Sigma Capital Group plc
Annual Report & Financial Statements
For the year ended 31 December 2015
PRS & Urban Regeneration Specialists
Contents
Key Points
Chairman’s Statement
Strategic Report
Directors
Advisers
Directors’ Report
Directors’ Remuneration Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Comprehensive Income Statement
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and company Cash Flow Statements
Accounting Policies
Notes to the Financial Statements
Five Year Record
Proxy Form
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Company number 3942129
Sigma Capital Group plc
Annual Report & Financial Statements 2015
1
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
> Launch of self-funded PRS portfolio in Dec
of PRS activities
2015:
> 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
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
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Sigma Capital Group plc
Annual Report & Financial Statements 2015
Chairman’s Statement
“ 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 on 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.”
David Sigsworth
Chairman
Sigma Capital Group plc
Annual Report & Financial Statements 2015
3
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.
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Sigma Capital Group plc
Annual Report & Financial Statements 2015
Chairman’s Statement
continued
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 homes 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.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
5
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
18 April 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,
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Sigma Capital Group plc
Annual Report & Financial Statements 2015
Strategic Report
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.
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:
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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-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
Sigma Capital Group plc
Annual Report & Financial Statements 2015
7
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.
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Sigma Capital Group plc
Annual Report & Financial Statements 2015
Strategic Report
continued
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.
Residential Projects
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. 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.
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.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
9
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.
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.
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
10
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Strategic Report
continued
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 company.
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:
Revenue – all property activities
Operating profit – property activities
Unrealised (loss)/profit on revaluation of investments
Group operating profit
Cash balances
2015
£’000
6,698
2,544
(120)
1,818
25,135
2014
£’000
3,849
576
171
186
5,220
Change
+74%
+342%
(291)
+877%
+382%
Sigma Capital Group plc
Annual Report & Financial Statements 2015
11
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.
Sustainability report
Sustainability is firmly at the heart of the
planning and housing system, and Sigma
takes pride in working closely with our
partners and local housing associations
and communities to create sustainable,
high quality developments.
Sigma currently focuses on creating new
homes and communities in the PRS sector
in the North West of England. This has led
to significant contributions to GDP and
social prosperity in the region, not only
revitalizing neighbourhoods and creating
much needed homes but also creating new
jobs. Our contribution to increasing the
housing stock is also a key source of
revenue for the government and local
authorities.
We are pleased to report that we continue
to make good progress in achieving our
sustainability objectives and we look
forward to further developing our longer-
term vision in providing better
environments for our customers to live.
Signed by the order of the directors
GF Barnet
Chief Executive Officer
18 April 2016
12
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Directors
David Sigsworth OBE,
Non-executive Chairman (Age 69)
David spent over ten years as a main
board director of FTSE 100 utility
companies and most recently on the board
of Scottish and Southern Energy plc. David
is actively involved in the sustainable
energy sector and holds several
associated non-executive directorships.
Graham Barnet,
Chief Executive Officer (Age 52)
Graham co-founded Sigma Technology
Management Limited in 1997. A qualified
lawyer, Graham worked for Noble Grossart
Limited, Edinburgh Financial Trust Limited
and Shepherd & Wedderburn, specialising
in corporate finance and corporate law,
prior to forming his own company in 1994.
This company, Merchant Investments
Limited, was a specialist consultancy
involved in the management of businesses
both in the traditional and technology
sectors.
Graeme Hogg,
Chief Operating Officer (Age 50)
Graeme has worked in the property and
property finance sector throughout his
career. He has worked on major
commercial and residential development
projects and has seven years of
international experience in the areas of
property development and fund
management. Graeme co-founded Sigma
Inpartnership with Duncan Sutherland in
late 2000 and was instrumental in the
creation of its three regeneration
partnerships.
Malcolm Briselden, ACMA,
Finance Director and Company Secretary
(Age 48) (Appointed 1 January 2015)
William MacLeod,
Executive Director (Age 50)
(left 8 April 2016)
Malcolm is a chartered management
accountant who joined the company as
Group Financial Controller in April 2012.
Prior to Sigma, Malcolm spent nine years at
The Premier Property Group Limited, the
commercial property arm of Murray
International Holdings Limited.
Gwynn Thomson, RICS,
Property Investment Director (Age 48)
Gwynn has over 22 years’ experience in
the property markets with his particular
specialism being in commercial property
investment. Prior to joining Sigma, Gwynn
was a director of investment and valuation
at DTZ.
Duncan Sutherland,
Regeneration Director (Age 64)
Duncan co-founded Sigma Inpartnership
with Graeme Hogg in 2000 and has been
key in developing the partnership model
with local government partners. Duncan
works closely with government promoting
this innovative approach to achieving
regeneration. Duncan is also a Non-
Executive Director of High Speed Two
(HS2) Limited.
Bill has over 25 years’ experience of
property investment, including real estate
investment management. Previous
positions include Managing Director at
Cushman & Wakefield Investors and
Director at ING Real Estate Investment
Management. Based in London, Bill is also
Managing Director of Torrin Asset
Management, his own management
business.
James McMahon,
Non-executive Director (Age 67)
Jim is a former senior partner in
PricewaterhouseCoopers and was a
founder partner of West Coast Capital with
Sir Tom Hunter in 2001. He has many
years’ experience in private equity, retail
and public companies including Office
Shoes, Booker plc, House of Fraser and
Prestbury Group.
The two non-executive Directors are the
members of the Audit Committee and the
Remuneration Committee. James
McMahon is chairman of the Audit
Committee and David Sigsworth is
chairman of the Remuneration Committee.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
13
Advisers
Registrars
Capita IRG plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Secretary and registered office
Malcolm Briselden, ACMA
3rd Floor
1 St Ann Street
Manchester
M2 7LR
Auditor
Moore Stephens LLP
150 Aldersgate Street
London
EC1A 4AB
Trading address
41 Charlotte Square
Edinburgh
EH2 4HQ
Nominated Adviser and Broker
Nplus1 Singer Capital Markets Limited
One Bartholomew Lane
London EC2N 2AX
Financial PR
KTZ Communications
No. 1 Cornhill
London EC3V 3ND
14
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Directors’ Report
The Directors present their annual report on
the affairs of the Group, together with the
audited financial statements and auditor’s
report, for the year ended 31 December
2015.
Results and dividends
The Group made a net profit before tax for
the year of £2,137,000 (2014: £214,000).
The directors do not recommend the
payment of a dividend (2014: nil). The
directors are confident of the prospects of
the Group for the current year.
Review of the business and future
developments
The Directors are required to present an
extended business review reporting on the
development and performance of the
Group and the Company during the year
and their positions at the end of the year.
This requirement is met by the Chairman’s
Statement and the Strategic Report on
pages 2 to 11.
Directors
The current Directors of the Company are
listed on page 12, all of whom held office
throughout the year except where indicated
otherwise. Details of Directors’ interests in
share options and in shares are given in
the Directors’ Remuneration Report on
pages 16 and 17.
Risk factors
Information on the Group’s financial risk
management objectives and policies
relating to market risk, credit risk and
liquidity risk is provided in note 1 to the
financial statements. The broader risks of
the business are considered in the
Strategic Report.
Treasury activities and financial
instruments
The Group’s financial instruments comprise
cash, equity investments plus other items
such as trade debtors and trade creditors
that arise directly from its operations. At 31
December 2015, the Group had positive
cash balances of £25,135,000 (2014:
£5,220,000).
The Group’s policy is to keep surplus funds
on short term and instant access deposit to
earn the prevailing market rate of interest.
The Group’s policy is only to borrow funds
if such funds are needed to develop
specific assets in which case the loan is
secured against that asset and is held
within the subsidiary company undertaking
the development. The Group does not give
cross guarantees from other companies
within the Group.
It is the Group’s policy not to speculate in
derivative financial instruments. The
Company is not exposed to significant
foreign exchange risks as transactions in
foreign currency are minimal.
Directors’ indemnity insurance
The Group held a Directors and Officers
insurance policy in place throughout the
year in respect of the Company and the
Group’s subsidiaries.
Political donations
No political contributions were made during
the year (2014: £nil).
Going concern
During the current year the Group raised
£20,000,000 gross from a placing of the
Company’s shares and had a bank
balance of £25,135,000 at the end of the
year, therefore has considerable financial
resources for the size of its current
business activities.
The income generated by the Group’s PRS
activities, regeneration partnerships and
other property activities comprises both
contracted revenue and one-off income
streams. As a consequence, the Directors
believe that the Group is well placed to
manage its business risks successfully.
After making enquiries, the Directors have
a reasonable expectation that the
Company and the Group have adequate
resources to continue in operational
existence for the foreseeable future.
Accordingly, they continue to adopt the
going concern basis in preparing the
annual report and financial statements.
Corporate governance
The Company does not fully comply with
the UK Corporate Governance Code as it is
not required to do so but seeks within the
practical confines of being a small
company to act in compliance with the
principles of good governance and the
code of best practice as contained therein.
The Board meets regularly to determine the
policy and business strategy of the Group
and has adopted a schedule of matters
that are reserved as the responsibility of the
Board. The Chief Executive Officer leads
the development of business strategies
within the Group’s operations. The Board
consists of five executive Directors and two
non-executive Directors. The Board
Sigma Capital Group plc
Annual Report & Financial Statements 2015
15
Auditor
Chantrey Vellacott DFK LLP were originally
appointed as auditors. On 30 April 2015
Chantrey Vellacott DFK LLP merged its
practice with Moore Stephens LLP and
resigned as auditors with effect from that
date. Moore Stephens LLP were appointed
auditor with effect from that date and a
resolution to re-appoint Moore Stephens
LLP as auditor will be proposed at the
Annual General Meeting.
