8 Jan 2019 07:00
8 January 2019
AIM: SGM
Sigma Capital Group plc
("Sigma" or "the Company" or "the Group")
The Private Rented Sector ("PRS") and urban regeneration specialist
Trading Update
Sigma, the PRS, residential development and urban regeneration specialist, is pleased to provide a trading update for the financial year ended 31 December 2018.
Trading in the second half of the financial year, especially in the last quarter, was very strong, and the Board expects the Company's full year results to show a significant uplift in revenue and profitability over the prior year, with pre-tax profit slightly ahead of current market forecasts. Profit before tax is expected to be approximately £12.4m (a year-on-year increase of 205%) on revenue of approximately £12.5m.
These encouraging results partly reflect the strong macro-economic drivers underpinning the continuing successful growth of The PRS REIT plc ("PRS REIT"), the launch of which in May 2017 marked a significant milestone in the development of Sigma's business model. Sigma's subsidiary, Sigma PRS Management Limited ("Sigma PRS"), is Investment Adviser to the PRS REIT and the PRS REIT retains 'first access' rights to Sigma's PRS Platform.
Over the course of the second half, the Company made very good progress in driving the PRS REIT's expansion, including into new geographic regions. Together with its main PRS partner, Countryside Properties, Sigma secured 20 additional development sites for the PRS REIT in this period. Sigma also completed two self-financed PRS sites in the second half that were subsequently purchased by the PRS REIT for a total consideration of £22m. The Company has a further five self-financed sites under construction that are under contract to be purchased by the PRS REIT when completed and let. The sites are expected to deliver c. 280 PRS units for a GDC of c. £46.3m, and have estimated rental value ("ERV") of £2.85m p.a. Completion is expected over the course of 2019 and first half of 2020.
As at 31 December 2018, the total number of sites that are completed or Contracted* for the PRS REIT stood at 43 across six regions. These sites have a gross development cost of £530m and will deliver 3,575 new homes, with 798 homes completed at the year end, including homes under direct development by Sigma. The ERV of these homes is £33.2m.
By the year end, Sigma PRS had c. £900m of the PRS REIT's funding either deployed or Committed to deployment, including the £530m of completed or Contracted development referred to above. The Pipeline of development opportunity continues to grow, and now stands at around £1bn, all sourced through Sigma's PRS Platform.
Rental demand for family homes remains strong, helping to underpin yield targets, and management remains positive about growth prospects in 2019 and beyond. It is also investing to support the Company's ongoing growth over the coming year.
Results for the full year to 31 December 2018 are expected to be announced towards the end of April. It is also the Company's intention to propose a final dividend for the year, marking the start of a progressive dividend policy.
*DEFINITIONS
Contracted | refers to sites under construction (under a design & build contract), which have been purchased by the PRS REIT or the PRS REIT's Investment Adviser (forward sold to the PRS REIT). |
Committed | refers to development sites that have been approved or are under formal appraisal by the Investment Adviser, and where planning consent is being sought, and/or are in the process of being acquired. |
Pipeline | refers to sites that have been identified as being suitable for appraisal. These sites are typically sourced from Sigma's PRS Platform, and are typically under a Framework Agreement or Collaboration Agreement with a construction partner. |
Enquiries:
Sigma Capital Group plc | Graham Barnet, Chief Executive | T: 020 3178 6378 (today) | ||
Malcolm Briselden, Finance Director | T: 0333 999 9926 | |||
KTZ Communications | Katie Tzouliadis, Dan Mahoney | T: 020 3178 6378 | ||
N+1 Singer(NOMAD and Broker) | James Maxwell, James Moat, Ben Farrow | T: 020 7496 3000 |
NOTES TO EDITORS
About Sigma Capital Group plc (www.sigmacapital.co.uk)
Sigma Capital Group plc is a private rented sector, residential development, and urban regeneration specialist, with offices in Edinburgh, Manchester and London. Sigma's principal focus is on the delivery of large scale housing schemes 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. Its subsidiary, Sigma PRS Management Limited, is Investment Adviser to The PRS REIT plc.
About Sigma PRS Management Limited
Sigma PRS Management Limited is a wholly owned subsidiary of AIM-quoted Sigma Capital Group plc and is the Company's Investment Adviser. It sources investments and manages the assets of The PRS REIT plc and advises the Alternative Investment Fund Manager ("AIFM") and the PRS REIT on a day-to-day basis in accordance with the PRS REIT's Investment Policy. The Investment Adviser is an appointed representative (reference number: 776293) of the AIFM.
About The PRS REIT plc(www.theprsreit.com)
The PRS REIT is a closed-ended real estate investment trust established to invest in the Private Rented Sector and to provide shareholders with an attractive level of income together with the potential for capital and income growth. In its Initial Public Offering, on 31 May 2017, the Company raised £250m (gross) of equity capital, and, on 20 February 2018, raised a further £250m (gross) through an additional Placing. Both fundraisings were supported by the UK Government's Homes England, with direct investments totaling c. £30 million.