000 (2014: £186,000) including an unrealised loss on investments of £120,000 (2014: unrealised profit of £171,000). Overall the Group made a net profit before tax in the year of £2,137,000 (2014: £214,000).

Net assets of the Group increased to £31,806,000 at 31 December 2015 (31 December 2014: £10,620,000) benefiting from the share placing which raised £19.1 million net of expenses. Net assets at 31 December 2015 were equivalent to 35.9p per share (31 December 2014: 17.4p per share).

Balance sheet

The principal items in the balance sheet are goodwill of £561,000 (2014: £579,000), the investment in the venture capital fund of £547,000 (2014: £502,000), stock of £509,000 (2014: £nil), accrued income of £5,361,000 (2014: £1,114,000), two loans to the PRS Fund totalling £1,759,000 (2014: £3,500,000) and cash of £25,135,000 (2014: £5,220,000).

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 eight companies (2014: eight companies). The stock relates to the acquisition of land at Norris Green, Liverpool which was sold subsequent to the year end to UK PRS Properties. Accrued income includes £2,627,000 expected to be paid in 2016 of which £1,982,000 has already been received post year end and £2,734,000 which is due greater than one year as detailed in note 16 to the accounts. The loans to the PRS Fund comprise two loans of £259,000 and £1,500,000 which were key for the PRS Fund to commence in the prior year. The loan of £259,000 is expected to be repaid in 2016 and the loan of £1,500,000 is expected to be repaid during 2016 and 2017.

The Group's current assets exceed its current liabilities by £26,588,000 (2014: £7,295,000). The Group has no long term liabilities.

Cash flow

The Group's cash balances increased by £19,915,000 to £25,135,000 (2014: increased by £4,150,000 to £5,220,000). The cash outflow from operating activities was £995,000 (2014: £131,000). The cash inflows from the issue of shares was £19,154,000 (2014: £7,747,000) along with cash inflow in respect of other investing activities of £1,756,000 (2014: outflow of £3,466,000).

Key performance indicators

With the transfer of the remaining fund activities during the prior 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 or deploy 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 extensive cost control and monitoring procedures. The loans are expected to be repaid in full during 2016 and 2017. A further financial risk is a reduction in the value of the Group's investment in the venture capital fund. This risk is mitigated to a certain extent as the funds are invested in eight underlying companies. In addition, 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 its own self-funded portfolio, along with its joint ventures with Gatehouse and UK PRS Properties, have 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.

Signed by the order of the directors

GF Barnet

Chief Executive Officer

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

For the year ended 31 December 2015

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

CONSOLIDATED BALANCE SHEET

at 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

Consolidated Cash Flow Statements

For the year ended 31 December 2015

NOTES

1. This final results announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 18 April 2016.

2. Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 December 2015 or 31 December 2014. The Audit reports of the auditor on the statutory financial statements for each of the years ended 31 December 2015 and 31 December 2014 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 2014 have been delivered to the Registrar of Companies. The statutory financial statements for the year ended 31 December 2015 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 2015 the Group is organised into three business segments: property, venture capital fund management and holding company activities.

The segment analysis for the year ended 31 December 2015 is as follows:

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

4. Unrealised (losses)/profits 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 a deferred taxation charge in the year as the group expects to pay tax at a future date.

The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised as it is not sufficiently clear that losses will be capable of utilisation in future periods.

6. Profit per share

The calculation of the basic profit per share for the year ended 31 December 2015 and 31 December 2014 is based on the profits attributable to the shareholders of Sigma Capital Group plc divided by the weighted average number of shares in issue during the year.

Diluted profit 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 per share is calculated by dividing the same profit attributable to equity holders of the Company as above by the adjusted number of ordinary shares in issue during the year ended 31 December 2015 of 71,511,717 (2014: 58,348,727). For the year ended 31 December 2015, the diluted earnings per share is 2.72 pence (2014: 0.37 pence). 

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 18 May 2016 and are available on its website at www.sigmacapital.co.uk.