By order of the Board
Malcolm Briselden, ACMA
Company Secretary
18 April 2016
considers that there is an appropriate
balance between the executives and non-
executives and that no individual or small
group dominates the Board decision
making. The Board’s members have a wide
range of expertise and experience and it is
felt that concerns may be addressed to the
non-executive Chairman.
The Board has delegated certain
authorities to committees, each with formal
terms of reference. The whole Board acts
as a Nomination Committee.
The non-executive Directors are the
members of the Audit Committee. It meets
at least twice a year to consider the scope
of the annual audit, interim financial
statements and to assess the effectiveness
of the Group’s system of internal controls.
Given the size of the Group, the Audit
Committee considers an internal audit
function is not currently justified. The Audit
Committee is chaired by James McMahon.
The non-executive Directors are the
members of the Remuneration Committee.
It meets at least once a year to determine
Company policy on senior executive
remuneration, to make detailed
recommendations to the Board regarding
the remuneration packages of the
executive Directors and to consider awards
under the Group’s option schemes and
carried interest arrangements. The Chief
Executive Officer is consulted on
remuneration packages and policy but
does not attend discussions regarding his
own package. The remuneration and terms
and conditions of the appointment of non-
executive Directors are determined by the
Board. The Remuneration Committee is
chaired by David Sigsworth.
The Board has considered mechanisms by
which the business and the financial risks
facing the Group are managed and
reported to the Board. The principal
business and financial risks have been
identified and the control procedures that
are in place to manage those risks have
been documented. This document is
subject to review by the Board and is
updated on a regular basis. The Board
acknowledges its responsibility for
reviewing the effectiveness of the systems
that are in place to manage risk and to
provide reasonable but not absolute
assurance with regard to the safeguarding
of the Group’s assets against misstatement
or loss.
The key elements of the system of internal
control are:
> Clear definition of delegated authorities
and preparation of annual budgets for
Board approval.
> Close involvement of senior
management in the day to day
business of the Group.
> Regular reporting of business
performance to the Board and the
review of results against budget.
Awareness of relevant audit information
At the date of this report and insofar as
each of the Directors is aware:
> There is no relevant audit information of
which the auditor is unaware.
> The Directors have taken all steps they
ought to have taken to make
themselves aware of any relevant audit
information and to establish that the
auditor is aware of that information.
16
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Directors’ Remuneration Report
Directors’ remuneration
The two non-executive Directors comprise
the members of the Remuneration
Committee. David Sigsworth chairs the
committee. The Remuneration Committee
decides the remuneration policy that
applies to executive Directors.
Salaries and benefits
The Remuneration Committee meets at
least once a year in order to consider and
set the remuneration packages for
executive Directors. The remuneration
packages are benchmarked to ensure
comparability with companies of a similar
size and complexity. Remuneration
comprises basic salary and, for most
directors, pension contributions to the
Director’s personal pension scheme, and
benefits in kind. In addition, certain
directors are paid a car allowance or
receive a contribution to their travel
expenses. Remuneration also includes
share options and carried interest as
detailed below. An analysis of
remuneration by Director is given in note 7
of these financial statements.
Contracts of service
G Barnet has a one-year rolling service
agreement with the Company. The other
executive Directors have service
agreements with a three-month notice
period.
Directors’ interests – interests in share
options
Details of options held by Directors who
were in office at 31 December 2015 are set
out below.
Director
GF Barnet
GF Barnet
GF Barnet
M Briselden
M Briselden
M Briselden
G Hogg
G Hogg
G Hogg
G Hogg
W MacLeod
D Sigsworth
D Sutherland
D Sutherland
D Sutherland
G Thomson
G Thomson
G Thomson
G Thomson
Date of
grant
28.11.13
19.11.14
05.01.16
28.11.13
19.11.14
05.01.16
29.07.11
28.11.13
19.11.14
05.01.16
28.11.13
30.04.08
29.07.11
28.11.13
19.11.14
05.05.11
28.11.13
19.11.14
05.01.16
Number
Exercise price
Exercise date
Expiry date
114,286
250,000
400,000
50,000
174,816
250,000
250,000
82,857
264,503
400,000
114,286
100,000
119,500
42,857
64,503
250,000
38,095
200,000
250,000
26.25p
68.00p
93.50p
26.25p
68.00p
93.50p
7.50p
26.25p
68.00p
93.50p
26.25p
25.00p
7.50p
26.25p
68.00p
8.00p
26.25p
68.00p
93.50p
28.11.16 – 27.11.23
19.11.17 – 18.11.24
05.01.19 – 04.01.26
28.11.16 – 27.11.23
19.11.17 – 18.11.24
05.01.19 – 04.01.26
29.07.14 – 28.07.21
28.11.16 – 27.11.23
19.11.17 – 18.11.24
05.01.19 – 04.01.26
28.11.16 – 27.11.23
30.04.08 – 29.04.18
29.07.14 – 28.07.21
28.11.16 – 27.11.23
19.11.17 – 18.11.24
05.05.14 – 04.05.21
28.11.16 – 27.11.23
19.11.17 – 18.11.24
05.01.19 – 04.01.26
27.11.23
18.11.24
04.01.26
27.11.23
18.11.24
04.01.26
28.07.21
27.11.23
18.11.24
04.01.26
27.11.23
29.04.18
28.07.21
27.11.23
18.11.24
04.05.21
27.11.23
18.11.24
04.01.26
Sigma Capital Group plc
Annual Report & Financial Statements 2015
17
During the year D Sutherland exercised an
option over 12,000 shares at 7.50p per
share, following which were transferred to
his self-invested pension scheme. Details
of the Company’s option schemes are set
out in note 20 to the financial statements.
The market price of the Company’s shares
at 31 December 2015 was 94.5p. The
range of market prices during the year was
53.5p to 95.5p.
Subject to certain performance conditions,
four of the directors may be entitled to a
share of the total carried interest which
could arise from an exit in respect of the
Group’s investment in the PRS joint venture
with UK PRS Properties. As the second
phase only commenced in December 2015,
the value attributable to this carried interest
is currently unknown. The total entitlement
to the directors is split in the following
proportions:
Company at a price of 75p per share. On
the 16th September 2015, Duncan
Sutherland exercised options over 12,000
ordinary shares of 1p each and transferred
them to his self-invested personal pension
of which he is trustee and sole beneficiary.
Pension fund holdings are included in the
Directors’ interests shown above. There
were no dealings in the Company’s shares
by any of the Directors between 31
December 2015 and 18 April 2016.
D Sigsworth OBE
Chairman
18 April 2016
Carried interest arrangements
Two of the Directors have been allocated a
share of the carried interest assigned to
Sigma arising from the historic venture
funds. Current estimates are that no value
is attributable to this carried interest.
Subject to certain performance conditions,
four of the Directors may be entitled to a
share of the total carried interest which
could arise from an exit in respect of the
Group’s investment in the PRS joint venture
with Gatehouse.
Based on the methodology used to
recognise a portion of the carried interest
as Group revenue, the value of the total
entitlement would be £781,000. This
amount is dependent upon the actual
outcome of the project and is not
contractually due to the directors unless
there is an exit in respect of Sigma’s
investment which is not expected to be
until 2018 at the earliest. The total
entitlement to the directors is split in the
following proportions:
GF Barnet
GR Hogg
G Thomson
D Sutherland
8.50%
8.50%
5.00%
3.00%
GF Barnet
GR Hogg
G Thomson
M Briselden
7.50%
7.50%
2.50%
2.25%
Directors’ interests - interests in shares
Directors in office at 31 December 2015
had the following interests in the ordinary
shares of 1p each of the Company:
2015
Number
2014
Number
GF Barnet
7,548,237
7,548,237
M Briselden
GR Hogg
W MacLeod
D Sigsworth
G Thomson
D Sutherland
61,600
536,496
766,000
545,304
142,857
145,299
61,600
536,496
766,000
411,971
142,857
133,299
All of the above interests are beneficial
except for 735,000 shares (2014: 735,000
shares) held by Graham Barnet as trustee
for two of his children. On the 16th March
2016, the shares are no longer included in
the beneficial interest of Graham Barnet
under the terms of those trusts. On the 12th
August 2015, David Sigsworth purchased
133,333 ordinary shares of 1p each in the
18
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Statement of Directors’ Responsibilities
The Directors are responsible for preparing
the annual report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law, the Directors
have prepared the Group and Parent
Company financial statements in
accordance with International Financial
Reporting Standards as adopted by the
European Union. Under company law, the
Directors must not approve the financial
statements unless they are satisfied that
they give a true and fair view of the state of
affairs of the Company and the Group and
of the profit or loss of the Group for that
period.
In preparing those financial statements, the
Directors are required to:
> select suitable accounting policies and
then apply them consistently;
> present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable,
understandable information;
> provide additional disclosures when
compliance with the specific
requirements in IFRSs are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s financial
position and financial performance; and
> prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the
Group will continue in business.
