PRS & Urban
Regeneration
Specialists
ANNUAL REPORT & FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2016
Contents
PAGE
Key Points 1
Chairman’s Statement 2
Strategic Report 6
Directors 12
Advisers 13
Directors’ Report 14
Directors’ Remuneration Report 16
Statement of Directors’
Responsibilities 18
Independent Auditor’s Report 19
Consolidated Comprehensive
Income Statement 21
Consolidated Balance Sheet 22
Company Balance Sheet 23
Consolidated Statement
of Changes in Equity 24
Company Statement of
Changes in Equity 25
Consolidated and Company
Cash Flow Statements 26
Accounting Policies 27
Notes to the Financial Statements 32
Five Year Record 54
Proxy Form 55
Company number 03942129
Sigma Capital Group plc | Annual Report & Financial Statements 2016 1
Key Points
FINANCIAL
FY2016 FY2015
Revenue £5.4m £6.7m
Profit from operations £3.4m £1.8m
Profit before tax £3.7m £2.6m*
Earnings per share 4.02p 3.39p*
Net assets per share 40.7p 36.5p*
Cash at year end £6.13m £25.14m
*restated
OPERATIONAL
A year of significant strategic progress with
PRS activities
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although some project delays as previously
reported
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UK PRS Properties venture (currently £84m
development of new 607 family rental homes
in the North West and Midlands) now on seven
sites, with 252 homes completed
PRS platform continued to expand:
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geographic presence extended into new
regions – Sigma now active in North West,
North East, and Midlands
additional house-building partner added;
Keepmoat Limited expands construction
resource and geographic coverage
1,000th PRS home delivered and let in
November 2016
Self-funded PRS activity made significant progress:
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contributed £2.1m to profit from operations
£45m funding facility agreed with the Homes
and Communities Agency in September 2016
first site (50 family homes in Merseyside),
completed and fully let by December 2016
a further six sites are now underway in the
North West, North East and Midlands regions,
with additional sites planned
‘Simple Life’ PRS brand launched in December
2016 to support scaling of self-funded activity
Managed PRS activity overall progressed well:
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contributed £0.6m to profit from operations
Gatehouse Bank JV project (£105m development
of 918 new family rental homes in the North West)
completed in Q1 2017; currently 99% let with gross
rental income of £7.5m pa
Regeneration activities continued to make
a good contribution:
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contributed £1.5m to profit from operations
£39m regeneration scheme, next
to Lime Street Station, Liverpool, launched in
October 2016
Proposed flotation of The PRS REIT plc (“PRS REIT”)
on the Main Market of the London Stock Exchange
(Specialist Fund Segment) with a Sigma subsidiary
appointed as Investment Adviser and Development
Manager – see separate announcement issued today
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associated fund-raising of up to £250m, to be
supported by the Homes and Communities
Agency (“HCA”)
a potentially transformational event for Sigma,
with proposed Admission expected at the end
of May
Board remains confident about growth prospects
as the Company’s business model develops
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asset backing is strengthening
critical shortage of new homes in England
remains a structural issue
political and economic backdrop is favourable
2 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Chairman’s Statement
“I am delighted to report another year of significant development
as we continued to scale Sigma’s presence in the Private Rented
Sector. The Group’s financial results demonstrate the progress
we are making, with profit before tax rising by 42% to £3.7m.
While these results are encouraging, the strategic progress we
made over the year, including our major funding agreement with
the Homes and Communities Agency, is of greater significance
and supports the material value creation we are targeting in
the medium and long term.
“We remain confident about growth prospects for the Group.
The shortage of new homes in England is structural and
remains a critical issue, and the political and economic
backdrop is favourable.
“Today’s announcement of the proposed flotation of The PRS
REIT plc, with Sigma appointed as Investment Adviser and
Development Manager is potentially transformational for the
Group. We believe it will be the first quoted REIT to address
opportunities in the PRS sector. Once launched, the REIT will
support greater visibility of Sigma’s revenues and future earnings
and help us to maximise the value of our pipeline of development
opportunities. We are delighted that the Homes and Communities
Agency is supporting both Sigma and the PRS REIT in our mutual
goal of creating thousands of high quality, professionally
managed, new rental homes in England.
“In preparation for the REIT, we have altered our development
schedules, delaying certain planned starts, so that we can
provide the PRS REIT with a significant and immediate pipeline
of development opportunities when it launches. We look
forward to updating shareholders further at the end of May.”
David Sigsworth
Chairman
Sigma Capital Group plc | Annual Report & Financial Statements 2016 3
Introduction
I am delighted to report another year of significant
development as we continued to scale Sigma’s
presence in the Private Rented Sector (“PRS”). The
Group’s financial results demonstrate the progress
we are making, with profit from operations improving
by 89% to £3.4m and profit before tax rising by 42%
to £3.7m. While these results are encouraging,
the strategic progress we have made is of greater
significance and supports the material value creation
we are targeting in the medium and long term.
We achieved a number of strategic milestones during
the year. In our half year report, we highlighted in
particular our intention to explore a long-term holding
vehicle which could assist us in capitalising on our
strong pipeline of opportunities in PRS. We are
therefore delighted to announce today the proposed
flotation on the Main Market of the London Stock
Exchange (Specialist Fund Segment) of The PRS REIT
plc (“PRS REIT”), with a Sigma subsidiary appointed as
Investment Adviser and Development Manager. There
is an associated fund-raising of up to £250 million
alongside the flotation and the REIT intends to use
gearing to enhance equity returns. Gearing is capped
at 45% of gross asset value and is expected to be
around 35% to 40% of gross asset value following
stabilisation of the PRS portfolio. We believe that the
PRS REIT will be the first quoted REIT in the UK to
address the opportunities in PRS. The proposed IPO,
which we expect to be completed at the end of May,
represents the fulfilment of our work to explore the
most efficient funding route to generate long term,
predictable revenues and maximise both our control
of our development pipeline and shareholder returns.
Further information about the PRS REIT and Sigma’s
role as Investment Adviser and Development Manager,
is provided in a prospectus, which is expected to be
published later today.
Reaching this point outstrips other important staging
posts attained in the year although, as we previously
reported, there were also some delays which affected
our managed and self-funded PRS activities in 2016.
I am very pleased to highlight, in particular, the major
funding agreement with the Homes and Communities
Agency (“HCA”), signed at the end of September, and
our new PRS partnership with Keepmoat Limited
(“Keepmoat”) signed in June. Our HCA relationship
enables us to materially increase the development
of our own self-funded PRS portfolio and has
subsequently led to the HCA’s commitment to support
the PRS REIT with a direct investment of 9.99% of the
gross IPO proceeds up to £25m in the REIT. Our
partnership with Keepmoat significantly increases
our construction resource and provides further
access to land assets in other parts of the UK. It also
complements our existing flourishing partnership
with our founding partner, Countryside Properties plc
(“Countryside”), which has constructed all our
completed PRS units to date. Our first site with
Keepmoat, in Sheffield, commenced in July 2016 and is
progressing well and we are also continuing to expand
significantly our activities with Countryside Properties.
Over the year, we also acquired the first six sites for
Sigma’s self-funded PRS portfolio. These will deliver
345 high quality, new homes, at a gross development
cost of approximately £45m. The first of those sites,
in Merseyside, comprising 50 new homes, was fully
developed and let by the end of 2016.
Across our managed PRS activities, with Gatehouse
Bank plc (“Gatehouse”) and UK PRS Properties,
we continued to progress our major development
schemes. By the end of November 2016, we completed
and let our 1,000th PRS home, with the majority
representing the new homes we are delivering for
these funding partners and the balance being our
own self-funded homes. This milestone event took the
gross development cost of the new homes completed
by Sigma’s PRS platform at November 2016 to £120m
since construction commenced in November 2014.
The rental income stream from these new homes
is in excess of £8m per annum.
Since November 2016, we have delivered a further
270 new PRS homes, bringing the total number of
new homes built by our platform to 1,270. The
Company is also now building across three regions
of England – the North West, North East, and the
Midlands. We are also progressing plans to develop
in the South of England.
Whilst our principal focus is on PRS, our regeneration
activities continue to produce good results. These
activities support the objectives of our local authority
partners and are mainly in the provision of market-for-
sale and social housing. Towards the end of October,
we were pleased to report the launch of a £39m
regeneration scheme, immediately adjacent to
Lime Street Station in the centre of Liverpool.
The new financial year has started very positively. We
have continued to make progress on the delivery of
our self-funded PRS portfolio as well as our managed
PRS activities. In preparing for the proposed REIT, we
have also rescheduled developments, delaying planned
4 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Chairman’s Statement (continued)
starts. Once successfully launched, the PRS REIT will
transform our model, allowing us to better capitalise
on our development pipelines and significantly
improve revenue and earnings visibility.
Revolving credit facility
In September 2016, we agreed a £45m revolving credit
facility with the HCA to accelerate the delivery of our
own PRS portfolio. The first amounts drawn under this
facility were completed in January 2017.
Financial Results
The Group generated revenues of £5.38m for the
financial year to 31 December 2016 (2015: £6.72m).
Profit from operations improved by 89% to £3.37m
(2015: £1.82m), with Sigma’s self-funded PRS activities
contributing £2.1m (2015: nil). Managed PRS activities
contributed £0.6m (2015: £0.9m) and regeneration
activities added £1.5m (2015: £1.7m) to profit from
operations. The Group’s non-core venture capital
activities and other holding activities generated a
loss from operations of £0.8m (2015: loss of £0.7m).
Administrative expenses rose by 13.7% to £3.6m
during the year (2015: £3.17m) mainly as a result of
the increased number of employees as we accelerated
the PRS model.
Profit before tax for the year rose by 42% to £3.67m
(2015: £2.59m restated). This is after an exceptional
item of £0.4m which related to the termination of the
Group’s agreement with Torrin Asset Management
(2015: nil). Basic earnings per share increased by 19%
to 4.02p (2015: 3.39p restated).
