SGM.L Regulatory News (SGM)

25 Sep 2006 07:01

Sigma Capital Group PLC25 September 2006 For immediate release 25 September 2006 Sigma Capital Group plc ("Sigma" or the "Group") Interim Results for the Six Months to 30 June 2006 Sigma (AIM:SGM), the UK specialist asset management and advisory group whichfocuses on specialist fund management, commercialisation of University IP andproperty, announces its interim results for the six months ended 30 June 2006. FINANCIAL HIGHLIGHTS •Turnover up by 57% to £3.4m (2005: £2.2m)•Positive swing of £1.0m into profit from previous losses •Net profit before tax £0.8m (2005: loss £0.2m)•Cash balances increased to £2.2m (2005: £1.9m) OPERATIONAL HIGHLIGHTS Venture Fund Management •Venture funds under management increased to £29m following the first close of the Sigma Sustainable Energies Fund at £6m •Sigma's first mandate into renewal energy •First investment made in Ocean Power Delivery, an off shore wave energy company •Scottish and Southern Energy plc, a key trade investor•Investments in 19 technology companies •Four investments in the period - two new; two follow on Universities €25-year partnership agreement with Robert Gordon University to commercialise their intellectual property•Investment in B1 Medical Ltd in July 2006 •Collaboration between University of Aberdeen, Robert Gordon University and NHS Grampian to commercialise IP in the field of medical devices for orthopaedics Property •Completed acquisition of £46.5m pre-let new office development in St Paul's Square, Liverpool •Fees generated of £2.2m•Disposed of Eagle Star's Cheltenham Head Office for a total consideration of £38.8m •Fees generated of £0.6m•Post balance sheet acquisition completed of three Ramada hotels for £73.1m •Fees of £4.0m (gross) to be recognised in second half Brian Hadfield, Chairman, said: "The first half of 2006 has seen significant further progress across the three main areas of our business. We have added another fund management mandate in anew sector, renewable energy, and are delighted to have the backing of such amajor partner as Scottish and Southern Energy plc. We have also completed ourfirst long term agreement with a university, RGU, and helped to establish B1Medical Limited, a joint venture between RGU, Aberdeen University and NHSGrampian. The property subsidiary has made excellent progress with threetransactions completed to date this year including the sale of the Eagle Starheadquarters generating excellent returns for its investors. We continue tomake progress across all aspects of our business and view the rest of the yearwith confidence." ENQUIRIES Sigma Capital Group plcNeil Crabb, Joint Managing Director Tel: 020 7653 3200Graham Barnet, Joint Managing Director Tel: 0131 220 9444 Buchanan CommunicationsDiane Stewart/Isabel Podda Tel: 020 7466 5000 Sigma Capital Group plc Interim Results for the Six Months to 30 June 2006 CHAIRMAN'S STATEMENT Results The Group's turnover has increased by 57% to £3,407,000 (2005: £2,172,000). Thehigher turnover combined with a fall in Group overheads of 4% and significantlyreduced write down of investments has resulted in a net profit before tax andafter investment write-downs of £792,000 (2005: loss of £204,000). This is animprovement of £996,000 in the first six months of 2006 compared with the sameperiod in 2005. The Group's cash balances increased to £2,168,000 (2005:£1,885,000). Venture Fund management Venture funds under management grew by £6m to £29m with the first close inJanuary 2006 of the Sigma Sustainable Energies Fund ("the Sustainable EnergiesFund"), Sigma's third active fund mandate. The Sustainable Energies Fund is aten-year fund and will provide funding for companies developing sustainableenergy technologies. The largest participators in the Sustainable Energies Fundare the FTSE 100 utility company and trade investor, Scottish and SouthernEnergy plc, and the European Regional Development Fund, both having committed£2.4m each. Sigma has invested £0.4m alongside a range of smaller privateinvestors. There were four investments in the period - two new investments and two inexisting investee companies, with the Sustainable Energies Fund making its firstinvestment. A summary of these investments is included in the notes accompanyingthis statement. At 30 June 2006, Sigma's three venture funds held investments in19 technology companies. Universities This year saw the first tangible result of Sigma's investment in developingrelationships with Scottish universities with the signing of Heads of Agreementwith the Robert Gordon University ("the RGU") in April 2006, followed by thesigning of the formal agreement in August 2006. This 25-year partnership hasbeen formed to maximise the commercial value of technologies developed by theRGU. Under the terms of the partnership, Sigma will work with the RGU tofacilitate its commercialisation activity across all faculties. In return, Sigmawill receive equity in new spin out companies from the RGU and a share of incomefrom licensing. The RGU has three faculties: Design and Technology, Health and Social Care andAberdeen Business School. These include Schools of Computing, Engineering,Health Sciences, Life Sciences and Pharmacy. RGU also has a strong research basein renewable energy technologies. The RGU, Aberdeen, is one of the oldest technology institutes in the UK. It hasa national and international reputation for excellence in the provision ofhighly relevant professional education delivering more than 300 courses toapproximately 12,000 full and part-time students. RGU came top in an independentTimes Higher Education Supplement survey of UK Universities, with the highestincome generated from business through commercial sales and consultancy,generating over £42 million in five years from this activity alone. The investment