The Directors are responsible for keeping
adequate accounting records sufficient to
show and explain company transactions
and which disclose with reasonable
accuracy at any time the financial position
of the Company and the Group and to
enable them to ensure that the financial
statements comply with the Companies Act
2006. They are also responsible for
safeguarding the assets of the Company
and the Group and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of financial statements
may differ from legislation in other
jurisdictions.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
19
Independent Auditor’s Report
to the Shareholders of Sigma Capital Group plc
We have audited the financial statements of
Sigma Capital Group plc for the year ended
31 December 2015 which comprise the
Consolidated Comprehensive Income
Statement, the Consolidated and Parent
Company Balance Sheets, the Consolidated
and Parent Company Statements of
Changes in Equity, the Consolidated and
Parent Company Cash Flow Statements and
the related notes. The financial reporting
framework that has been applied in their
preparation is applicable law and
International Financial Reporting Standards
(IFRSs) as adopted by the European Union
and as regards the parent company
financial statements, as applied in
accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken
so that we might state to the Company’s
members those matters we are required to
state to them in an auditor’s report and for
no other purpose. To the fullest extent
permitted by law, we do not accept or
assume responsibility to anyone other than
the Company and the Company’s members
as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors
and auditor
As explained more fully in the Directors’
Responsibilities Statement, the directors
are responsible for the preparation of the
financial statements and for being satisfied
that they give a true and fair view. Our
responsibility is to audit and express an
opinion on the financial statements in
accordance with applicable law and
International Standards on Auditing (UK
and Ireland). Those standards require us to
comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
Scope of the audit of the financial
statements
An audit involves obtaining evidence about
the amounts and disclosures in the
financial statements sufficient to give
reasonable assurance that the financial
statements are free from material
misstatement, whether caused by fraud or
error. This includes an assessment of:
whether the accounting policies are
appropriate to the group’s and the parent
company’s circumstances and have been
consistently applied and adequately
disclosed; the reasonableness of
significant accounting estimates made by
the directors; and the overall presentation
of the financial statements. In addition, we
read all of the financial and non-financial
information in the Annual Report to identify
material inconsistencies with the audited
financial statements and to identify any
information that is apparently materially
incorrect based on, or materially
inconsistent with, the knowledge acquired
by us in the course of performing the audit.
If we become aware of any apparent
material misstatements or inconsistencies,
we consider the implications for our report.
Opinion on financial statements
In our opinion:
> the financial statements give a true and
fair view of the state of the group’s and
of the parent company’s affairs as at 31
December 2015 and of the group’s
profit for the year then ended;
> the group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
> the parent company financial statements
have been properly prepared in
accordance with IFRSs as adopted by
the European Union and as applied in
accordance with the provisions of the
Companies Act 2006; and
> the financial statements have been
prepared in accordance with the
requirements of the Companies Act 2006.
Opinion on other matters prescribed by
the Companies Act 2006
In our opinion the information given in the
Strategic Report and Directors’ Report for
the financial year for which the financial
statements are prepared is consistent with
the financial statements.
Matters on which we are required to
report by exception
We have nothing to report in respect of the
following matters where the Companies Act
2006 requires us to report to you if, in our
opinion:
> adequate accounting records have not
been kept by the parent company, or
returns adequate for our audit have not
been received from branches not
visited by us; or
> the parent company financial
statements are not in agreement with
the accounting records and returns; or
> certain disclosures of directors’
remuneration specified by law are not
made; or
> we have not received all the information
and explanations we require for our
audit.
Neil Tustian
(Senior Statutory Auditor)
for and on behalf of Moore Stephens LLP
Chartered Accountants and Statutory
Auditor
150 Aldersgate Street
London
EC1A 4AB
18 April 2016
20
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Consolidated Comprehensive Income Statement
for the year ended 31 December 2015
2015 2014
Notes £’000 £’000
Revenue 3 6,724 3,868
Cost of sales 4 (1,621) (660)
Gross profit 5,103 3,208
Realised loss on disposal of equity investments - (1)
Unrealised (loss)/profit on the revaluation of investments 14 (120) 171
Administrative expenses 5 (3,165) (3,192)
Profit from operations 1,818 186
Finance income 6 319 28
Profit before tax 2,137 214
Taxation 8 (192) -
Profit for the year 1,945 214
Profit per share attributable to the equity holders of the Company:
Basic profit per share 9 2.76p 0.38p
Diluted profit per share 9 2.72p 0.37p
There were no other comprehensive incomes or losses in either year other than those included in the comprehensive income statement.
The accompanying notes are an integral part of this consolidated comprehensive income statement. The Company has elected to take
the exemption under section 408 of the Companies Act 2006 to not present the Company income statement. The loss for the Company
for the year was £542,000 (2014: £338,000).
Sigma Capital Group plc
Annual Report & Financial Statements 2015
21
Consolidated Balance Sheet
at 31 December 2015
2015 2014
Notes £’000 £’000
Assets
Non-current assets
Goodwill and other intangibles 10 561 579
Property and equipment 11 33 18
Fixed asset investments 13 2 -
Financial assets at fair value through profit and loss 14 553 673
Trade and other receivables 16 4,069 2,055
5,218 3,325
Current assets
Stocks 15 509 -
Trade receivables 16 1,020 178
Other current assets 16 3,250 2,829
Cash and cash equivalents 25,135 5,220
29,914 8,227
Total assets 35,132 11,552
Liabilities
Current liabilities
Trade and other payables 17 3,134 932
Deferred tax liability 18 192 -
Total liabilities 3,326 932
Net assets 31,806 10,620
Equity
Called up share capital 19 885 612
Share premium account 19 31,833 12,952
Capital redemption reserve 34 34
Merger reserve (249) (249)
Capital reserve (7) (7)
Retained earnings (690) (2,722)
Equity attributable to equity holders of the Company 31,806 10,620
The accompanying notes are an integral part of this consolidated balance sheet.
22
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Company Balance Sheet
at 31 December 2015
2015 2014
Notes £’000 £’000
Assets
Non-current assets
Property and equipment 10 - 1
Investment in subsidiaries 12 2,921 2,921
Trade and other receivables 16 3,179 154
6,100 3,076
Current assets
Trade receivables 16 500 5,157
Other current assets 16 96 56
Cash and cash equivalents 23,562 3,018
24,158 8,231
Total assets 30,258 11,307
Liabilities
Current liabilities
Trade and other payables 17 1,592 1,340
Total liabilities 1,592 1,340
Net assets 28,666 9,967
Equity
Called up share capital 19 885 612
Share premium account 19 31,833 12,952
Capital redemption reserve 34 34
Retained earnings (4,086) (3,631)
Total equity 28,666 9,967
The accompanying notes are an integral part of this balance sheet.
The financial statements on pages 20 to 45 were approved by the Board of Directors and authorised for issue on 18 April 2016 and were
signed on its behalf by:
GF Barnet
Chief Executive Officer
18 April 2016
Registered number 3942129
Sigma Capital Group plc
Annual Report & Financial Statements 2015
23
Consolidated Statement of Changes in Equity
for the year ended 31 December 2015
Share Capital
Share premium redemption Merger Capital Retained
capital account reserve reserve reserve earnings Total equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2014 483 5,334 34 (249) (7) (2,959) 2,636
Issue of shares 129 7,995 - - - - 8,124
Cost of share issue - (377) - - - - (377)
Profit for the year - - - - - 214 214
Share-based payments - - - - - 23 23
At 31 December 2014 612 12,952 34 (249) (7) (2,722) 10,620
Issue of shares 273 19,783 - - - - 20,056
Cost of share issue - (902) - - - - (902)
Profit for the year - - - - - 1,945 1,945
Share-based payments - - - - - 87 87
At 31 December 2015 885 31,833 34 (249) (7) (690) 31,806
24
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Company Statement of Changes in Equity
for the year ended 31 December 2015
Share Capital
Share premium redemption Retained
capital account reserve earnings Total equity
£’000 £’000 £’000 £’000 £’000
At 1 January 2014 483 5,334 34 (3,316) 2,535
Issue of shares 129 7,995 - - 8,124
Cost of share issue - (377) - - (377)
Loss for the year - - - (338) (338)
Share-based payments - - - 23 23
At 31 December 2014 612 12,952 34 (3,631) 9,967
Issue of Shares 273 19,783 - - 20,056
Cost of share issue - (902) - - (902)
Loss for the year - - - (542) (542)
Share-based payments - - - 87 87
At 31 December 2015 885 31,833 34 (4,086) 28,666
Sigma Capital Group plc
Annual Report & Financial Statements 2015
25
Consolidated and Company Cash Flow Statements
for the year ended 31 December 2015
Group Group Company Company
2015 2014 2015 2014
Notes £’000 £’000 £’000 £’000
Cash flows from operating activities
Cash (used in)/received from operations 23 (995) (131) 1,351 (4,955)
Net cash used in operating activities (995) (131) 1,351 (4,955)
Cash flows from investing activities
Purchase of property and equipment (25) (12) - -
Purchase of financial assets at fair value through profit and loss - (1) - -
Disposal of financial assets at fair value through profit and loss - 19 - -
Repayment of/(loans to) PRS Fund 1,741 (3,500) - -
Fixed asset investments (2) - - -
Interest received and other financial income 42 28 39 18
Net cash generated from/(invested in) investing activities 1,756 (3,466) 39 18
Cash flows from financing activities
Issue of shares 19,154 7,747 19,154 7,747
Net cash generated from financing activities 19,154 7,747 19,154 7,747
Net increase in cash and cash equivalents 19,915 4,150 20,544 2,810
Cash and cash equivalents at beginning of year 5,220 1,070 3,018 208
Cash and cash equivalents at end of year 25,135 5,220 23,562 3,018
The accompanying notes are an integral part of this cash flow statement.