The Group’s net assets backing continues to
strengthen, with net assets per share at the year
end increasing by 12% to £36.09m (2015: £32.26m
restated), equivalent to 40.7p per share (31 December
2015: 36.5p per share restated). After the Group’s
investment in PRS activities during the year, cash
at 31 December 2016 stood at £6.1m (2015: £25.1m).
*Prior year adjustment
The Group’s prior year’s results have been adjusted to
reflect the Group’s share of profits, being £449,000,
from Countryside Sigma Limited, Sigma’s joint venture
vehicle with Countryside Properties plc.
Dividends
At this stage of Sigma’s development, the Board is not
recommending the payment of a dividend. 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 keep the
dividend policy under review.
Operational Overview
The expansion of Sigma’s self-funded PRS activities
was a key theme over 2016. Following the launch
of these activities in December 2015, which was
supported by a £20m (gross) fund raising, our
funding agreement with the HCA in September 2016
has enabled us to scale up our plans. While we
experienced unavoidable delayed starts across three
sites in the first half of the year, by December 2016
we had acquired six sites, with our first site also
completed and fully let. This site comprised 50 new
family homes, at Mackets Lane in Merseyside. All six
sites, which are located in the North West, North East
and the Midlands, will deliver a total of 345 homes
at a gross development cost of approximately £45m.
Following the year end, in January 2017 Sigma
acquired a seventh site, in Telford, which will comprise
approximately 70 new homes at a gross development
cost of c. £11m. We commenced our first site under
our new Keepmoat relationship in the summer of
2016 in Sheffield. This site comprises approximately
24 new family homes and we expect to start on
additional sites in 2017. In December 2016, we also
launched our own PRS brand, Simple Life,
(www.simplelifehomes.co.uk) which will help to
differentiate our offering in the rental marketplace.
All our properties will be marketed and let under this
brand, and managed by our existing lettings partner
SDL Group. Our intention is for Simple Life to be
recognised as standing for high quality, professionally
managed rental homes.
Across our managed PRS activities, our PRS platform
completed the first phase of PRS homes in our
Gatehouse joint venture (“PRS Fund”) in the first
quarter of the current financial year. This first phase
comprised 918 new family rental homes, in the North
West of England at a total gross development cost of
£105m. It is one of the UK’s first large scale PRS
schemes of new family homes and is currently 99% let
and generating a gross rental income per annum of
£7.5m. The second phase of managed PRS homes,
with UK PRS Properties, which currently comprises
607 new homes with a total development cost of
£84m is underway across the North West, North East
Sigma Capital Group plc | Annual Report & Financial Statements 2016 5
and Midlands regions of England. To date, 252
properties are complete. Our partners are exploring
their funding options to allow them to commence
further sites.
The continuing 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 the SDL
Group, and our funding partners, Gatehouse, UK PRS
Properties and Barclays Bank. We were delighted to
secure another partner, Keepmoat, which has a long
term aim of delivering thousands of new PRS homes
across England. The HCA is another new partner
whose support is helping to unlock the creation of
hundreds of new rental homes by Sigma. I would also
like to thank our existing and new shareholders for
their backing during the year.
Our regeneration activities, which support our local
authority partners, continued to make progress over
the year. The delivery of a 200 market-for-sale housing
site at Gateacre in Liverpool with our partners
Liverpool City Council and Countryside, progressed
well and 46 of the new homes have now been sold or
reserved since the show homes opened in January
2017. In March 2016, we completed the sale of the
remaining acreage of residential development land
at Norris Green in Liverpool, which is in the process
of delivering 69 private rented units. The land was
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.
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 1,165 homes across all tenures.
In October 2016, working with Liverpool City Council
and our commercial development partner, ION
Developments, we commenced the redevelopment of
Lime Street Eastern Terrace, Liverpool. This mixed-use
development incorporates a c. 400 bedroom student
residence, a c. 100-bedroom hotel, pre-let to Premier
Inn along with 30,000 sq.ft of retail and leisure units
and is due to complete in July 2018. We are also
working with our partners on other regeneration
schemes in Liverpool.
The Board
As previously reported, in April 2016, Bill MacLeod
stepped down from the Board and Company. We
wish him well as he pursues other activities.
Staff
On behalf of the Board, I would like to thank our
staff for all their efforts during 2016. Sigma continues
to transform its business and has made significant
progress 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. Their
dedicated efforts are much appreciated.
Everyone can be extremely proud of what has been
achieved not only for the Company but also in the
communities where high quality new housing can
boost the prospects of individuals and stimulate the
local economy.
Outlook
We remain confident about growth prospects for
the Group. The shortage of new homes in England
is structural and remains a critical issue, and the
political and economic backdrop is favourable.
The proposed launch of The PRS REIT is a potentially
transformational event for Sigma, reinforcing the
Group’s position as a leader in PRS. It will also help
us to maximise our control over the pipeline of
development opportunities we have identified,
and improve revenue and earnings visibility.
In preparation for the REIT, we have altered our
development schedules, delaying certain planned
starts, so that we can provide the PRS REIT with a
significant and immediate pipeline of development
opportunities when it launches. We look forward to
updating shareholders further at the end of May.
David Sigsworth OBE
Chairman
3 May 2017
6 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Strategic Report
The Directors have pleasure in presenting their
Strategic Report for the year ended 31 December 2016.
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 2016 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 2016, SCP has been investing in
its own self-funded portfolio of private rented homes
with the acquisition of seven sites to date; one site,
consisting of 50 PRS homes, has been completed and
let. The Group’s first PRS joint venture with Gatehouse
Bank plc commenced in November 2014 and has now
completed the delivery of 918 new family homes for
the private rental market with construction costs as
forecast, occupation levels of 99% and rental levels
exceeding initial budget expectations. 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 is progressing well and is currently active on
seven sites for the delivery of 607 new family rental
homes of which 252 having already been completed.
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
which sit outside of its PRS and 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 has ceased its venture capital
management activities, 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 local authorities,
house building and funding partners, along with the
Homes and Communities Agency to further our PRS
activities and maintain our position at the vanguard
of the private rented sector.
This sector is now critically important in addressing
the effects of the structural supply problems in the UK
housing market and helping those disenfranchised
from home ownership by affordability constraints.
The sector additionally addresses the needs of an
increasing group of those who simply enjoy the
flexibility that renting professionally managed new
homes offers. The market has grown by 2.2m
households in the last 10 years and is forecast to
grow by a further 1.1m in the next five, adding to the
supply pressures inherent in the market.
In terms of the geographic roll out, Sigma’s strategy
is to extend its activities beyond its existing local
authority partnerships to other core cities in England.
Our main direction of travel for these new
opportunities is expanding our delivery in the Midlands
and expanding into the south of England, broadly
following the route of HS2, the largest infrastructure
project in the UK. We have now delivered over 1,200
homes in a little over two years and our current overall
active pipeline is in excess of 2,800 PRS homes in
Greater Manchester, Merseyside, the North East and
the Midlands. We have visibility over a further 2,000
plus plots within our key target locations.
This PRS model is the key component of our strategy
for 2017 and will continue to be executed through our
dedicated Sigma PRS Platform.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 7
To this end, in September 2016, we agreed an
innovative £45m revolving credit facility with the
Homes and Communities Agency which will allow us
to significantly increase the delivery of our own assets.
We have also signed a strategic partnership in June
2016 with an additional housebuilding partner,
Keepmoat, enabling us to expand our geographic
area of operation. Our coverage now includes the
North East, North West and the Midlands, and we
are actively appraising sites in a fourth region.
The most exciting element to our strategy going
forward is the intention to float the first ever UK
quoted REIT, specifically focused on investment in
the private rented sector. The PRS REIT is targeting
a fundraise of £250m of equity. This, coupled with
the HCA facility and our expanded housebuilding
partnerships, will allow a significant acceleration of
our delivery capability and also enable Sigma to
recycle its capital through the REIT’s purchase of
Sigma’s seed portfolio.
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 structures.
From a local authority perspective, the key advantage
is that it benefits from the delivery of large-scale high
quality housing quickly, meeting both an urgent social
need and wider regeneration objectives. This is
achieved as the PRS model delivers houses typically
at four to five times the rate of those built ‘for sale’
which tend to be built at the pace of sales demand.
Furthermore, the local authorities benefit from
increased council tax receipts from the new homes as
well as from the Government’s new homes bonus. The
rapidity of delivery provided by our platform is both
attractive to and synergistic for our housebuilding
partners as it offers an enhanced return on capital as
well as derisking and quickly maturing those sites on
which there are a mix of ‘for sale’ and PRS homes.
Sigma PRS
In 2015, the Company raised £20m (gross) from a
share placing to create a substantial portfolio of self-
funded PRS assets leveraging its existing PRS
infrastructure and relationships. In 2016, the Group
agreed a £45m revolving credit facility with the Homes
and Communities Agency (“HCA”) materially up scaling
our delivery of self-funded new rental homes. This is
the first facility of its kind with the HCA and confirms
the benefit of our strategy for central Government
policy for housing demand. Sigma have acquired seven
sites for development across the North West, North
East and Midlands regions of England. The first site,
consisting of 50 new rental homes in Merseyside, was
completed in November 2016. There was strong
demand for the properties, which let quickly, and they
are generating gross rental income in excess of that
originally forecast. Three further sites will complete
development during 2017 with the remainder in 2018.
This portfolio is earmarked for purchase by The PRS
REIT, in the event of the REIT’s successful launch,
allowing us to build further new PRS homes.
2016 also saw the launch of our new PRS brand ‘Simple
Life’ (www.simplelifehomes.co.uk), through which all
our new sites will be marketed. The creation of this new
consumer brand helps to further professionalise our
approach to potential customers and, over time, we are
aiming for Simple Life to be recognised as the ‘gold
standard’ for tenant experience.
Simple Life will be managed by SDL Group, which has
managed the letting of all our delivered PRS properties
to date under the auspices of Sigma’s in-house asset
management and marketing teams.
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 Europe, delivered the equity element of the
venture whilst Barclays Bank plc provided the debt
financing.
