7 Jan 2009 07:00
RNS Number : 2196L
Sigma Capital Group PLC
07 January 2009
7 January 2009
SGM
SIGMA CAPITAL GROUP PLC
(“Sigma” or “the Company”)
Trading Update
and
Major new Limited Partners for Sigma Sustainable Energy Fund II
The Board of Sigma is pleased to announce a trading update for the financial year to 31 December 2008, including the signing of major new Limited Partners for the Company’s Sigma Sustainable Energy Fund II (“SSEF II”).
Despite unprecedented challenges to the business over the twelve months, arising from the crisis in the banking and financial markets, the Company has made good progress in key areas and remains in robust shape. Operating costs in the core business have been significantly reduced and, as the Company enters 2009, the balance sheet remains strong, with substantial cash balances.
For the year under review, the Directors expect the Company to generate a profit from trading activities before tax of approximately £600,000. This is stated before investment write downs and bad debts but after two charges totalling £137,000, for share based payment (£82,000) and irrecoverable VAT (£55,000). The profit reflects the very high level of activity in the last quarter of 2008 in the Company’s core subsidiary, its venture capital fund management business, (as detailed below), as well as a profitable contribution from its property subsidiary, which is creditable given the very poor market conditions. Revenue from services for the year is expected to be approximately £4.7m, with the venture capital fund management business increasing its revenue by approximately 19% over the period, while the overall reduction in year-on-year revenue reflects the performance from the property subsidiary. Net assets per share at the year end are expected to be maintained at 15.3p per share (2007: 15.6p).
At the half year stage, the Company recognised £266,000 of investment write downs or impairments and provided £45,000 against bad debts. For the full year, the Board believes that it is prudent to take an extremely cautious view of the valuations within the Company’s portfolio holdings, including historic funds. The Directors estimate therefore that, including further bad debt provisions, the Company will provide for an additional £800,000, taking total provisions for the year for investment write downs and bad debts to approximately £1.1m. This also takes into account the reduction in stock market valuations of the quoted stocks which the Company holds. As a result, the net carrying value of the unquoted portfolio will be held on the Company’s books at a highly conservative valuation. After these provisions, the loss before tax for the full year is expected to be approximately £500,000.
In the final quarter of the financial year, the venture capital fund management business completed a total of nine investments, seven of which are follow-on into existing portfolio companies and two are new. The aggregate deal value was £4.3m including co-investors, with Sigma funds investing a total of £2.86m. Of the aggregate amount, £2.85m was invested in existing portfolio companies and £1.45m was placed in new investments. The investments made have further strengthened the balance sheets of these portfolio companies and increase the prospect of a positive investment outcome when more favourable market conditions return.
A significant development prior to the year end was the addition of £4.4m of capital from new Limited Partners to Sigma’s flagship venture capital fund, SSEF II. SSEF II carries a gross management fee of 2% per annum and is a ten year fund terminating in June 2017. In particular, we are delighted that a wholly owned subsidiary of EDP S.A., Portugal’s largest utility provider, is one of SSEF II’s new Limited Partners. The addition of these partners further strengthens Sigma’s profile in the Cleantech market and substantially enhances our resource for sourcing and qualifying deals. The new commitments also increase the Company’s contracted recurring revenue and enhance the visibility of earnings within the venture capital fund management subsidiary. Having removed in excess of 20% of overheads here during the year, the Directors estimate that approximately 90% of this business’s projected overhead in 2009 is now covered by recurring contracted revenue.
The Board has taken a prudent view of the management of the business and implemented the necessary changes to position the Company in the expectation of continuing challenging market conditions. Sigma’s balance sheet remains strong and while the economic backdrop is likely to remain tough in 2009, the Board believes that the Company is well placed to take advantage of any return to stability in the financial markets.
Enquiries
| Sigma Capital Group plc | Graham Barnet, Chief Executive | T: 0131 220 9444 |
| | Marilyn Cole, Finance Director | |
| | | |
| Biddicks | Katie Tzouliadis/ Sophie Lane | T: 020 7448 1000 |
| | | |
| Arbuthnot Securities | Tom Griffiths/ Neil Kirton | T: 020 7012 2000 |
| | | |
This information is provided by RNS
The company news service from the London Stock Exchange