26
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Accounting Policies
for the year ended 31 December 2015
The principal accounting policies are
summarised below. They have all been
applied consistently throughout the year
and the preceding year.
Basis of accounting
The financial statements have been
prepared on a going concern basis. The
business model of the Group together with
the principal risks and uncertainties are set
out in the Strategic Report and the Group’s
financial risk management is covered in
note 1. The progress of the Group since the
balance sheet date is described in the
Chairman’s Statement and Strategic
Report. During the year the Group raised
£20,000,000 gross from a placing of the
Company’s shares and had a bank
balance of £25,135,000 at the end of the
year, therefore has considerable financial
resources for the size of its current
business activities.
The financial statements of the Group have
been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted for use in the European
Union. The Company has prepared its
financial statements in accordance with
IFRS as adopted for use in the European
Union and as applied in compliance with
the provisions of the Companies Act 2006.
The financial statements have been
prepared on the historical cost basis,
except where IFRS requires an alternative
treatment. The principal variations from
historical cost relate to financial instruments
(IAS 39).
Adoption of new and revised standards
The accounting policies applied are the
same as those applied in the financial
statements for the year ended 31
December 2014. New standards
introduced during the period had no
material impact on the results or net assets
of the Company or Group.
The directors anticipate that the adoption of
those standard and interpretations which,
at the date of authorisation of these
financial statements, were in issue but not
yet effective will have little or no impact on
the financial statements when they come
into effect other than the following with
effective date (periods commencing on or
after) 1 January 2018:
> IFRS 9 Financial Instruments; and
> IFRS 15 Revenue from Contracts with
Customers
The impact of the adoption of these
standards and interpretations on the
Group’s financial statements in the period
of initial application has not been
quantified, but is not expected to be
material.
Basis of consolidation
The Group financial statements consolidate
the financial statements of Sigma and its
subsidiary undertakings. The Group has
taken advantage of the exemption under
IFRS 1 First-time Adoption of International
Financial Reporting Standards not to adopt
IFRS 3 retrospectively and hence has used
merger accounting for STM which was first
consolidated into the Group in 2000. All
other subsidiary undertakings are
consolidated using acquisition accounting
from the date of acquisition.
Under acquisition accounting, the cost of
an acquisition is measured as the fair value
of the assets given, equity instruments
issued and liabilities incurred or assumed
at the date of exchange. Identifiable assets
acquired and liabilities and contingent
liabilities assumed in a business
combination are measured initially at their
fair values at the acquisition date. The
excess of the cost of acquisition over the
fair value of the Group’s share of the
identifiable net assets acquired is recorded
as goodwill. The direct costs of acquisition
are recognised immediately as an
expense.
The Group has an interest in three limited
partnerships which undertake property
regeneration, the North Solihull Partnership,
the Salford Partnership and the Liverpool
Partnership (together “the Partnerships”).
The Group has a 49.805% share of any
profits that might arise in the North Solihull
Partnership through its 25% holding in the
General Partner of this partnership and
through a wholly owned subsidiary which
acts as a limited partner. The Group has a
32.99% share of any profits that might arise
in the Salford Partnership through its 25%
holding in the General Partner of this
partnership, through a wholly owned
subsidiary which acts as a limited partner
and through three other wholly owned
subsidiaries. The Group has a 0.01% share
of any profits that might arise in the
Liverpool Partnership through a wholly
owned subsidiary. The Directors consider
that the Group neither exercises control nor
has the potential to control the Partnerships
and acts in a commercial capacity as
project manager, development manager
and developer of the underlying projects
undertaken by the Partnerships.
The Group has a 25.1% interest in
Countryside Sigma Limited (“CSL”) a
residential housing developer also
engaged in the sourcing and provision of
affordable housing for housing associations
and other registered social landlords. The
Group earns profits on residential
Sigma Capital Group plc
Annual Report & Financial Statements 2015
27
developments depending on the size of
each development. The Directors consider
that the Group neither exercises control nor
has the potential to control CSL. As at the
31 December 2015, the net assets of CSL
were immaterial and have therefore not
been recognised in these financial
statements.
The Group has a 20.1% interest in Thistle
Limited Partnership (“TLP”), its PRS joint
venture with Gatehouse. The Group will
retain a share of the net disposal profits on
the assets, subject to a minimum return to
investors. The Group made a loan of £2m
to TLP in the prior year of which £1.7m was
repaid during the current year. The balance
may be converted to equity conditional on
final construction costs of the initial
investments The Directors consider that the
Group neither exercises control nor has the
potential to control TLP and acts in a
commercial capacity as development and
asset manager.
The Group also has a 20% interest in UK
PRS (Jersey) I LP in relation to its PRS joint
venture with UK PRS Properties. The Group
will retain a share of net disposal profits on
the assets, subject to a minimum return to
investors. The Directors consider that the
Group neither exercises control nor has the
potential to control UK PRS (Jersey) I LP
and acts in a commercial capacity as
development and asset manager.
Segmental reporting
The Directors regard the Group’s
reportable segments of business to be
property, venture capital fund investment
and holding company activities. The
business operates in a single region the
UK. Costs are allocated to the appropriate
segment as they arise with central
overheads apportioned on a reasonable
basis.
Intangible assets
Goodwill
Goodwill arising on consolidation
represents the excess of the cost of
acquisition over the Group’s interest in the
fair value of the identifiable assets and
liabilities of a subsidiary at the date of
acquisition. Goodwill is recognised as an
asset and reviewed for impairment
annually. For the purposes of assessing
impairment, assets are grouped in to cash
generating units (CGU) being the lowest
levels for which there are separately
identifiable cash flows. Any impairment is
recognised immediately in the income
statement and is not subsequently
reversed. When the Group disposes of an
interest in a subsidiary, the value of
goodwill is reduced by the proportion that
relates to the interest being disposed of.
Property and equipment
Property and equipment are stated at cost
less depreciation and any provision for
impairment.
Depreciation
Depreciation is provided at rates
calculated to write off the cost less
estimated residual value of each asset on a
straight-line basis over its expected useful
life. The rates of depreciation are as
follows:
Leasehold improvements
over the term of the lease
Fixtures and office equipment
25% per annum
Computer equipment
33-50% per annum
Acquired intangible assets
Stocks and work in progress
Intangible assets are recognised on
business combinations if they are
separable from the acquired entity or give
rise to other contractual/legal rights. The
amounts ascribed to such intangibles are
arrived at by using appropriate valuation
techniques.
The significant intangibles recognised by
the Group, their useful economic lives and
the methods used to determine the cost of
intangibles acquired in a business
combination are as follows:
Intangible
asset
Useful
economic life
Valuation
method
Customer
relationships
Remaining
period of contract
Multi-Period
Earnings Method
Development properties and land held for
development and/or resale are valued at
the lower cost and net realisable value.
Work in progress on development
properties is valued at the cost of labour
and materials plus interest incurred on
borrowings for development expenditure
until the date of practical completion.
Net realisable values are based on
directors’ assessments of the projected net
sales proceeds for each property or plot of
land. The key assumptions in assessing
these values take into account the current
and projected rental levels, anticipated
property investment yields at the projected
date of sale and underlying capital values.
As the property values can be heavily
influenced by variances in these
assumptions over time the directors’
assessment of valuation assumes that
properties can be held for a longer period
where the net realisable value cannot be
achieved in the short term.
28
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Accounting Policies
continued
Financial instruments
Financial assets and financial liabilities are
recognised on the Group’s balance sheet
when the Group becomes a party to the
contractual provisions of the instrument.
Trade and other receivables
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost using the effective interest
method, less provision for impairment. A
provision for impairment is established
when there is objective evidence that the
Group will not be able to collect all
amounts due. The amount of the provision
is the difference between the asset’s
carrying amount and the present value of
estimated future cash flows, discounted at
the effective interest rate. The movement in
the provision is recognised in the
comprehensive income statement.
Cash
Cash and cash equivalents comprise cash
at bank and in hand.
Investments
Investments represent the Group’s interest
in the equity value of one unquoted stock
and one venture capital fund managed by
a third party.
Investments are classified as financial
assets at fair value through profit or loss
and are initially measured at cost.
Subsequent measurement is at fair value.
The fair value of the unquoted stock is
established using International Private
Equity and Venture Capital Valuation
Guidelines. The fair value of the
investments in the venture capital fund is
based on the net asset value of the fund at
the Company’s year end as reported by the
independent fund manager where the
Board believes that this is materially
equivalent to fair value. The fund manager
undertakes a full fair value assessment of
the investments held by the venture capital
funds using valuation methodologies in line
with British Venture Capital Association
guidelines.
Investments classified as “financial assets
at fair value through profit or loss” are
recognised as non-current assets.
Investment in subsidiary companies is
stated at cost less provision for any
impairment in value.
Trade payables
Trade payables are not interest bearing
and are stated at their amortised cost.
Equity instruments
Equity instruments issued by the Company
are recorded at the proceeds received, net
of direct issue costs.
Current and deferred tax
The charge for current tax is based on the
results for the year as adjusted for items
which are non-assessable or disallowed. It
is calculated using rates that have been
enacted or substantively enacted by the
balance sheet date.
Deferred tax is accounted for using the
balance sheet liability method in respect of
temporary differences arising from
differences between the carrying amount of
assets and liabilities in the financial
statements and the corresponding tax
basis used in the computation of taxable
profit. In principle, deferred tax liabilities
are recognised for all taxable temporary
differences and deferred tax assets are
recognised to the extent that it is probable
that taxable profits will be available against
which deductible temporary differences
can be recognised. Such assets and
liabilities are not recognised if the
temporary difference arises from goodwill
or from the initial recognition (other than in
a business combination) of other assets
and liabilities in a transaction which affects
neither the tax profit nor the accounting
profit.