This first phase was completed after the year end, in
March 2017, and consists of 918 new privately rented
residential properties in the North West of England,
with construction costs as forecast. The site is
currently 99% let with rental levels continuing to
be in excess of those originally forecast. For those
properties, which have been let for in excess of 12
months, we are experiencing an 83% renewal rate with
existing tenants. The properties have been let by the
SDL Group under the brand, ‘DIFRENT’.
8 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Strategic Report (continued)
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 construction is currently underway on seven sites
across the North West and Midland regions of England
which will deliver 607 family homes, with a gross
development cost in excess of £84m. To date, 252
properties have been delivered with lettings
progressing well and rental levels in excess of those
forecast. As with phase 1, the new homes are being
let by the SDL Group under the ‘DIFRENT’ brand.
The PRS phases with Gatehouse and UK PRS
Properties generate fees for the Group. An upfront
fee is paid on commencement of a site, 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 let. Sigma also retains a share
of the net profits on disposal of the assets subject to a
minimum return to investors.
URBAN REGENERATION
Liverpool Partnership (also referred to as
Regeneration Liverpool)
Our Liverpool Partnership is a limited liability
partnership formed in 2007 between SIP and Liverpool
City Council. The partnership was given an initial ten
year option over a 60 acre residential development
site, known as Norris Green, which had outline
planning consent for around 800 new homes, with
a total development value of c. £120 million. The
partnership was established with the flexibility to
develop additional sites at the discretion of Liverpool
City Council and over the last three years, the Council
has increased the number of sites under option. The
key sites added are Gateacre, the former Queen Mary
School site and Lime Street/Knowledge Quarter.
Although the initial partnership period has ended, the
Liverpool Partnership will continue to develop and
manage those sites under option until completion.
In 2012, we formed a joint venture company with
a major local commercial property development
company, ION Developments Limited (formerly
Neptune Developments Limited), to help accelerate
the delivery of the commercial regeneration projects
in Liverpool. In 2013, we established a second joint
venture company, Countryside Sigma Limited, 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
ION Developments Limited.
Residential Projects
The regeneration of the site at Norris Green continues
to make excellent progress with the final phase now in
full swing. The development 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. Seven of the phases are complete and
construction is progressing well on the final phase of
269 homes, 200 being for sale and 69 for rent. At the
end of March 2017 we had completed 633 of the
homes. Of the 221 PRS properties, 198 are complete
with all (bar 6) fully let. It is anticipated that the
balance of the units will be completed before the
end of June 2017.
Construction on the former Queen Mary School site,
which is approximately one mile from Norris Green is
progressing well, with only the open market sale
element left to complete. The scheme comprised a
total of 200 new homes, with 64 homes designated
for the PRS Fund. All of the PRS units have been
constructed and are fully let, with rents in line
with or in excess of that originally targeted. Our
affiliate, Countryside Sigma Limited, is building the
136 open market sale homes and, to date, 123 have
been built and sold, with only 13 remaining.
Construction is also progressing well at Gateacre, a 19
acre former secondary school. The site consists of 200
new family homes for open market sale ranging from
two and three bedroom town houses to five bedroom
executive detached homes. The site is being marketed
from two sales areas and uptake has been excellent
with 6-8 units currently being completed per month. To
date, 46 of the new homes are sold or reserved, since
the show homes opened in January 2017.
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
Sigma Capital Group plc | Annual Report & Financial Statements 2016 9
flagship mixed-use development to the south and east
of Lime Street railway station in the centre of Liverpool
and we continue to work with our commercial joint
venture partner, ION Developments on these sites.
Planning consent together with a forward funding
commitment for the redevelopment of Lime Street
Eastern Terrace was secured for a mixed use
development incorporating a c. 400 bedroom student
residence, a Premier Inn hotel and 30,000 sq.ft of
retail/leisure units. However, following a delay,
commencement on site did not take place until
October 2016 with completion now due for July 2018.
Redevelopment plans for the former ABC cinema on
Lime Street have now been finalised and take a phased
approach to the project. Whilst discussions are still
ongoing with an operator for the venue, an initial
planning application has been lodged for a change of
use from cinema to live mixed performance events
venue, nightclub/bar and television sound stage. The
aim is for this to be determined during the summer
together with concluding a contract with an operator.
The plans for the redevelopment of Mount Pleasant Car
Park are being worked on in conjunction with a potential
funder for the project and also in consultation with other
stake holders with significant land holdings in the
Knowledge Quarter area. The aim is to be in a position
to lodge a full planning application later this year.
Salford Partnership (also known as Higher
Broughton Partnership)
The Salford Partnership is our partnership with Salford
City Council and Royal Bank of Scotland.
During the year, we dealt with residual matters arising
from previous residential and commercial projects of
the Salford Partnership.
Sigma is working closely with Salford City Council to
bring additional land for delivery for PRS. A total of
four sites and 206 units have been developed as
part of the initial phase of our PRS Fund with
Gatehouse and a further two sites consisting of 220
units are being developed as part of the joint venture
with UK PRS Properties. We are in the process of
reviewing more.
North Solihull Partnership
The Partnership was set up in 2007 by Solihull
Metropolitan Borough Council, Bellway Homes, West
Mercia Housing Association and SIP, with a remit of
coordinating and delivering the regeneration of an area
of circa 1,000 acres in North Solihull. The key objectives
of the Partnership are to deliver new and replacement
housing stock, ten new or refurbished primary schools
and five new village centres incorporating neighbourhood
council, medical and retail facilities. Our key role is the
provision of development management services,
including strategic development planning, coordination
and procurement of development works, in return for
agreed fees for these services. We continue to provide
strategic advice to the Partnership on developments
whilst our relationship with the Partnership allows us to
look at PRS opportunities and we are actively in
discussions with the council in that respect.
City Wharf, Aberdeen
Sigma continued to provide property management
services to SI Limited Partnership No. 7 and its lender
National Asset Management Agency (“NAMA”). In
August 2015 NAMA disposed of the loan that
supported the underlying property vehicles to OCM
Albion Debtco DAC (“the Lender”). During 2015 the
economic climate in Aberdeen deteriorated as a result
in the fall of the oil price which resulted in two of the
tenants, occupying three floors of City Wharf,
exercising their right to break their leases. In light of
these factors the Lender demanded immediate
repayment of the loan and consequently the underlying
property companies went into administration. The
Group’s role as asset manager therefore came to an
end in February 2016.
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 2016
The Group’s revenue decreased by 19.9% to
£5,383,000 (2015: £6,724,000). Revenue included the
sale of development land at Norris Green, Liverpool,
revenues from our managed PRS activities with
Gatehouse and UK PRS Properties along with our first
rental income from our self-funded portfolio. Despite
the fall in revenues, gross profit decreased by only
3.5% to £4,923,000 (2015: £5,103,000).
10 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Strategic Report (continued)
The Group made a trading profit in the year of
£1,325,000 (2015: £1,938,000), with property activities
contributing a trading profit of £2,196,000 (2015:
£2,544,000). The discontinued venture capital
activities generated a trading profit of £8,000 (2015:
trading loss of £6,000) and the trading profit was
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 increased to £3,598,000 (2015:
£3,165,000) reflecting an increase in the number of
employees as a result of our increased investment in
PRS activities.
Profit from operations increased by 85% to £3,365,000
(2015: £1,818,000). This result included an unrealised
gain of £2,017,000 (2015: £nil) on the revaluation of
investment property and an unrealised gain on
investments of £23,000 (2015: unrealised loss of
£120,000). Profit before tax for the year was adversely
affected by an exceptional item of £428,000 (2015:
£nil). This related to the Group’s managed PRS
activities and the termination of the Group’s
agreement with Torrin Asset Management. As a result,
profit before tax was £3,670,000 (2015: £2,586,000
restated), which represents an increase of 42%.
Net assets of the Group increased by 12% to
£36,087,000 at 31 December 2016 (31 December 2015:
£32,255,000 restated). Net assets at 31 December 2016
were equivalent to 40.7p per share (31 December 2015:
36.5p per share restated).
Balance sheet
The principal items in the balance sheet are goodwill
of £544,000 (2015: £561,000), investment property
of £24,825,000 (2015: £nil), property and equipment
of £1,111,000 (2015: £33,000), accrued income of
£5,611,000 (2015: £5,361,000), loans to the PRS
Fund totalling £92,000 (2015: £1,759,000), cash of
£6,125,000 (2015: £25,135,000) and trade and other
payables of £4,226,000 (2015: £3,134,000).
The goodwill relates to the acquisition of SIP and is
reviewed each year for impairment. The investment
property relates to Sigma’s own PRS. The property
and equipment principally relates to the Group’s
acquisition and redevelopment of its head office in
Edinburgh. Accrued income includes £1,485,000
expected to be paid in 2017 and £4,126,000 which is
due greater than one year as detailed in note 19 to the
accounts. The loans to the PRS Fund of £92,000
were fully repaid in March 2017. The trade and other
payables of £4,226,000 includes £2,901,000 in
relation to its investment in property and was paid
in January 2017.
The Group’s current assets exceed its current liabilities
by £4,492,000 (2015: £26,588,000). The Group has
one long term liability of £481,000 (2015: £nil). This
relates to a loan provided in relation to its acquisition
and redevelopment of the Group headquarters as
detailed further in note 21.
Cash flow
After the Group’s investment in PRS activities, cash
balances decreased by £19,010,000 to £6,125,000
(2015: increased by £19,915,000 to £25,135,000). The
cash inflow from operating activities was £2,353,000
(2015: outflow of £995,000). The cash outflow from
investing activities was £21,953,000 (2015: inflow of
£1,756,000) along with the cash inflows from financing
activities of £590,000 (2015: £19,154,000).
Key performance indicators
The key performance indicators are concentrated on
the property activities.