by the Sigma Technology Venture Fund in B1 Medical Ltd in July2006 was further evidence of the developing relationships with Scottishuniversities. B1 Medical Ltd has been established to commercialise intellectualproperty from the University of Aberdeen, the RGU and NHS Grampian in the fieldof medical devices for orthopaedics. Property Sigma's property subsidiary completed two transactions in the first half of2006; it established its fourth limited partnership and sold the property heldby its third limited partnership. The Si Limited Partnership No 4 was established to acquire and providedevelopment funding for a new office development in St Paul's Square locatedwithin Liverpool's commercial district. The office has been pre-let to HillDickinson LLP, a top 40 UK law firm. The total cost of acquiring and developingthe property will be £46.5m. This transaction generated total fees of £2.2m. The Si Limited Partnership No 3 was established in late 2004 to acquire theEagle Star head office building in Cheltenham. Contracts for the sale of thisproperty were exchanged in the first half of 2006 with completion shortlythereafter. The property was sold to a private property company and generated areturn of over 30% to investors over a 19-month period. This successfultransaction generated a transaction fee and an incentive fee for the propertysubsidiary, together amounting to over £550,000, all of which has beenrecognised in the first half of the year. In late August 2006 the property subsidiary established its fifth limitedpartnership and acquired three regional Ramada hotels managed by Jarvis Hotels.The partnership is expected to be fully capitalised by mid October. The totalacquisition cost was £73.1m. This transaction will generate total fees of £3.96mall of which will be recognised in the second half of 2006. Both Si LimitedPartnership No 4 and Si Limited Partnership No 5 have embedded transaction feesand incentive fees payable to the property subsidiary when the partnershipassets are sold. The incentive fees are subject to a minimum return beingachieved for investors but, as demonstrated by the sale of the Eagle Star headoffice building, can amount to significant sums. The property team are currentlyworking on Si Limited Partnership No 6. Change of name The change of name of the company to Sigma Capital Group plc was approved byshareholders at the Company's Annual General Meeting on 8 June 2006. Outlook The first half of 2006 has seen significant further progress across the threemain areas of our business. We have added another fund management mandate in anew sector, renewable energy, and are delighted to have the backing of such amajor partner as Scottish and Southern Energy plc. We have also completed ourfirst long term agreement with a university, RGU, and helped to establish B1Medical Limited, a joint venture between RGU, Aberdeen University and NHSGrampian. The property subsidiary has made excellent progress with threetransactions completed to date this year; the sale of the Eagle Starheadquarters generating excellent returns for its investors. We continue to makeprogress across all fronts the second half of the year and view the rest of theyear with confidence. Brian HadfieldChairman 25 September 2006 Sigma Capital Group plc CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 June 2006 Notes Six months Six months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 -------- -------- --------Turnover 3,407 2,172 3,332Other income 78 78 290 -------- -------- -------- 3,485 2,250 3,622 Cost of sales (1,513) (848) (868) -------- -------- --------Gross profit 1,972 1,402 2,754 Operating expenses (net)--------------------------------------------------------------------------------Operating expenses (net)before write down of investments (1,061) (1,107) (2,183)Write down of investments (97) (527) (1,005)-------------------------------------------------------------------------------- (1,158) (1,634) (3,188) -------- -------- --------Operating profit/(loss) 814 (232) (434) Interest receivable 41 28 68Interest payable 2 (63) - - -------- -------- --------Profit/(loss) on ordinaryactivities before taxation 792 (204) (366) Taxation 3 (300) - 114 -------- -------- --------Loss for the period after taxation 492 (204) (252) Minority interests (350) (232) (513) -------- -------- --------Retained profit/(loss) for the period 142 (436) (765) ======== ======== ======== Basic earnings/(loss) per share 0.37p (1.17)p (2.04)pDiluted earnings/(loss) per share 4 0.37p (1.17)p (2.04)p ======== ======== ======== There are no recognised gains or losses other than those stated in the aboveprofit and loss accounts. All of the operations of the Group are continuing. Sigma Capital Group plc CONSOLIDATED BALANCE SHEET At 30 June 2006 Notes As at As at As at 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000Fixed assets Intangible assets 59 62 60Tangible assets 52 79 69Unquoted investments 5 2,058 1,884 1,913 -------- -------- -------- 2,169 2,025 2,042 -------- -------- --------Current assets 1,555 679 1,017Debtors 304 682 374Investments 2,168 1,885 1,995Cash at bank and in hand -------- -------- -------- 4,027 3,246 3,386Creditors: amounts falling duewithin one year --------------------------------------------------------------------------------Minority interests - non-equity (1,255) (837) (1,255)Other creditors (915) (480) (675)-------------------------------------------------------------------------------- (2,170) (1,317) (1,930) -------- -------- -------- Net current assets 1,857 1,929 1,456 -------- -------- --------Total assets less current 4,026 3,954 3,498 liabilities Creditors: amounts falling dueafter more than one year Minority interests - non-equity - (418) - Preference share capital (750) (750) (750) -------- -------- --------Net assets 