Deferred tax is calculated at the rates that
are expected to apply when the asset or
liability is settled. Deferred tax is charged
or credited in the income statement, except
when it relates to items credited or charged
directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset
when they relate to income taxes levied by
the same taxation authority and the Group
intends to settle its current tax assets and
liabilities on a net basis.
Share-based payments
The Group issues equity-settled share-
based payments to certain employees.
Equity-settled share-based payments are
measured at fair value (excluding the effect
of non-market based vesting conditions) at
the date of grant. The fair value determined
at the grant date of the equity-settled
share-based payments is expensed on a
straight-line basis over the vesting period,
based on the Group’s estimate of shares or
options that will eventually vest.
Fair value is measured using the Black
Scholes-Merton pricing model. The
expected life used in the model has been
adjusted, based on management’s best
estimate, for the effects of non-
transferability, exercise restrictions, and
behavioural considerations.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
29
carrying amount of the asset (cash-
generating unit) is reduced to its
recoverable amount. Impairment losses are
recognised as an expense immediately.
Where an impairment loss subsequently
reverses, the carrying amount of the asset
(cash-generating unit) is increased to the
revised estimate of its recoverable amount,
but so that the increased carrying amount
does not exceed the carrying amount that
would have been determined had no
impairment loss been recognised for the
asset (cash-generating unit) in prior years.
Impairment losses relating to goodwill are
not reversed.
Revenue recognition
Operating leases
Fees for services provided by the Group
are measured at the fair value of the
consideration received or receivable, net of
value added tax.
Amounts due under operating leases are
charged to the income statement in equal
annual instalments over the period of the
lease.
Property project management fees are
recognised when the service is provided.
Income arising from profit share
arrangements is recognised when the
amount of profit can be reliably estimated
but discounted to reflect when the amount
will actually be received. The profit share
estimate is reviewed on a quarterly basis.
Development management fees are
recognised on a pro-rata basis over the
development period. Transaction fees and
other fees for corporate finance work are
recognised when the service is provided
subject to completion of the respective
transaction being virtually certain. Carried
interest is recognised over the initial period
of the project but discounted to reflect
when the amount will actually be received
and is reviewed on a quarterly basis.
Revenue recognised in advance of
invoicing is shown as accrued income
within debtors.
Revenue from property development is
recognised as appropriate in accordance
with IAS 18 or IAS 11, with reference to
IFRIC 15, dependent upon the
circumstances specific to each contract.
Where the substance of a contract meets
the definition of a construction contract,
revenue is accrued and development costs
charged to the income statement in
proportion to the stage of completion of the
project in accordance with IAS 11. Where
the substance of the contract does not
meet the definition of a construction
contract, revenue is recognised as the
services are provided in accordance with
IAS 18.
Retirement benefit costs
The Group operates a defined contribution
retirement benefit scheme. The amount
charged to the income statement in respect
of retirement benefit costs are the
contributions payable in the year.
Differences between contributions payable
in the year and contributions actually paid
are shown as either prepayments or
accruals in the balance sheet.
Impairment
At each balance sheet date, the Group
reviews the carrying amounts of its
property and equipment and intangible
assets with finite lives to determine whether
there is any indication that those assets
have suffered an impairment loss. If any
such indication exists, the recoverable
amount of the asset is estimated in order to
determine the extent of the impairment
loss. Where it is not possible to estimate the
recoverable amount of an individual asset,
the Group estimates the recoverable
amount of the cash-generating unit to
which the asset belongs.
Goodwill arising on acquisition is allocated
to cash-generating units. The recoverable
amount of the cash-generating unit to
which goodwill has been allocated is tested
for impairment annually, or on such other
occasions that events or changes in
circumstances indicate that it might be
impaired. If the recoverable amount of an
asset (or cash-generating unit) is estimated
to be less than its carrying amount, the
30
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
for the year ended 31 December 2015
1.
Financial risk management
Financial risk factors
The Group’s business activities are set out in the Strategic Report on pages 6 to 11. These activities expose the Group to a number
of financial risks. The following describes the Group’s objectives, policies and processes for managing these risks and the
methods used to measure them. The Group only operates in the UK and transacts in sterling. It is therefore not exposed to any
foreign currency exchange risk.
(a)
Capital risk management
The Group’s objectives for managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an efficient capital structure to manage
the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend paid to
shareholders, return capital to shareholders and issue new shares or buy back existing shares. At 31 December 2015 the
Group had no short term debt (2014: £nil). There were no changes in the Group’s approach to capital management during
the year.
(b) Market risk
(i)
Price risk
The Group is exposed to equity securities price risk because of equity investments held by the Group and classified on
the consolidated balance sheet either as financial assets at fair value through profit and loss or trading investments
which are also held at fair value through profit or loss. At 31 December 2015, 99% (2014: 75%) of the Group’s
investments was investment in one venture fund.
The venture fund invests in early stage companies which are by their nature of a higher risk than more mature trading
companies. Risk is mitigated to a certain extent by the fact that the fund holds investments in several companies. At 31
December 2015, the fund held 8 investments (2014: 8 investments). A third party manages the venture fund.
A net movement of 10% in the value of the venture fund holdings would give rise to a movement in the income
statement of £55,000 (2014: £50,000).
The Group earns profit share in respect of property projects which is partly based on development values and is
therefore exposed to price risk.
(ii)
Interest rate risk
As the Group has no borrowings it only has limited interest rate risk. The impact is on income and operating cash flow
and arises from changes in market interest rates. From time to time, certain of the Group’s cash resources are placed
on short term fixed deposit of up to one year to take advantage of preferential rates. Otherwise, cash resources are
held in current, floating rate accounts.
(c)
Credit risk
The Group’s credit risk is primarily attributable to its trade receivables and other current assets.
During the year ended 31 December 2015, the Group’s cash and cash equivalents were held with the Bank of Scotland,
Royal Bank of Scotland plc and Investec Bank plc.
The concentration of credit risk from trade receivables and other current assets varies throughout the year depending on the
timing of transactions and invoicing of fees.
Property project management fees arise from Sigma Inpartnership’s joint venture, CSL. The fees are agreed in advance and
are recognised as per the accounting policy on revenue recognition. Fees are payable on a monthly basis over the
development period.
The profit share arising from Sigma Inpartnership’s joint venture, CSL, is recognised as per the accounting policy on revenue
recognition. The profit share is payable once the project is complete and once other criteria have been fulfilled.
Carried interest arises from the Group’s PRS activities and is recognised as per the accounting policy on revenue
recognition. The carried interest is payable on exit or from an agreed valuation.
Revenue recognised in advance of the contracted right to invoice or receive payment is shown in accrued income. The
amounts recognised will be paid during the development period, usually between one month and up to four years, but the
underlying fundamentals of the projects are such that the credit risk represented by these amounts is deemed to be low.
Property project management fees are also earned by Sigma Inpartnership that arise from the work undertaken on the three
regeneration partnerships with Liverpool City Council, Salford City Council and Solihull Metropolitan Borough Council. The
basis of these fees for the coming year and beyond is agreed in advance with each partnership and each month the invoices
Sigma Capital Group plc
Annual Report & Financial Statements 2015
31
are approved by the partnership for payment. Consequently, the amounts outstanding at any one time generally represent
only one or two months’ fees and the credit risk of the customers is deemed to be low.
Development management fees earned in respect of the groups PRS activities are agreed in advance of the project or a site
commencing, are based on the expected development costs and are payable quarterly in arrears.
During the current year the company earned property management fees from the management of City Wharf, Aberdeen.
However, subsequent to the year end the company that held the asset was put into administration. During the prior year, the
company earned fees in relation to the management of the Winchburgh development however the contract was terminated in
September 2014.
The Group withdrew from its venture capital activities during the prior year.
Other exposures of the Group are spread over a number of customers and counterparties with little concentration on any one
entity.
The concentration of credit risk arising from trade receivables and other current assets is analysed below.
2015 2014
£’000 £’000
Property management fees due to Sigma Inpartnership 72 100
Transaction fee due to Sigma Capital Property 916 -
Other property management fees 32 78
Other debtors 94 205
Other debtors - loan to PRS Fund 1,500 1,500
Other debtors - loan to PRS Fund 259 2,000
Other prepayments 105 65
Accrued income in respect of disposal of land 1,575 -
Other accrued income 3,786 1,114
8,339 5,062
The maximum exposure to credit risk for trade receivables and other current assets is represented by their carrying amount.
The transaction fee due to Sigma Capital Property was paid in January 2016. The accrued income in respect of the disposal
of land was paid in January 2016. The loan of £1,500,000 (2014: £1,500,000) in respect of the PRS Fund is expected to be
repaid during 2016 and 2017. The loan of £259,000 (2014: £2,000,000) in respect of the PRS Fund is expected to be repaid
in full during 2016. The credit risk associated with these loans relates to the possibility that they will not be able to be repaid
from the cash flows of the related projects. The Board assesses this risk as low.
(d)
Liquidity risk
The Group seeks to manage liquidity risk to ensure sufficient liquidity is available to meet the requirements of the business
and to invest cash assets safely and profitably. The Board reviews regularly available cash to ensure there are sufficient
resources for working capital requirements and to meet the Group’s limited partner commitments to the venture funds.