The Group’s key performance indicators include:
2016 2015
£’000 £’000 CHANGE
Revenue – all property
activities 5,373 6,698 (20%)
Operating profit –
property activities 4,213 2,544 +66%
Unrealised profit on
revaluation of
investment property 2,017 - +100%
Group profit
from operations 3,365 1,818 +85%
Cash balances 6,125 25,135 (76%)
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.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 11
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.
A financial risk is where the Group develops its own
investment property and there may be increased costs
from that originally forecast. This risk is mitigated by
securing fixed price design and build contracts before the
development commences. A further financial risk is the
reduction in the value of the Group’s investment property.
This risk is mitigated by the number of properties and
their geographical location but also focusing on ensuring
that the properties are let to good quality tenants, and are
professionally managed so providing customers with a
high level of service. In addition, the Group seeks to
acquire investment sites at competitive prices.
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 rental income in respect of its
investment properties, property project development
fees and the receipt of profits arising out of the
partnerships.
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, managed funds and Sigma’s Own PRS portfolio.
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.
During the year the Group fulfilled it legal obligation in
relation to pension auto-enrolment and offered all
employees the opportunity to join a defined
contribution scheme managed by the Group.
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,
North East and Midland areas of England. This has
led to significant contributions to GDP and social
prosperity in the region, not only revitalising
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
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
GF Barnet
Chief Executive Officer
3 May 2017
12 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Directors
David Sigsworth OBE
Non-executive Chairman (Age 70)
Gwynn Thomson, RICS
Property Investment Director (Age 49)
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.
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.
Graham Barnet
Chief Executive Officer (Age 53)
Duncan Sutherland
Regeneration Director (Age 65)
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 51)
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 49)
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.
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.
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.
William MacLeod
Executive Director (Age 51) (left 5 April 2016)
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.
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 2016 13
Advisers
Registrars
Capita IRG plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Secretary and Registered Office
Malcolm Briselden, ACMA
Floor 3, 1 St Ann Street
Manchester
M2 7LR
Auditor
Moore Stephens LLP
150 Aldersgate Street
London
EC1A 4AB
Trading Address
18 Alva Street
Edinburgh
EH2 4QG
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 2016
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 2016.
Results and dividends
The Group made a net profit before tax for the year of
£3,670,000 (2015 restated: £2,586,000). The directors
do not recommend the payment of a dividend (2015:
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 £6,125,000 (2015:
£25,135,000).
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
(2015: £nil).
Going concern
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
Sigma Capital Group plc | Annual Report & Financial Statements 2016 15
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.
Auditor
A resolution to reappoint Moore Stephens LLP as
auditor will be proposed at the Annual General
Meeting.
By order of the Board
Malcolm Briselden, ACMA
Company Secretary
3 May 2017
executive Directors and two non-executive Directors.
The Board 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.
16 Sigma Capital Group plc | Annual Report & Financial Statements 2016
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 8 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 2016 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
D Sutherland
D Sutherland
D Sutherland
G Thomson
G Thomson
G Thomson
G Thomson
DATE OF GRANT
NUMBER
EXERCISE PRICE EXERCISE DATE
EXPIRY DATE
28.11.13
114,286
26.25p 28.11.16 – 27.11.23
27.11.23
19.11.14
250,000
68.00p 19.11.17 –
18.11.24
18.11.24
05.01.16
400,000
93.50p 05.01.19 – 04.01.26
04.01.26
28.11.13
50,000
26.25p 28.11.16 – 27.11.23
27.11.23
19.11.14
174,816
68.00p 19.11.17 –
18.11.24
18.11.24
05.01.16
250,000
93.50p 05.01.19 – 04.01.26
04.01.26
29.07.11
250,000
7.50p 29.07.14 – 28.07.21
28.07.21
28.11.13
82,857
26.25p 28.11.16 – 27.11.23
27.11.23
19.11.14
264,503
68.00p 19.11.17 –
18.11.24
18.11.24
05.01.16
400,000
93.50p 05.01.19 – 04.01.26
04.01.26
29.07.11
119,500
7.50p 29.07.14 – 28.07.21
28.07.21
28.11.13
42,857
26.25p 28.11.16 – 27.11.23
27.11.23
19.11.14
64,503
68.00p 19.11.17 –
18.11.24
18.11.24
05.05.11
250,000
8.00p 05.05.14– 04.05.21
04.05.21
28.11.13
38,095
26.25p 28.11.16 – 27.11.23
27.11.23
19.11.14
200,000
68.00p 19.11.17 –
18.11.24
18.11.24
05.01.16
250,000
93.50p 05.01.19 – 04.01.26
04.01.26
During the year D Sigsworth exercised an option over 100,000 shares at 25p per share. Details of the Company’s
option schemes are set out in note 24 to the financial statements.
The market price of the Company’s shares at 31 December 2016 was 82p. The range of market prices during the
year was 70.5p to 106.5p.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 17
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 £942,000. 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%
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.
Based on the methodology used to recognise a
portion of the carried interest as Group revenue, the
value of the total entitlement would be £127,000. 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 2020 at the earliest.
The total entitlement to the directors is split in the
following proportions:
GF Barnet
GR Hogg
G Thomson
M Briselden
7.50%
7.50%
2.50%
2.25%
the fair value uplift on investment property, the value
of the total entitlement would be £401,000. This
amount is dependent on the actual disposal of the
investment property and is not contractually due to
the directors unless there is a disposal. The total
entitlement to the directors is split in the following
proportions:
GF Barnet
GR Hogg
G Thomson
M Briselden
4.5%
4.5%
1.5%
1.5%
Directors’ interests - interests in shares
Directors in office at 31 December 2016 had the
following interests in the ordinary shares of 1p each of
the Company:
2016 2015
NUMBER NUMBER
GF Barnet 6,513,237 7,548,237
M Briselden 61,660 61,600
GR Hogg 536,496 536,496
D Sigsworth 645,304 545,304
G Thomson 142,857 142,857
D Sutherland 145,299 145,299
All of the above interests are beneficial except for nil
shares (2015: 735,000 shares) held by Graham Barnet
as trustee for two of his children. On 16 March 2016,
the shares are no longer included in the beneficial
interest of Graham Barnet under the terms of those
trusts. On 19 April 2016, David Sigsworth exercised
options over 100,000 ordinary shares of 1p each. On 28
November 2016, Bill MacLeod a former director,
exercised options over 114,285 ordinary shares of 1p
each. 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 2016 and 2 May 2017.
Subject to certain performance conditions, four of the
directors may be entitled to a share of the total profit
on disposal in relation to the Group’s self-funded PRS
properties. Based on methodology used to recognise
D Sigsworth OBE
Chairman
3 May 2017
18 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Statement of Directors’ Responsibilities
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.
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.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 19
Independent Auditor’s Report
to the shareholders of Sigma Capital Group plc
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 the parent
company’s affairs as at year end 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.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
>
>
the information given in the Strategic Report and
the Directors’ Report for the financial year for
which the group financial statements are prepared
is consistent with the group financial statements;
and
the Strategic Report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
We have audited the financial statements of Sigma
Capital Group plc for the year ended 31 December
2016 which are set out on pages 21 to 53. 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 set out on page 18, 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 (APB’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 the financial and
non-financial information in the Annual Report to
20 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Independent Auditors’ Report (continued)
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
parent company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the strategic report or the directors’
report.
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
Statutory Auditor
150 Aldersgate Street
London
EC1A 4AB
3 May 2017
Sigma Capital Group plc | Annual Report & Financial Statements 2016 21
Consolidated Comprehensive
Income Statement
for the year ended 31 December 2016
RESTATED
2016 2015
NOTES £’000 £’000
Revenue 3 5,383 6,724
Cost of sales 4 (460) (1,621)
Gross profit 4,923 5,103
Unrealised gain on revaluation of investment property 12 2,017 -
Unrealised profit/(loss) on the revaluation of investments 17 23 (120)
Administrative expenses 5 (3,598) (3,165)
Profit from operations 3,365 1,818
Finance income 6 290 319
Share of profit of associate company 15 443 449
Exceptional items 7 (428) -
Profit before tax 3,670 2,586
Taxation 9 (105) (192)
Profit for the year 3,565 2,394
Profit per share attributable to the equity holders of the Company:
Basic profit per share 10 4.02p 3.39p
Diluted profit per share 10 3.97p 3.35p
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
£739,000 (2015: £542,000).
22 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Consolidated Balance Sheet
at 31 December 2016
RESTATED
2016 2015
NOTES £’000 £’000
ASSETS
Non-current assets
Goodwill and other intangibles 11 544 561
Investment property 12 24,825 -
Property and equipment 13 1,111 33
Investment in joint venture 15 892 449
Fixed asset investments 16 2 2
Financial assets at fair value through profit and loss 17 576 553
Trade and other receivables 19 4,126 4,069
32,076 5,667
Current assets
Stocks 18 - 509
Trade receivables 19 323 1,020
Other current assets 19 2,622 3,250
Cash and cash equivalents 6,125 25,135
9,070 29,914
Total assets 41,146 35,581
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings 21 481 -
Current liabilities
Trade and other payables 20 4,226 3,134
Interest bearing loans and overdrafts 21 55 -
Deferred tax liability 22 297 192
Total liabilities 5,059 3,326
Net assets 36,087 32,255
Equity
Called up share capital 23 887 885
Share premium account 23 31,885 31,833
Capital redemption reserve 34 34
Merger reserve (249) (249)
Capital reserve (7) (7)
Retained earnings 3,537 (241)
Equity attributable to equity holders of the Company 36,087 32,255
The accompanying notes are an integral part of this consolidated balance sheet.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 23
Company Balance Sheet
at 31 December 2016
2016 2015
NOTES £’000 £’000
ASSETS
Non-current assets
Property and equipment 13 43 -
Investment in subsidiaries 14 2,921 2,921
Trade and other receivables 19 23,218 3,179
26,182 6,100
Current assets
Trade receivables 19 215 500
Other current assets 19 61 96
Cash and cash equivalents 3,395 23,562
3,671 24,158
Total assets 29,853 30,258
LIABILITIES
Current liabilities
Trade and other payables 20 1,659 1,592
Total liabilities 1,659 1,592
Net assets 28,194 28,666
Equity
Called up share capital 23 887 885
Share premium account 23 31,885 31,833
Capital redemption reserve 34 34
Retained earnings (4,612) (4,086)
Total equity 28,194 28,666
The accompanying notes are an integral part of this balance sheet.