3,276 2,786 2,748 ======== ======== ======== -------- -------- --------Capital and reserves 383 379 381Called-up share capital 14,076 14,035 14,043Share premium account (249) (249) (249)Merger reserve (7) (7) (7)Capital reserve (11,230) (11,043) (11,372)Profit and loss account -------- -------- --------Shareholders' funds 2,973 3,115 2,796 Minority interest - equity 303 (329) (48)interests -------- -------- -------- 3,276 2,786 2,748 ======== ======== ======== Sigma Capital Group plc CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2006 Six months Six months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash inflow from operatingactivities 272 809 962Return on investments andservicing of finance 41 28 68Taxation - - (6)Capital expenditure andfinancial investment (189) (121) (354) -------- -------- --------Cash inflow/(outflow) beforefinancing and management ofliquid resources 124 716 670Management of liquid resources 14 (50) 96Financing - issue of equity 35 361 371 -------- -------- --------Increase in cash in the period 173 1,027 1,137 ======== ======== ======== Reconciliation of operating lossto operating cash flowsOperating profit/(loss) 814 (232) (434)Depreciation and amortisationcharges 20 31 54(Increase)/decrease in debtors (688) 965 925Increase/(decrease) increditors 28 (479) (462)Profit on disposal of fixedasset investments - (3) -Loss/(profit) on disposal ofcurrent asset investments 1 - (126)Write off of investments 97 527 1,005 -------- -------- --------Net cash inflow/(outflow) fromoperating activities 272 809 962 ======== ======== ======== Analysis of changes in net funds As at As at As at 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Increase in cash in the period 173 1,027 1,137Cash (inflow)/outflow fromchange in liquid resources (14) 50 30 -------- -------- --------Change in net funds resultingfrom cash flows 159 1,077 1,167Reclassification of investmentsfrom fixed assets to current assets - 20 20Loss on sale of current asset investments (1) - -Current asset investments written down (55) (311) (599) -------- -------- --------Movement in net funds in the period 103 786 588Opening net (debt)/funds 2,369 (224) 1,781 -------- -------- --------Closing net funds/(net debt) 2,472 562 2,369 ======== ======== ======== Sigma Capital Group plc Interim Results for the Six Months to 30 June 2006 NOTES 1. Basis of presentation The interim financial statements have been prepared in accordance withapplicable Accounting Standards and on the basis of the accounting policies setout in the annual report and accounts of Sigma Capital Group plc ("Sigma") forthe year ended 31 December 2005. The interim financial statements do not comprise statutory accounts for thepurpose of s240 of the Companies Act 1985. The comparatives for the full yearended 31 December 2005 are not the Company's full statutory accounts for thatyear. A copy of the statutory accounts for the year has been delivered to theRegistrar of Companies. The auditor's report on these accounts was unqualifiedand did not contain a statement under section 237(2) or 237(3) of the CompaniesAct 1985. The interim financial statements have not been audited or reviewed by theCompany's auditors. 2. Interest payable The interest payable in the six months to 30 June 2006 is in respect of thepreference shares in the property subsidiary. The property subsidiary moved fromnegative to positive retained reserves during the current year with the resultthat a dividend is due to be paid on the preference shares at the end of theyear. 3. Taxation An estimate has been made of the effective rate of taxation for the full year.There was no charge for taxation in the prior year period due to the Groupreporting a trading loss. 4. Earnings per share The calculation of earnings per share is based on a profit on ordinaryactivities after taxation for the six months ended 30 June 2006 of £142,000(2005: loss of £436,000) and on the weighted average number of ordinary sharesoutstanding during the six months ended 30 June 2006 of 38,140,216 (2005:37,113,615). The calculation of diluted earnings per share is based on the sameprofit/loss figures and on the weighted average number of diluted ordinaryshares outstanding during the six months ended 30 June 2006 of 38,351,842 (2005:37,408,020). 5. Investments The investments made by two of the venture funds, Sigma Technology Venture Fundand Sigma Sustainable Energies Fund, in the six months ended 30 June 2006 areset out below. The Sigma Innovation Fund (East of Scotland) did not make anyinvestments in the period. Sigma Capital Group plc Interim Results for the Six Months to 30 June 2006 NOTES (continued) Total % amount holding invested (fully diluted) £'000 %Sigma Technology Venture FundExterity LtdDevelops and supplies a set of products that distribute TV and video around business and campusnetworks for corporate, education and hospitality organisations 326 16.4 McLaren Software LtdIts product suite manages key document centric business processes with a focus on high risk areas of cost and compliance within large programmes of work.Follow on investment £82,000 1,806 31.2 Nandi Proteins LtdProvides modified protein technology for use in the food and drink industry. Initial investment for this fund. The Sigma Innovation Fund also has a 18.8% holding in this company. 300 19.6 Sigma Sustainable Energies FundOcean Power Delivery LtdOffshore wave energy company developing wave energy converter technology 500 1.6 6. Copies of the interim financial statements Copies of the interim financial statements will be sent to shareholders andcopies are available on request from the Company's registered office at 6thFloor, Bucklersbury House, 83 Cannon Street, London EC4N 8ST. This information is provided by RNS The company news service from the London Stock Exchange