2.
Significant accounting estimates and judgements
Sources of estimation uncertainty
The preparation of the financial statements requires the Group to make estimates, judgements and assumptions that affect the
reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The
Directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the
circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
32
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
Estimates and judgements are continually made and are based on historic experience and other factors, including expectations of
future events that are believed to be reasonable in the circumstances.
As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. The Directors believe the
following to be the key areas of estimation and judgement:
(i)
Revenue recognition
The Group believes that the most significant judgement area in the application of its accounting policies is in respect of
revenue recognition. The matters taken into account when assessing the amount of revenue to recognise are detailed in the
accounting policy on revenue recognition.
(ii)
Fair value of unlisted investments
The matters taken into account when assessing the fair value of the unlisted investments are detailed in the accounting
policy on investments.
(iii) Goodwill and impairment
The recoverable amount of goodwill is determined based on value in use calculations of the cash-generating units to which it
relates. Further detail on key assumptions, including growth rates, discount rates and the time period of these value in use
calculations is given in note 10.
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 Group had four significant customers in the year. Thistle Limited Partnership was a significant customer with profit share and
carried interest earned of £2,137,000 (2014: £985,000), UK PRS (Jersey) Properties I Limited with transaction fees of £763,000
(2014: £nil), Countryside Sigma Limited with development management fees and profit share earned of £1,441,000 (2014:
£960,000) and Countryside Properties (UK) Limited with fees and sale of land totalling £2,032,000 (2014: £nil).
The segment analysis for the year ended 31 December 2015 is as follows:
Venture Holding Intra group
Property Capital Company adjustments Total
£’000 £’000 £’000 £’000 £’000
Revenue from services 6,698 26 - - 6,724
Trading profit/(loss) 2,544 (6) (582) (18) 1,938
Unrealised loss on the revaluation of investments - (120) - - (120)
Profit/(loss) from operations 2,544 (126) (582) (18) 1,818
Finance income 277 2 40 - 319
Profit/(loss) before tax 2,821 (124) (542) (18) 2,137
Total assets 10,178 3,491 30,258 (8,795) 35,132
Total liabilities (9,572) (1,732) (1,592) 9,570 (3,326)
Net assets 606 1,759 28,666 775 31,806
Capital expenditure 25 - - - 25
Depreciation 6 3 1 - 10
Sigma Capital Group plc
Annual Report & Financial Statements 2015
33
The segment analysis for the year ended 31 December 2014 is as follows:
Venture Holding Intra group
Property Capital Company adjustments Total
£’000 £’000 £’000 £’000 £’000
Revenue from services 3,849 19 - - 3,868
Trading profit/(loss) 576 (179) (364) (17) 16
Loss on disposal of equity investments - (1) - - (1)
Unrealised profit on the revaluation of investments - 171 - - 171
Profit/(loss) from operations 576 (9) (364) (17) 186
Finance income 1 1 26 - 28
Profit/(loss) before tax 577 (8) (338) (17) 214
Total assets 7,096 3,601 11,307 (10,452) 11,552
Total liabilities (9,119) (1,718) (1,340) 11,245 (932)
Net (liabilities)/net assets (2,023) 1,883 9,967 793 10,620
Capital expenditure 12 - - - 12
Depreciation 4 8 1 - 13
4.
Cost of sales
2015 2014
£’000 £’000
(Credits)/costs in relation to the development at North Arran Way (78) 562
Costs in relation to sale of land 1,448 -
Other 251 98
1,621 660
34
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
5.
Expenses by nature
Expenses included in administrative expenses are analysed below.
2015 2014
£’000 £’000
Administrative expenses
Employee costs (salaries, national insurance and pension) 1,976 1,899
Share based payments 87 23
Other employee related costs 52 34
Consultancy 102 80
Travel and entertainment 245 259
Depreciation 10 13
Amortisation 18 17
Provision for bad debts and bad debts written off - (3)
Operating lease rentals:
- plant and machinery 2 3
- land and buildings (net) 122 114
Other premises costs 108 145
Audit services:
- Fees payable to Company auditor for the audit of the parent company and consolidated accounts 30 31
- the audit of the Company’s subsidiaries pursuant to legislation 32 21
Non-audit services:
- tax services 18 19
- other accountancy services 14 5
Other legal, professional and financial costs 295 481
Other property costs - 4
Administration costs 55 46
3,165 3,192
6.
Finance income
2015 2014
£’000 £’000
Interest income on short-term deposits and loans 42 28
Interest income on loan to PRS Fund 212 -
Unwinding of discount 65 -
319 28
Sigma Capital Group plc
Annual Report & Financial Statements 2015
35
7.
Directors and employees
The average monthly number of employees, including executive Directors, employed by the Group during the year was:
2015 2014
Number Number
Property 13 15
Administration 6 5
19 20
The aggregate remuneration was as follows:
2015 2014
£’000 £’000
Wages and salaries 1,683 1,604
Social security 209 240
Pension costs – defined contribution plans 84 55
Share based payment charge - equity settled 87 23
2,063 1,922
Remuneration comprises basic salary and pension contributions and some employees also receive a car allowance or contribution
to travel expenses. In addition other payments are made which are benefits in kind, being private health insurance and life
assurance. The type of remuneration is consistent from year to year. Ad hoc bonuses may be paid to reward exceptional
performance. Such bonuses are decided by the Remuneration Committee on the recommendation of the Chief Executive Officer.
Share options are also awarded to employees from time to time. In the past the share options awarded had performance criteria
attached which related to the stock market performance of the Company. More recently the Remuneration Committee has decided
that this type of performance condition was not appropriate to individual employees given the volatility of smaller company stocks
including those of the Company. The granting of share options to individual employees is determined taking into account seniority,
commitment to the business and recent performance. Details of share options granted to and exercised by Directors in the year
are contained in the Directors’ Remuneration Report.
The key management of the Group comprises the Sigma Capital Group plc Board Directors. The total remuneration for each
director is shown below.
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Salary
Annual incentives
Other benefits
Total
Pension
Executive
GF Barnet 275 250 76 40 - 2 351 292 - -
M Briselden 85 - 9 - 6 - 100 - 9 -
MD Cole - 88 - 15 - 6 - 109 - -
MS Hogarth * - 30 - - - 1 - 31 - 3
J Hamilton ** - 71 - - - 5 - 76 - 7
G Thomson 116 94 10 20 - 1 126 115 12 9
G Hogg 156 109 76 41 5 6 237 156 16 8
D Sutherland 91 83 - 22 5 5 96 110 5 5
W MacLeod 90 90 - - - - 90 90 - -
Non-executive
D Sigsworth 40 26 - 10 - - 40 36 - -
J McMahon 10 10 - - - - 10 10 - -
863 851 171 148 16 26 1,050 1,025 42 32
*
from 1 January 2014 to 19 March 2014
** from 1 January 2014 to 29 September 2014
36
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
8.
Taxation
2015 2014
£’000 £’000
UK corporation tax on profit for the year - -
Deferred tax – origination and reversal of timing differences 192 -
Tax on profit on ordinary activities 192 -
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are explained below.
2015 2014
£’000 £’000
Profit before tax 2,137 214
Profit before tax at the effective rate of corporation tax in the UK of:
20.25 % (2014: 21.49%) 433 46
Effects of:
Expenses not deductible for tax purposes 59 24
Share of partnership losses (30) -
Capital allowances in excess of depreciation (6) (3)
Utilisation of losses (4) -
Unrelieved losses arising in the year - 184
Non taxable income - (37)
Other short term timing differences not recognised in deferred tax (199) -
Other adjustments (61) (214)
Tax charge for the year 192 -
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. The amounts set out below will be available for offset
against future taxable profits. These are stated using a corporation tax rate of 19% (2014: 20%).
2015 2014
£’000 £’000
Unrelieved management expenses and other losses 2,801 2,961
Unrelieved capital losses 770 811
Excess of depreciation over capital allowances 6 7
Other timing differences (173) -
3,404 3,779
9.
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.
Profit/(loss) Weighted Basic
attributable average profit/(loss)
to shareholders number of per share
£’000 shares pence
Year ended 31 December 2015 1,945 70,555,231 2.76
Year ended 31 December 2014 214 56,837,607 0.38
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).
Sigma Capital Group plc
Annual Report & Financial Statements 2015
37
10. Goodwill and other intangible assets
Other
Goodwill intangibles Total
£’000 £’000 £’000
Cost
At 31 December 2014 and 31 December 2015 656 105 761
Amortisation and impairment
At 1 January 2014 123 42 165
Amortisation charge - 17 17
At 31 December 2014 123 59 182
Amortisation charge - 18 18
At 31 December 2015 123 77 200
Carrying value
At 31 December 2015 533 28 561
At 31 December 2014 533 46 579
Impairment
Goodwill and other intangibles arising on consolidation represent the excess of cost of an acquisition over the fair value of the
Group’s share of the net assets of the acquired subsidiary at the date of acquisition. The carrying amount of intangible assets,
being the fair value of the contractual relationships, is allocated to the cash generation units (CGUs) as follows:
Sigma Inpartnership
2015 2014
£’000 £’000
Goodwill 533 533
Intangible assets 28 46
The major assumption used in value in use calculations is as follows:
Pre-tax discount rate 9% 9%
The directors estimate discount rates using pre-tax rates that reflect current market assessment of the time value of money and the
risk specific to the CGU. The pre-tax discount rate is based on a number of factors including the risk free rate in the UK and the
inherent risk of the forecast income streams included in the Group’s cash flow projections.