The loss for the Company for the year was £739,000 (2015: £542,000)
The financial statements on pages 21 to 53 were approved by the Board of Directors and authorised for issue on 3
May 2017 and were signed on its behalf by:
GF Barnet
Chief Executive Officer
3 May 2017
Registered number 03942129
24 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
SHARE CAPITAL
SHARE PREMIUM REDEMPTION MERGER CAPITAL RETAINED TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE EARNINGS EQUITY
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2015 612 12,952 34 (249) (7) (2,722) 10,620
Transactions with owners
in their capacity as owners - - - - - - -
Issue of shares 273 19,783 - - - - 20,056
Cost of share issue - (902) - - - - (902)
Comprehensive income
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
Prior year adjustment - - - - - 449 449
At 31 December 2015 restated 885 31,833 34 (249) (7) (241) 32,255
Transactions with owners
in their capacity as owners - - - - - - -
Issue of shares 2 52 - - - - 54
Comprehensive income
for the year - - - - - 3,565 3,565
Share-based payments - - - - - 213 213
At 31 December 2016 887 31,885 34 (249) (7) 3,537 36,087
There were no other comprehensive incomes or losses in either year other than those included in the profit and
loss for the year.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 25
Company Statement of Changes in Equity
for the year ended 31 December 2016
SHARE CAPITAL
SHARE PREMIUM REDEMPTION RETAINED TOTAL
CAPITAL ACCOUNT RESERVE EARNINGS EQUITY
£’000 £’000 £’000 £’000 £’000
At 1 January 2015 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
Issue of Shares 2 52 - - 54
Loss for the year - - - (739) (739)
Share-based payments - - - 213 213
At 31 December 2016 887 31,885 34 (4,612) 28,194
26 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Consolidated and Company
Cash Flow Statements
for the year ended 31 December 2016
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
NOTES £’000 £’000 £’000 £’000
Cash flows from operating activities
Cash received/(used in) from operations 27 2,353 (995) (20,244) 1,351
Net cash used in operating activities 2,353 (995) (20,244) 1,351
Cash flows from investing activities
Purchase of property and equipment (1,102) (25) (50) -
Purchase of investment property
at fair value through profit and loss (22,808) - - -
Repayment of loans by PRS Fund 1,667 1,741 - -
Fixed asset investments - (2) - -
Interest received and other financial income 290 42 73 39
Net cash (invested in)/generated
from investing activities (21,953) 1,756 23 39
Cash flows from financing activities
Bank loan 536 - - -
Issue of shares 54 19,154 54 19,154
Net cash generated from financing activities 590 19,154 54 19,154
Net (decrease)/increase in cash and cash equivalents (19,010) 19,915 (20,167) 20,544
Cash and cash equivalents at beginning of year 25,135 5,220 23,562 3,018
Cash and cash equivalents at end of year 6,125 25,135 3,395 23,562
The accompanying notes are an integral part of this cash flow statement.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 27
Accounting Policies
for the year ended 31 December 2016
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. The
Group had a bank balance of £6,125,000 at the end of
the year and 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 2015 with the exception of IAS 40
Investment Property and IAS 28 Investments in
Associates and Joint Ventures. New standards
introduced during the period had no material impact
on the results or net assets of the Company or Group.
A number of new standards and amendments to
existing standards have been published which
are mandatory, but are not effective for the year ended
31 December 2016. The Directors do not anticipate that
the adoption of these revised standards and
interpretations will have a significant impact on the
figures included in the financial statements in the
period of initial application other than the following:
IFRS 9 Financial Instruments
The standard is effective for periods beginning on or
after 1 January 2018.
The standard makes substantial changes to the
measurement of financial assets and financial liabilities.
There will only be three categories of financial assets
whereby financial assets are recognised at either fair
value through profit and loss, fair value through other
comprehensive income or measured at amortised cost.
On adoption of the standard, the Group will have to
re-determine the classification of its financial assets
based on the business model for each category of
financial asset. This is not considered likely to give
rise to any significant adjustments other than
reclassifications.
The principal change to the measurement of financial
assets measured at amortised cost or fair value
through other comprehensive income is that
impairments will be recognised on an expected loss
basis compared to the current incurred loss approach.
As such, where there are expected to be credit losses
these are recognised in profit or loss. For financial
assets measured at amortised cost the carrying
amount of the asset is reduced for the loss allowance.
For financial assets measured at fair value through
other comprehensive income the loss allowance is
recognised in other comprehensive income and does
not reduce the carrying amount of the financial asset.
Most financial liabilities will continue to be carried at
amortised cost, however, some financial liabilities will
be required to be measured at fair value through profit
or loss, for example derivative financial instruments,
with changes in the liabilities’ credit risk recognised in
other comprehensive income.
IFRS 15 – Revenue from contracts with customers
The date the standard is effective from 1 January 2018.
The standard has been developed to provide a
comprehensive set of principles in presenting the
nature, amount, timing and uncertainty of revenue
and cash flows arising from a contract with a customer.
The standard is based around the following steps in
recognising revenue:
>
>
>
Identify the contract with the customer;
Identify the performance obligations in the
contract;
Determine the transaction price;
> Allocate the transaction price; and
>
Recognise revenue when a performance obligation
is satisfied.
On application of the standard the disclosures are
likely to increase. The standard includes principles on
disclosing the nature, amount, timing and uncertainty
of revenue and cash flows arising from contracts with
customers, by providing qualitative and quantitative
information.
28 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Accounting Policies (continued)
IFRS 16 – Leases
The standard is effective for periods beginning on or
after 1 January 2019, but can be applied before that
date if the Company also applies IFRS 15 revenue from
Contracts with Customers.
IFRS 16 eliminates the classification of leases as either
operating leases or finance leases for a lessee. Instead
all leases are treated in a similar way to finance leases
applying IAS 17. Leases are ‘capitalised’ by recognising
the present value of the lease payments and showing
them either as lease assets (right-of-use assets) or
together with property, plant and equipment. If lease
payments are made over time, a company also
recognises a financial liability representing its
obligation to make future lease payments. IFRS 16
replaces the typical straight-line operating lease
expense for those leases applying IAS 17 with a
depreciation charge for lease assets (included within
operating costs) and an interest expense on lease
liabilities (included within finance costs).
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
developments depending on the size of each
development and is entitled to 50% of the residual
profits of CSL once all developments are complete. The
Group uses the equity method of consolidation, initially
at cost, and the carrying amount is increased or
decreased to reflect the Group’s share of the profit or
loss with the amount recognised in the profit and loss
account. The Directors consider that the Group neither
exercises control nor has the potential to control CSL.
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 2014 which has now been repaid in full during
the current and prior year. 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.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 29
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:
Property held for own use
over 30 years
Leasehold improvements
over the term of the lease
Fixtures and office equipment
25% per annum
Computer equipment
33-50% per annum
Acquired intangible assets
Interests in joint ventures
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 USEFUL VALUATION
ASSET ECONOMIC LIFE METHOD
Customer Remaining Multi-period
relationships period of Earnings
Method contract
Investment Property
Property that is held for long-term rental yields or for
capital appreciation or both is classified as investment
property under IAS 40. Investment property, including
that which is being constructed for future use as
investment property, is measured initially at its cost
including related transactions costs. After initial
recognition, investment property is carried at fair value.
The investment properties are externally valued by
Savills. Savills are qualified independent valuers who
hold a recognised and relevant professional qualification.
Gains or losses arising from changes in the fair value of
the Group’s investment properties are included in profit
from operations in the income statement of the period in
which they arise. Investment property falls within level 3
of the fair value hierarchy as defined by IFRS 13. Further
details are provided in note 1.
Investments in joint ventures are accounted for
by the equity method of accounting and are initially
recognised at cost, and the carrying amount is
increased or decreased to recognise the Group’s
share of profit or loss after the date of acquisition.
The Group’s share of profit or loss is recognised in
the income statement.
Stocks and work in progress
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.
30 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Accounting Policies (continued)
Financial instruments
Trade payables
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 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
Sigma Capital Group plc | Annual Report & Financial Statements 2016 31
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.
Revenue recognition
Fees for services provided by the Group are measured
at the fair value of the consideration received or
receivable, net of value added tax.
Rental income from investment properties is accounted
for on an accruals basis. 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.
Operating leases
Amounts due under operating leases are charged to
the income statement in equal annual instalments over
the period of the lease.
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
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.
Exceptional items
Exceptional items are defined as items of income and
expenditure, which, in the opinion of the Directors, are
material and unusual in nature or of such significance
that, in order to give a full understanding of the
Group’s underlying financial performance, they require
separate disclosure on the face of the comprehensive
income statement in accordance with IAS1
Presentation of Financial Statements.
Prior year adjustment
The Group was not expecting a share of the profits
from its interest in Countryside Sigma Limited in the
prior year. As the results of Countryside Sigma Limited
were not finalised before the accounts were signed, the
share of profit was not included. It was subsequently
determined that the profit was correct and the
Directors believe the amount of profit is material and
therefore a prior year adjustment has been made.
32 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements
for the year ended 31 December 2016
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.
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. At 31 December 2016 the Group had short term debt of
£55,000 (2015: £nil). There were no changes in the Group’s approach to capital management during the year.
Market risk
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 2016, 99% (2015:
99%) 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 2016, the fund held 8 investments (2015: 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 £57,000 (2015: £55,000).
The Group earns profit share in respect of property projects which is partly based on development values
and is therefore exposed to price risk.
Fair values
IFRS 13 sets out a three-tier hierarchy for financial assets and liabilities valued at fair value. These are as
follows:
Level 1
Level 2
quoted prices (unadjusted) in active markets for identical assets and liabilities;
inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly; and
Level 3
unobservable inputs for the asset or liability.
Investment property falls within Level 3. The Investment valuations provided by the independent valuation
expert are based on RIC’s Professional Valuation Standards, but include a number of unobservable inputs
and other valuation assumptions.
The significant unobservable inputs and the range of values used are:
TYPE
RANGE
Investment yield 4.5% to 4.75%
Gross to net assumption 21.5% to 23.5%
Sigma Capital Group plc | Annual Report & Financial Statements 2016 33
The impact of changes to the significant unobservable inputs are:
2016 2016 2015 2015
STATEMENT STATEMENT
INCOME OF FINANCIAL INCOME OF FINANCIAL
STATEMENT POSITION STATEMENT POSITION
IMPACT IMPACT IMPACT IMPACT
£’000 £’000 £’000 £’000
Improvement in yield by 0.125% 656 656 - -
Worsening in yield by 0.125% (622) (622) - -
Improvement in gross to net by 1% 306 306 - -
Worsening in gross to net by 1% (306) (306) - -
The above sensitivities are the average values in respect of all investment property fair valued at 31 December
2016 and includes investment properties under construction.
Financial assets at fair value through the profit and loss account fall within Level 3. The investment valuations
are provided by the manager of the fund based on industry guidelines and reviewed quarterly by the Board.
The valuations are based on market data related to multiples appropriate to the related industry and
development stage of the investee. The significant unobservable inputs relate to this data.
Interest rate risk
The Group has limited interest rate risk in respect of its loan that part funded the acquisition and
refurbishment of its new head office. 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.
Credit risk
The Group’s credit risk is primarily attributable to its trade receivables and other current assets.
During the year ended 31 December 2016, 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 rental income arises from the Group’s investment in PRS assets. Rental income is paid monthly in
advance.
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. Each project is subject to financial due diligence prior to
commencement including a detailed appraisal. The project is reviewed regularly thereafter. As the fees are
paid throughout the development period the risk is reduced.
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. Each project is subject to financial due diligence prior to commencement
including a detailed appraisal. The project is reviewed regularly thereafter.
Property project management fees arise in respect of Sigma Inpartnership’s joint venture with ION
Developments. The fees are agreed in advance and are recognised as per the accounting policy on revenue
recognition. Fees are payable monthly over the development period. Each project is subject to financial due
diligence prior to commencement including a detailed appraisal. The project is reviewed regularly thereafter.
34 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
1.
Financial risk management (continued)
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. The Group’s PRS
activities are subject to financial due diligence prior to commencement including a detailed appraisal. The
performance of the project is monitored on a monthly basis with updates on the level of carried interest
calculated quarterly. Carried interest is recognised over the expected life of the project and therefore the
risk is reduced.
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 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 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.
Asset management fees are earned in respect of the groups PRS activities and are earned based on the
number of residential units that have reached practical completion.
During the current year the Group earned property management fees from the management of City Wharf,
Aberdeen. However, in January 2016 the company that held the asset was put into administration.
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:
2016 2015
£’000 £’000
Property management fees due to Sigma Inpartnership 44 72
Transaction fee due to Sigma Capital Property - 916
Development management fees due to Sigma Capital Property 264 -
Other property management fees 15 32
Other debtors 378 94
Other debtors - loan to PRS Fund 92 1,500
Other debtors - loan to PRS Fund - 259
Other prepayments 139 105
Accrued income in respect of disposal of land - 1,575
Other accrued income 5,610 3,786
Social security and other taxes 529 -
7,071 8,339
The maximum exposure to credit risk for trade receivables and other current assets is represented by their
carrying amount. The development management fees due to Sigma Capital Property were paid in January
2017. The loan of £92,000 (2015: £1,500,000) in respect of the PRS Fund was fully repaid in March 2017.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 35
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.
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 investment property
The matters taken into account when assessing the fair value of investment property are detailed in
accounting policy on investment property.
(iii) 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.
(iv) 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 11.
36 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
3.
Segmental information – business segments
At 31 December 2016 the Group has just one business activity, property. The Group’s venture capital fund
management activities ceased in the first half of 2014.
The Group had four significant customers in the year. Thistle Limited Partnership was a significant customer
with profit share and carried interest earned of £1,549,000 (2015: £2,137,000), UK PRS (Jersey) Properties I
Limited with fees and carried interest of £1,247,000 (2015: £763,000), Countryside Sigma Limited with
development management fees and profit share earned of £954,000 (2015: £1,441,000), Countryside
Properties (UK) Limited with fees and sale of land totalling £548,000 (2015: £2,032,000) and ION
Developments with fees totalling £577,000 (2015: £nil).
The revenue from services from the Group’s Owned PRS property represents £66k of gross rental income
(2015: £nil). Rental operating costs attributable to the gross rental income for the year were £16k (2015: £nil).
The segment analysis for the year ended 31 December 2016 is as follows:
MANAGED OWNED PRS VENTURE OLDING INTRA GROUP
REGENERATION PROPERTY PROPERTY CAPITAL HCOMPANY ADJUSTMENTS TOTAL
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Revenue from services 2,171 3,136 66 10 0 0 5,383
Trading profit/(loss) 1,538 607 51 8 (812) (67) 1,325
Unrealised gain on
revaluation of
investment property - - 2,017 - - - 2,017
Unrealised gain on
revaluation of investments - - - 23 - - 23
Profit/(loss) from
operations 1,538 607 2,068 31 (812) (67) 3,365
Finance income 128 87 - 2 73 - 290
Share of associate 443 - - - - - 443
Exceptional items - (428) - - - - (428)
Profit/(loss) before tax 2,109 266 2,068 33 (739) (67) 3,670
Total assets 6,060 4,971 25,796 3,444 29,853 (28,978) 41,146
Total liabilities (216) (7,486) (23,728) (1,651) (1,659) 29,681 (5,059)
Net assets 5,844 (2,515) 2,068 1,793 28,194 703 36,087
Capital expenditure - 1,052 - - 50 - 1,102
Depreciation 1 13 - 2 7 - 23
Segmental assets
Net assets of the Group’s Regeneration activities consists mainly of its accrued income in respect of property
projects. The Group’s Owned PRS Property consists of Investment property measured at fair value. Venture
Capital net assets includes its historic investment in one venture fund and cash.
Sigma Capital Group plc | Annual Report & Financial Statements 2016 37
The restated segment analysis for the year ended 31 December 2015 is as follows:
RESTATED MANAGED OWNED PRS VENTURE HOLDING INTRA GROUP
REGENERATION PROPERTY PROPERTY CAPITAL COMPANY ADJUSTMENTS TOTAL
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Revenue from services 3,602 3,096 - 26 - - 6,724
Trading profit/(loss) 1,652 892 - (6) (582) (18) 1,938
Unrealised gain on
revaluation of
investment property - - - - - - -
Unrealised loss on
revaluation of investments - - - (120) - - (120)
Profit/(loss) from
operations 1,652 892 - (126) (582) (18) 1,818
Finance income 65 212 - 2 40 - 319
Share of associate 449 - - - - - 449
Profit/(loss) before tax 2,166 1,104 - (124) (542) (18) 2,586
Total assets 6,224 4,961 - 3,491 30,258 (8,795) 35,581
Total liabilities (2,493) (7,637) - (1,732) (1,592) 9,570 (3,326)
Net assets 3,731 (2,676) - 1,759 28,666 775 32,255
Capital expenditure - 25 - - - - 25
Depreciation - 6 - 3 1 - 10
4.
Cost of sales
2016 2015
£’000 £’000
Costs in relation to the development at North Arran Way (25) (78)
Costs in relation to sale of land 514 1,448
Other (29) 251
460 1,621
38 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
5.
Expenses by nature
Expenses included in administrative expenses are analysed below.
2016 2015
£’000 £’000
Administrative expenses
Employee costs (salaries and national insurance) 2,288 1,892
Employers pension contributions 100 84
Share based payments 213 87
Other employee related costs 104 52
Consultancy 84 102
Travel and entertainment 233 245
Depreciation 24 10
Amortisation 17 18
Operating lease rentals:
- plant and machinery 14 2
-
land and buildings (net) 122 122
Other premises costs 38 108
Audit services:
- Fees payable to Company auditor for the audit
of the parent company and consolidated accounts 23 30
-
the audit of the Company’s subsidiaries pursuant to legislation 31 32
Non-audit services:
-
tax services 25 18
- other accountancy services 5 14
Other legal, professional and financial costs 229 294
Administration costs 48 55
3,598 3,165
6.
Finance income
2016 2015
£’000 £’000
Interest income on short-term deposits and loans 79 42
Interest income on loan to PRS Fund - 212
Unwinding of discount 211 65
290 319
Sigma Capital Group plc | Annual Report & Financial Statements 2016 39
7.
Exceptional items
2016 2015
£’000 £’000
Managed PRS activities 428 -
428 -
The Group’s agreement with Torrin Asset Management for fees payable in relation to its managed PRS
activities was terminated during the year giving rise to a settlement of £428,000. The Group considers this
an exceptional item due its size and non-recurring nature.
8.
Directors and employees
The average monthly number of employees, including executive Directors, employed by the Group during the
year was:
Property 17 13
Administration 8 6
25 19
2016
2015
The aggregate remuneration was as follows:
2016 2015
£’000 £’000
Wages and salaries 2,035 1,683
Social security 253 209
Pension costs – defined contribution plans 100 84
Share based payment charge - equity settled 213 87
2,601 2,063
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.
40 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
8.
Directors and employees (continued)
The key management of the Group comprises the Sigma Capital Group plc Board Directors. The total
remuneration for each director is shown below.