The value in use cash flows are based upon management approved budgets for a period of one year and on specific assumptions
and projections on a project by project basis for a further four years, using management’s detailed knowledge and expectations of
the outcome of each project. Thereafter a conservative estimate of continuing cash flows is included assuming nil growth.
The results of the value in use calculations for the CGU shows that Sigma Inpartnership exceeds its carrying amount in both the
current and prior year.
38
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
11.
Property and equipment
Leasehold Fixtures and Computer
improvements office equipment equipment Total
Group £’000 £’000 £’000 £’000
Cost
At 1 January 2014 43 60 169 272
Additions - - 12 12
At 31 December 2014 43 60 181 284
Additions - 16 9 25
At 31 December 2015 43 76 190 309
Depreciation
At 1 January 2014 43 57 153 253
Charge for the year - 1 12 13
At 31 December 2014 43 58 165 266
Charge for the year - 1 9 10
At 31 December 2015 43 59 174 276
Net book value
At 31 December 2015 - 17 16 33
At 31 December 2014 - 2 16 18
Leasehold Fixtures and
improvements office equipment Total
Company £’000 £’000 £’000
Cost
At 1 January 2014 7 15 22
Additions -
- -
At 31 December 2014 7 15 22
Additions - - -
At 31 December 2015 7 15 22
Depreciation
At 1 January 2014 7 13 20
Charge for the year - 1 1
At 31 December 2014 7 14 21
Charge for the year - 1 1
At 31 December 2015 7 15 22
Net book value
At 31 December 2015 - - -
At 31 December 2014 - 1 1
Sigma Capital Group plc
Annual Report & Financial Statements 2015
39
12.
Investment in subsidiaries and partnerships
Company Company
2015 2014
£’000 £’000
At 31 December 2014 and 31 December 2015 2,921 2,921
Subsidiaries and Partnerships
The Company has investments in the following subsidiaries and partnerships:
Company Name
Country of incorporation % Holding Principal activity
Sigma Capital Property Limited
Sigma Inpartnership Limited
Strategic Property Asset Management Limited
Strategic Investment Management Holdings Limited
Sigma Property Investment Limited
Sigma Property Partners Limited
Sigma General Partner Limited
Sigma FP General Partner Limited
Sigma Thistle Founder Partner LP
Sigma Thistle Phase II FP Limited Partnership
Sigma Thistle Phase II GP LLP
Sigma Thistle Phase II Limited
Sigma UK PRS GP Limited
Sigma Founder Partner LP
Sigma PRS Developments Limited
Sigma PRS Investments I Limited
Sigma PRS GP Limited
Sigma PRS General Partner LLP
Sigma PRS Founder Partner LP
Sigma PRS Property Investments LP
Liverpool Inpartnership Limited
Solihull Inpartnership Limited
Salford Inpartnership Limited
Inpartnership (LP) Limited
City Spirit Regeneration Limited
City Spirit Regeneration (Salford) Limited
Inpartnership CS Limited
Blackburn Inpartnership Limited
Sigma Technology Management Limited
Sigma Technology Investments Limited
Sigma Technology Founder Partners Limited
Liverpool Inpartnership 2007 Limited
Inpartnership Health Limited
Solihull IP (NAW 1) Limited
Sigma PRS Properties LP
Sigma Capital Investments LLP
Sigma Capital Developments LLP
SI Hotels (GP1) Limited
SI Hotels (GP2) Limited
SI Hotels Glasgow (GP1) Limited
SI Hotels Glasgow (GP2) Limited
SI No 7 (GP1)Limited
SI No 7 (GP2) Limited
SI (LP) Limited
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
England 68.25 Property
Scotland 75 Property
Scotland 100 Property
Scotland 100 Property
Jersey 100 Property
Scotland 100 Property
Scotland 100 Property
Scotland 85 Property
Scotland 100 Property
Scotland 100 Property
Scotland 100 Property
England 100 Property
England 100 Property
England 100 Property
Scotland 100 Property
Scotland 100 Property
England 100 Property
England 100 Property
England 100 Property
Scotland 100 Property
England 100 Venture Capital
England 100 Venture Capital
England 100 Venture Capital
England 100 Dormant
England 100 Dormant
England 100 Dormant
Scotland 100 Dormant
Scotland 100 Dormant
Scotland 100 Dormant
England 100 Dormant
England 100 Dormant
Scotland 100 Dormant
Scotland 100 Dormant
Scotland 100 Dormant
Scotland 100 Dormant
England 100 Dormant
40
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
13.
Fixed asset investments
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
At 1 January 2015 - - - -
Additions 2 - - -
At 31 December 2015 2 - - -
The addition during the year relates to the Company’s investment in UK PRS (Jersey) I Limited Partnership.
14.
Financial assets at fair value through profit and loss
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
At 1 January 2015 673 520 - -
Additions - 1 - -
Disposals - (19) - -
Fair value write (down) / up (120) 171 - -
At 31 December 2015 553 673 - -
The financial assets at fair value through profit and loss are the Group’s holdings in venture capital funds and an unquoted
security. The underlying investments in the funds are in unlisted start-up companies. The investments are valued by the manager of
the fund on a basis consistent with industry guidelines and are reviewed quarterly by the Board. The directly held unquoted
security amounts to £6,000 and was also valued on a basis consistent with industry guidelines.
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.
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Financial assets at fair value through profit and loss:
- the venture capital funds 43 - - -
- Unquoted securities (163) 169 - -
Trading investments - 2 - -
(120) 171 - -
During the prior year, the management of the last fund held by the Group, Sigma Sustainable Energy Fund II, was transferred to
new managers and the group disposed of its residual interest in the fund assets. This had been fully provided for.
15. Stocks
The following is included in the net book value of stocks
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Land and development properties 509 - - -
The value of stocks expensed during the year and included in cost of sales was £1,439,000.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
41
16.
Trade receivables and other current assets
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Trade receivables 1,020 178 - -
Receivables from Group undertakings – current - - 500 5,157
Receivables from Group undertakings – non current - - 3,179 154
Social security and other taxes - - 45 10
Other debtors 518 2,370 2 8
Other debtors - non current 1,335 1,335 - -
Prepayments and accrued income 2,732 459 49 38
Prepayments and accrued income – non current 2,734 720 - -
8,339 5,062 3,775 5,367
Less receivables from Group undertakings - non current - - (3,179) (154)
Less other debtors - non current (1,335) (1,335) - -
Less prepayments and accrued income – non current (2,734) (720) - -
Current portion 4,270 3,007 596 5,213
Trade receivables
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Trade receivables not due 975 97 222 4,849
Trade receivables past due 1-30 days 31 9 4 -
Trade receivables past due 31-60 days 9 8 104 -
Trade receivables past due 61-90 days 5 8 4 87
Trade receivables past due over 90 days - 56 166 221
Gross trade receivables at 31 December 2015 1,020 178 500 5,157
Provision for bad debt at 1 January 2015 - 108 - -
Debt provisions reversed in the year - (108) - -
Provision for bad debt at 31 December 2015 - - - -
Net trade receivables at 31 December 2015 1,020 178 500 5,157
The Directors consider that the carrying amount of trade receivables approximates to their fair value. Debts provided for and
written off are determined on an individual basis and included in Administrative expenses in the financial statements. Trade
receivables past due over 90 days includes £nil (2014: £56,000). The Group’s maximum exposure on credit risk is fair value on
trade receivables as presented above. The Group has no pledge as security on trade receivables.
The Group’s other debtors include a loan of £259,000 (2014: £2,000,000) in respect of the PRS Fund and is expected to be repaid
in full during 2016 and a loan of £1,500,000 (2014: £1,500,000) also in respect of the PRS Fund which is expected to be repaid
during 2016 and 2017. The loan of £1,500,000 attracts interest at the rate of 12% per annum compounded daily and a deferred
interest sum of £100,000 which is recognised over 4 years.
The Group’s non-current prepayments and accrued income includes fees of £1,608,000 (2014: £720,000) which will be paid
between 2017 and 2019, carried interest of £914,000 (2014: £nil) which is expected to be paid no earlier than 2018 and loan
interest of £212,000 (2014: £nil) which is expected to be paid in 2017.
42
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
17.
Trade and other payables
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Trade payables 79 211 39 24
Payables to Group undertakings - - 1,345 1,140
Other creditors 3 3 - -
Social security and other taxes 359 62 - -
Accruals and deferred income 2,693 656 208 176
3,134 932 1,592 1,340
The Directors consider that the carrying amount of trade payables approximates to their fair value.
18. Deferred tax liability
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Amounts due to be paid within one year 192 - - -
The movement in the year in the Group and Company net deferred tax
liability position was as follows:
Opening position as at 1 January 2014 - - - -
Charge to statement of comprehensive income for the year - - - -
At 31 December 2014 - - - -
Charge to statement of comprehensive income for the year 192 - - -
At 31 December 2015 192 - - -
19. Share capital and share premium
Group and Company
Number of Ordinary Share
shares shares premium Total
£’000 £’000 £’000
At 31 December 2014 61,151,475 612 12,952 13,564
Issue of shares at 75p per share 26,666,666 267 19,733 20,000
Expenses of share issue - - (902) (902)
Allotment of shares (prior year) 37,956 - - -
Exercise of share options 645,333 6 50 56
At 31 December 2015 88,501,430 885 31,833 32,718
The total authorised number of ordinary shares is 130,000,000 (2014: 130,000,000) with a par value of 1p per share (2014: 1p). All
issued shares are fully paid.