ANNUAL OTHER
SALARY INCENTIVES BENEFITS TOTAL PENSION
________________ ________________ ________________ ________________ ________________
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Executive
GF Barnet 395 275 - 76 - - 395 351 - -
M Briselden 128 85 - 9 6 6 134 100 12 9
G Thomson 130 116 - 10 - - 130 126 13 12
G Hogg 225 156 - 76 5 5 230 237 22 16
D Sutherland 96 91 - - 5 5 101 96 5 5
W MacLeod 76 90 - - - - 76 90 - -
Non-executive
D Sigsworth 55 40 - - - - 55 40 - -
J McMahon 40 10 - - - - 40 10 - -
1,145 863 - 171 16 16 1,161 1,050 52 42
Certain Directors have been allocated a share of the carried interest in respect of the PRS joint ventures with
Gatehouse and with UK PRS properties. In addition, subject to certain performance conditions, four of the
directors may be entitled to a share of the total profit on disposal in relation to the Group’s self-funded PRS
properties. No carried interest has crystallised to date. Details of the carried interest arrangements are
contained in the Directors’ remuneration report.
9.
Taxation
2016 2015
£’000 £’000
UK corporation tax on profit for the year - -
Deferred tax – origination and reversal of timing differences 105 192
Tax on profit on ordinary activities 105 192
Sigma Capital Group plc | Annual Report & Financial Statements 2016 41
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are
explained below.
RESTATED
2016 2015
£’000 £’000
Profit before tax 3,670 2,586
Profit before tax at the effective rate of corporation tax in the UK of:
20% (2015: 20.25%) 734 524
Effects of:
Expenses not deductible for tax purposes 59 59
Share of partnership losses - (30)
Share of joint venture profit after tax (89) (91)
Capital allowances in excess of depreciation (28) (6)
Utilisation of losses 176 (4)
Gains on revalued properties not recognised in deferred tax (408) -
Other short term timing differences not recognised in deferred tax (208) (199)
Effect of reduction in deferred tax rate (102) -
Other adjustments (29) (61)
Tax charge for the year 105 192
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 17% (2015: 19%).
2016 2015
£’000 £’000
Unrelieved management expenses and other losses 2,634 2,801
Unrelieved capital losses 689 770
Chargeable gains (343) -
Excess of depreciation over capital allowances 6
Other timing differences (297) (173)
2,683 3,404
42 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
10. Profit per share
The calculation of the basic profit per share for the year ended 31 December 2016 and 31 December 2015 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 WEIGHTED
ATTRIBUTABLE TO AVERAGE BASIC PROFIT
SHAREHOLDERS NUMBER OF PER SHARE
£’000 SHARES (PENCE)
Year ended 31 December 2016 3,565 88,649,088 4.02
Year ended 31 December 2015 (Restated) 2,394 70,555,231 3.39
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 2016 of 89,750,427 (2015: 71,511,717). For the
year ended 31 December 2016, the diluted earnings per share is 3.97 pence (2015 restated: 3.35 pence).
11. Goodwill and other intangible assets
OTHER
GOODWILL INTANGIBLES TOTAL
£’000 £’000 £’000
Cost
At 31 December 2015 and 31 December 2016 656 105 761
Amortisation and impairment
At 1 January 2015 123 59 182
Amortisation charge - 18 18
At 31 December 2015 123 77 200
Amortisation charge - 17 -
At 31 December 2016 123 94 200
Carrying value
At 31 December 2016 533 11 544
At 31 December 2015 533 28 561
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 Capital Group plc | Annual Report & Financial Statements 2016 43
Sigma Inpartnership
2016 2015
£’000 £’000
Goodwill 533 533
Intangible assets 11 28
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.
12.
Investment property
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Cost
At 1 January 2016 - - - -
Additions during the year 22,808 - - -
At 31 December 2016 22,809 - - -
Fair value adjustment
At 1 January 2016 - - - -
Revaluation during the year 2,017 - - -
At 31 December 2016 2,017 - - -
Net book value
At 31 December 2016 24,825 - - -
The investment properties were externally valued by Savills. Savills are qualified independent valuers who
hold a recognised and relevant professional qualification. The valuation basis of market value conforms to
international valuation standards. The valuation is based on market evidence of investment yields, expected
gross to net income rates and actual and expected rental values.
44 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
13. Property and equipment
FIXTURES
FREEHOLD LEASEHOLD AND OFFICE COMPUTER
PROPERTY IMPROVEMENTS EQUIPMENT EQUIPMENT TOTAL
£’000 £’000 £’000 £’000 £’000
GROUP
Cost
At 1 January 2015 - 43 60 181 284
Additions - - 16 9 25
At 31 December 2015 - 43 76 190 309
Additions 1,028 44 26 4 1,102
Disposals - (43) (57) (170) (270)
At 31 December 2016 1,028 44 45 24 1,141
Depreciation
At 1 January 2015 - 43 58 165 266
Charge for the year - - 1 9 10
At 31 December 2015 - 43 59 174 276
Charge for the year - 6 8 9 23
Disposals - (43) (57) (169) (269)
At 31 December 2016 - 6 10 14 30
Net book value
At 31 December 2016 1,028 38 35 10 1,111
At 31 December 2015 - - 17 16 33
Sigma Capital Group plc | Annual Report & Financial Statements 2016 45
FIXTURES
LEASEHOLD AND OFFICE
IMPROVEMENTS EQUIPMENT TOTAL
£’000 £’000 £’000
COMPANY
Cost
At 1 January 2015 7 15 22
Additions - - -
At 31 December 2015 7 15 22
Additions 44 6 50
Disposals (7) (12) (19)
At 31 December 2016 44 9 53
Depreciation
At 1 January 2015 7 14 21
Charge for the year - 1 1
At 31 December 2015 7 15 22
Charge for the year 6 1 7
Disposals (7) (12) (19)
At 31 December 2016 6 4 10
Net book value
At 31 December 2016 38 5 43
At 31 December 2015 - - -
46 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
14.
Investment in subsidiaries and partnerships
COMPANY COMPANY
2016 2015
£’000 £’000
At 31 December 2015 and 31 December 2016 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 Ltd Scotland 100 Property*
Sigma Inpartnership Limited Scotland 100 Property*
Strategic Property Asset Management Limited Scotland 100 Property*
Strategic Investment Management Holdings Limited Scotland 100 Property*
Sigma Property Investment Limited Scotland 100 Property*
Sigma Property Partners Limited Scotland 100 Property*
Sigma General Partner Limited Scotland 100 Property*
Sigma FP General Partner Limited Scotland 100 Property*
Sigma Thistle Founder Partner LP England 68.25 Property**
Sigma Thistle Phase II FP Limited Partnership Scotland 75 Property*
Sigma Thistle Phase II GP LLP Scotland 100 Property*
Sigma Thistle Phase II Limited Scotland 100 Property*
Sigma UK PRS GP Limited Jersey 100 Property***
Sigma Founder Partner Limited Partnership Scotland 100 Property*
Sigma PRS Developments Limited Scotland 100 Property*
Sigma PRS Investments I Limited Scotland 85 Property*
Sigma PRS Investments II Limited England 85 Property**
Sigma PRS Investments III Limited England 85 Property**
Sigma PRS Investments IV Limited England 85 Property**
Sigma PRS Investments V Limited England 85 Property**
Sigma PRS Investments VI Limited England 85 Property**
Sigma PRS Investments VII Limited England 85 Property**
Sigma PRS Investments VIII Limited England 85 Property**
Sigma PRS Investments XI Limited England 85 Property**
Sigma PRS GP Limited Scotland 100 Property*
Sigma PRS General Partner LLP Scotland 100 Property*
Sigma PRS Founder Partner LP Scotland 100 Property*
Sigma PRS Management Limited England 100 Dormant**
Sigma PRS Property Investments LP England 100 Property**
Liverpool Inpartnership Limited England 100 Property**
Solihull Inpartnership Limited England 100 Property**
Sigma Capital Group plc | Annual Report & Financial Statements 2016 47
COMPANY NAME COUNTRY OF INCORPORATION % HOLDING PRINCIPAL ACTIVITY
Salford Inpartnership Limited Scotland 100 Property*
Inpartnership (LP) Limited Scotland 100 Property*
City Spirit Regeneration Limited England 100 Property**
City Spirit Regeneration (Salford) Limited England 100 Property**
Inpartnership CS Limited England 100 Property**
Blackburn Inpartnership Limited Scotland 100 Property*
Sigma Technology Management Limited England 100 Venture Capital**
Sigma Technology Investments Limited England 100 Venture Capital**
Sigma Technology Founder Partners Limited England 100 Venture Capital**
Liverpool Inpartnership 2007 Limited England 100 Dormant**
Inpartnership Health Limited England 100 Dormant**
Sigma PRS Properties LP Scotland 100 Dormant*
The PRS REIT Limited England 100 Dormant**
SI Hotels (GP1) Limited England 100 Dormant**
SI Hotels (GP2) Limited England 100 Dormant**
SI Hotels Glasgow (GP1) Limited Scotland 100 Dormant*
SI Hotels Glasgow (GP2) Limited Scotland 100 Dormant*
SI No 7 (GP1)Limited Scotland 100 Dormant*
SI No 7 (GP2) Limited Scotland 100 Dormant*
SI (LP) Limited England 100 Dormant**
Registered Office: 18 Alva Street, Edinburgh, EH2 4QG
Registered Office: Floor 3, 1 St. Ann Street, Manchester, M2 7LR
*
**
*** Registered Office: 44 Esplanade, St. Helier, Jersey, JE6 9WG
15.
Investment in joint venture
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
At 1 January 2016 449 - - -
Share of profits 443 449 - -
At 31 December 2015 892 449 - -
Group share of net assets 892 449 - -
The share of net assets relates to the Group’s investment in Countryside Sigma Limited. Countryside Sigma
Limited is incorporated in the United Kingdom and the Group owns 25.1% of the ordinary share capital. The
accounting reference date of Countryside Sigma Limited is 30 September. The results for 12 months to 31
December 2016 and the financial position as at that date have been equity accounted in these financial
statements. The Group is contractually entitled to 50% of the profit of Countryside Sigma expected to be
realised at the end of the development.