Sigma Capital Group plc
Annual Report & Financial Statements 2015
43
20. Share options
The Company has two option schemes for executive Directors and employees, the Sigma Capital Group plc Company Share
Option Scheme 2010, which has received Inland Revenue approval, and the Sigma Capital Group plc Unapproved Share Option
Scheme 2010. All options are granted at the market value of the shares at the date of grant. Both share option schemes run for a
period of ten years and have a vesting period of three years. All employees are eligible to participate in the schemes. No payment
is required from option holders on the grant of an option. There were no options over ordinary shares (2014: 1,334,441) granted
during the year. No performance conditions or market conditions are attached to these options.
Movements in the number of share options outstanding and their related weighted average exercise prices were as follows:
2015 2014
Weighted Weighted
average exercise average exercise
price in pence Options price in pence Options
per share (‘000s) per share (‘000s)
At 1 January 2015 36.3 3,250 12.4 3,555
Granted - - 68.0 1,335
Exercised 8.7 (645) 8.4 (1,477)
Expired / lapsed 50.4 (60) 26.3 (163)
At 31 December 2015 43.0 2,545 36.3 3,250
Of the 2,545,000 outstanding options (2014: 3,250,000), 720,000 had vested at 31 December 2015 (2014: 1,365,000).
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Exercise price 2015 2014
Expiry date pence per share Number Number
2018 25.0 100,000 100,000
2019 11.25 - 150,000
2021 8.0 250,000 733,333
2021 7.5 369,500 381,500
2023 26.25 525,476 550,476
2024 68.0 1,299,975 1,334,441
There were no options granted in the year. The weighted average fair value of options granted to executive Directors and
employees during the prior year determined using the Black-Scholes-Merton valuation model was 17.4p per option. The significant
inputs into the model were exercise price shown above, volatility of 30%, dividend yield of 0%, expected option life of 4 years and
annual risk free interest rate of 1.46%. Future volatility has been estimated based on comparable information rather than historical
data.
21. Other reserves
The capital redemption reserve was created on the buy-back of shares in the Company and their subsequent cancellation, being
the nominal value of the shares cancelled. The merger reserve and capital reserve were created on the merger of Sigma
Technology Management Limited (“STM”) with the Company. The fair value of equity-settled share-based payments is expensed
on a straight line basis over the vesting period and the amount expensed in each year is recognised in retained earnings. The
movement in reserves for the years ended 31 December 2015 and 2014 is set out in the Consolidated and Company Statements of
Changes in Equity.
44
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Notes to the Financial Statements
continued
22. Operating lease commitments
The Company leases the Group’s offices in Edinburgh under a non-cancellable operating lease which expires in 2016. In January
2016 Sigma Inpartnership surrendered its existing lease of the Group’s offices in Manchester under a non-cancellable operating
lease which was due to expire in 2016. In January 2016 the Company commenced a new lease for Group offices in Manchester
under a non-cancellable operating lease which expires in 2021. Other Group companies lease various plant and machinery under
non-cancellable lease agreements. The future aggregate minimum lease payments under non-cancellable operating leases are as
follows:
2015 2014
Plant and Land and Plant and Land and
machinery buildings machinery buildings
£’000 £’000 £’000 £’000
The Group
Within 1 year 8 121 3 114
From 2-5 years 12 120 5 100
After 5 years - - - -
20 241 8 214
The Company
Within 1 year - 119 -
95
From 2-5 years - 120 - 95
After 5 years - - - -
- 239 - 190
23. Cash flows from operating activities
Group Group Company Company
2015 2014 2015 2014
£’000 £’000 £’000 £’000
Profit after tax 1,945 214 (542) (338)
Adjustments for:
Share-based payments 87 23 87 23
Depreciation 10 13 1 1
Amortisation 18 17 - -
Finance income (319) (28) (39) (18)
Fair value loss/(profit) on financial assets at fair value through profit or loss 120 (171) - -
Loss on disposal of trading investments at fair value through profit or loss 1 - -
Changes in working capital:
Increase in stocks (509) - - -
Trade and other receivables (4,741) 4,089 1,592 (3,827)
Trade and other payables 2,394 (4,289) 252 (796)
Cash flows from operating activities (995) (131) 1,351 (4,955)
Sigma Capital Group plc
Annual Report & Financial Statements 2015
45
24. Related party transactions
Sigma holds a 25.1% shareholding in Countryside Sigma Limited. Fees invoiced in relation to development management services
for the year were £489,000 (2014: £87,000). At 31 December 2015, Sigma was owed £69,000 (2014: £75,000).
The Group has a 20.1% capital interest in Thistle Limited Partnership, its joint venture with Gatehouse. Profit share earned and paid
during the year were £1,118,000 (2014: £965,000).
The Group has a 20% interest in UK PRS (Jersey) I LP in respect of its joint venture with UK PRS Properties. Fees invoiced in relation
to transaction services for the year were £763,000. The fees were outstanding at the year end but were paid in January 2016.
During the year, the Group were invoiced fees of £52,934 (2014: £nil) by Torrin Asset Management Limited of which Bill MacLeod
is also a director. The balance outstanding at the end of the year was £52,934 (2014: £nil)
25. Post balance sheet events
On 17 March 2016, the Group disposed of a development site at Norris Green for £548,000.
On 24 March 2016, the Group acquired new head office premises in Edinburgh for £834,000.
46
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Five Year Record
2015 2014 2013 2012 2011
£’000 £’000 £’000 £’000 £’000
Revenue 6,724 3,868 5,808 2,326 2,468
Cost of sales (1,621) (660) (3,555) - -
Gross profit 5,103 3,208 2,253 2,326 2,468
Other operating income (26) 170 54 (833) (61)
Administrative and other expenses (3,259) (3,192) (2,662) (2,575) (2,530)
Profit/(loss) from operations 1,818 186 (355) (1,082) (123)
Net finance income 319 28 10 22 15
Profit/(loss) arising from associate company (net) - - 20 (111) (1,307)
Exceptional item - - (531) - -
Profit/(loss) before tax 2,137 214 (856) (1,171) (1,415)
Taxation (192) - - - -
Profit/(loss) for the year 1,945 214 (856) (1,171) (1,415)
Attributable to:
Equity holders of the Company 1,945 214 (856) (1,171) (1, 401)
Minority interests - - - - (14)
1,945 214 (856) (1,171) (1,415)
Net assets employed 31,806 10,620 2,636 2,597 3,753
Basic earnings/(loss) per ordinary share (pence) 2.76 0.38 (1.87) (2.57) (3.17)
Sigma Capital Group plc
Annual Report & Financial Statements 2015
47
Proxy Form
I/we
FULL NAME(S) IN BLOCK CAPITALS
of
ADDRESS IN BLOCK CAPITALS
being a member/members of Sigma Capital Group plc hereby appoint as my/our proxy, to vote for me/us on my/our behalf at the Annual
General Meeting of the Company to be held at 11am on 17 June 2016 at 41 Charlotte Square, Edinburgh EH2 4HQ and at any
adjournment thereof, the duly appointed Chairman of the meeting or (see Note 1)
My/Our proxy is to vote as indicated by ‘X’ below in respect of the resolutions set out in the notice of the meeting.
Ordinary Resolutions
1.
2.
3.
4.
5.
6.
7.
Receipt of the financial statements for the year ended 31 December 2015 together
with the reports of the Directors and the auditor
Re-appointment of David Sigsworth as a director
Re-appointment of Graeme Ronald Rae Hogg as a director
Approval of the report on Directors’ remuneration for the year ended 31 December 2015
Re-appointment of the auditor
Remuneration of the auditor
General authority to allot securities
Special Resolutions
8.
General disapplication of pre-emption rights
For
Against
Withheld
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
Signature(s) or Common Seal
Date
FULL NAME (BLOCK CAPITALS)
Notes
1. A member may appoint a proxy of his or her choice. If a proxy
4. Only members or their proxies may attend the meeting.
other than the Chairman is preferred, delete the words “the duly
appointed Chairman of the meeting or” and enter the name of
your proxy in the space provided. A proxy need not be a
member of the Company, but must attend the meeting to
represent you.
2.
3.
In the case of a corporation, the form of proxy must be either
given under its common seal or signed by a duly authorised
officer or attorney.
In the case of joint holders, the first-named holder of the shares
must sign the form of proxy.
5. Completion and return of the form of proxy will not prevent a
member from attending and voting in person at the meeting if
the member so wishes.
6. Please indicate with ‘X’ in the boxes in the form of proxy how
you wish your proxy to vote on each of the resolutions. If no
indication is given your proxy will have discretion to vote or to
abstain (including on any other matter which may properly
come before the meeting) as he/she thinks fit. To be valid the
form of proxy must be received by the Company Secretary at
41 Charlotte Square, Edinburgh EH2 4HQ no later than 11am
on 15 June 2016.
#
48
Sigma Capital Group plc
Annual Report & Financial Statements 2015
Smith Brands Ltd
www.smithbrands.com
Sigma Capital Group plc
41 Charlotte Square
Edinburgh EH2 4HQ
Tel +44 (0)131 220 9444
Fax +44 (0)131 220 9445
Floor 3
1 St Ann Street
Manchester M2 7LR
Tel +44 (0)161 200 5300
Fax +44 (0)161 236 7838
Regis House
45 King William Street
London
EC4R 9AN
edinburgh@sigmacapital.co.uk
www.sigmacapital.co.uk