48 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
16. Fixed asset investments
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
At 1 January 2016 2 - - -
Additions - 2 - -
At 31 December 2016 2 2 - -
The addition during the prior year relates to the Group’s investment in UK PRS (Jersey) I Limited Partnership.
17.
Financial assets at fair value through profit and loss
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
At 1 January 2016 553 673 - -
Additions - - - -
Disposals - - - -
Fair value write up/(down) 23 (120) - -
At 31 December 2016 576 553 - -
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
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Financial assets at fair value through profit and loss:
- the venture capital funds 23 43 - -
- Unquoted securities - (163) - -
23 (120) - -
18. Stocks
The following is included in the net book value of stocks
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Land and development properties - 509 - -
The value of stocks expensed during the year and included in cost of sales was £509,000 (2015: £1,439,000).
Sigma Capital Group plc | Annual Report & Financial Statements 2016 49
19. Trade receivables and other current assets
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Trade receivables 323 1,020 2 -
Receivables from Group undertakings – current - - 213 500
Receivables from Group undertakings – non current - - 23,218 3,179
Social security and other taxes 529 - 17 45
Other debtors 471 518 4 2
Other debtors - non current - 1,335 - -
Prepayments and accrued income 1,622 2,732 40 49
Prepayments and accrued income – non current 4,126 2,734 - -
7,071 8,339 23,494 3,775
Less receivables from Group undertakings - non current - - (23,218) (3,179)
Less other debtors - non current - (1,335) - -
Less prepayments and accrued income – non current (4,126) (2,734) - -
Current portion 2,945 4,270 276 596
Trade receivables
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Trade receivables not due 321 975 98 222
Trade receivables past due 1-30 days - 31 5 4
Trade receivables past due 31-60 days 2 9 23 104
Trade receivables past due 61-90 days - 5 83 4
Trade receivables past due over 90 days - - 6 166
Gross trade receivables at 31 December 2016 323 1,020 215 500
Provision for bad debt at 1 January 2016 - - - -
Debt provisions reversed in the year - - - -
Provision for bad debt at 31 December 2016 - - - -
Net trade receivables at 31 December 2016 323 1,020 215 500
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. 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 £nil (2015: £259,000) in respect of the PRS Fund which was
repaid in full during 2016 and a loan of £92,000 (2015: £1,500,000) also in respect of the PRS Fund which
was paid in March 2017. The loan of £92,000 attracts interest at the rate of 12% per annum compounded
daily and a deferred interest sum of £100,000.
The Group’s non-current prepayments and accrued income includes fees of £2,294,000 (2015: £1,608,000)
which will be paid between 2017 and 2020, carried interest of £1,832,000 (2015: £914,000) which is expected
to be paid no earlier than 2018 and loan interest of £nil (2015: £212,000).
50 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
20. Trade and other payables
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Trade payables 3,103 79 61 39
Payables to Group undertakings - - 1,552 1,345
Other creditors - 3 - -
Social security and other taxes 84 359 - -
Accruals and deferred income 1,039 2,693 46 208
4,226 3,134 1,659 1,592
The Directors consider that the carrying amount of trade payables approximates to their fair value.
21.
Interest – bearing loans and overdrafts
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Current liabilities
Bank loans 55 - - -
Non-current liabilities
Bank loans 481 - - -
Total interest bearing loans and overdrafts 536 - - -
The loan part funded the acquisition and redevelopment of the Group’s head office in Edinburgh. The original
value of the loan was £550,000 and is repayable in quarterly instalments with a final instalment in 2021.
Interest is charged at commercial rates. The loan is held by Sigma Capital Property Ltd and is secured on the
property. A cross guarantee is provided by the Company.
22. Deferred tax liability
GROUP COMPANY
2016 2016
£’000 £’000
Amounts due to be paid within one year 297 -
The movement in the year in the Group and Company net
deferred tax liability position was as follows:
Opening position as at 1 January 2015 - -
Charge to statement of comprehensive income for the year 192 -
At 31 December 2015 192 -
Charge to statement of comprehensive income for the year 105 -
At 31 December 2016 297 -
Sigma Capital Group plc | Annual Report & Financial Statements 2016 51
23. Share capital and share premium
Group and Company
NUMBER ORDINARY SHARE
OF SHARES SHARES PREMIUM TOTAL
£’000 £’000 £’000
At 31 December 2015 88,501,430 885 31,833 32,718
Exercise of share options 214,285 2 52 54
At 31 December 2016 88,715,715 887 31,885 32,772
The total authorised number of ordinary shares is 130,000,000 (2015: 130,000,000) with a par value of 1p
per share (2015: 1p). All issued shares are fully paid.
24. 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 HM Revenue and Customs 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 1,885,774 options over ordinary shares (2015: nil)
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:
2016 2015
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE PRICE EXERCISE PRICE
IN PENCE PER OPTIONS IN PENCE PER OPTIONS
SHARE (‘000S) SHARE (‘000S)
At 1 January 2016 43 2,545 36.3 3,250
Granted 93.5 1,886 - -
Exercised 25.7 (214) 8.7 (645)
Expired / lapsed 68.0 (89) 50.4 (60)
At 31 December 2016 66.4 4,128 43.0 2,545
Of the 4,128,000 outstanding options (2015: 2,545,000), 1,031,000 had vested at 31 December 2016 (2015:
720,000).
52 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Notes to the Financial Statements (continued)
24. Share options (continued)
Share options outstanding at the end of the year have the following expiry date and exercise prices:
EXERCISE PRICE
PENCE PER 2016 2015
EXPIRY DATE SHARE NUMBER NUMBER
2018 25.0 - 100,000
2021 8.0 250,000 250,000
2021 7.5 369,500 369,500
2023 26.25 411,190 525,476
2024 68.0 1,211,741 1,299,975
2026 93.5 1,885,774 -
There were 1,885,774 (2015: nil) options granted in the year. The weighted average fair value of options
granted to executive Directors and employees during the year determined using the Black-Scholes-Merton
valuation model was 22.7p 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
1.12%. Future volatility has been estimated based on comparable information rather than historical data.
25. 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 2016 and 2015 is set out in the Consolidated and Company Statements of Changes in Equity.
26. Operating lease commitments
The Company leased the Group’s offices in Edinburgh until 31 December 2016 under a non-cancellable operating
lease. 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:
2016 2015
PLANT AND LAND AND PLANT AND LAND AND
MACHINERY BUILDINGS MACHINERY BUILDINGS
£’000 £’000 £’000 £’000
The Group
Within 1 year 14 30 8 121
From 2-5 years 32 90 12 120
After 5 years - - - -
46 120 20 241
The Company
Within 1 year - 30 - 119
From 2-5 years - 90 - 120
After 5 years - - - -
- 120 - 239
Sigma Capital Group plc | Annual Report & Financial Statements 2016 53
27. Cash flows from operating activities
RESTATED
GROUP GROUP COMPANY COMPANY
2016 2015 2016 2015
£’000 £’000 £’000 £’000
Profits/(loss) after tax 3,565 2,394 (739) (542)
Adjustments for:
Share-based payments 213 87 213 87
Depreciation 23 10 7 1
Amortisation 17 18 - -
Finance income (290) (319) (73) (39)
Fair value (profit)/loss on financial assets
at fair value through profit or loss (23) 120 - -
Loss on disposal of trading investments
at fair value through profit or loss - 1 - -
Share of associate profit (443) (449) - -
Unrealised profit on revaluation of investment property (2,017) - - -
Changes in working capital:
Decrease/(increase) in stocks 509 (509) - -
Trade and other receivables (398) (4,741) (22,970) 1,592
Trade and other payables 1,197 2,394 3,318 252
Cash flows from operating activities 2,353 (995) (20,244) 1,351
28. Capital commitments
The Group have entered into contracts with unrelated parties for the construction of residential housing with
a total value of £38,457,000 (2015: £nil). As at 31 December 2016, £21,878,000 (2015: £nil) of such
commitments remained outstanding.
29. 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 £425,000 (2015: £489,000). At 31 December 2016, Sigma was owed
£16,000 (2015: £69,000).
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 £1,041,000 (2015: £1,118,000). The Group also received interest of
£434,000 (2015: £nil) in respect of its loans to Thistle Limited Partnership.
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 services for the year were £797,000 (2015: £763,000). At the year end, Sigma
were owed £268,000 (2015: £763,000). The group also sold land and development property to UK PRS
(Jersey) I LP for £548,000 (2015: £nil).
During the year, the Group paid fees of £680,000 (2015: £nil) to Torrin Asset Management Limited of
which former director Bill MacLeod is also a director. The balance outstanding at the end of the year was £nil
(2015: £52,934).
Certain Directors have been allocated a share of the carried interest in respect of the PRS joint ventures with
Gatehouse and with UK PRS properties. In addition, subject to certain performance conditions, four of the
directors may be entitled to a share of the total profit on disposal in relation to the Group’s self-funded PRS
properties. No carried interest has crystallised to date. Details of the carried interest arrangements are
contained in the Directors’ remuneration report.
54 Sigma Capital Group plc | Annual Report & Financial Statements 2016
Five Year Record
RESTATED
2016 2015 2014 2013 2012
£’000 £’000 £’000 £’000 £’000
Revenue 5,383 6,724 3,868 5,808 2,326
Cost of sales (460) (1,621) (660) (3,555) -
Gross profit 4,923 5,103 3,208 2,253 2,326
Other operating income 2,040 (26) 170 54 (833)
Administrative and other expenses (3,598) (3,259) (3,192) (2,662) (2,575)
Profit/(loss) from operations 3,365 1,818 186 (355) (1,082)
Net finance income 290 319 28 10 22
Share of profits/(losses) from
joint ventures /associate companies 443 449 - 20 (111)
Exceptional item (428) - - (531) -
Profit/(loss) before tax 3,670 2,586 214 (856) (1,171)
Taxation (105) (192) - - -
Profit/(loss) for the year 3,565 2,394 214 (856) (1,171)
Attributable to:
Equity holders of the Company 3,565 2,394 214 (856) (1,171)
Minority interests - - - - -
3,565 2,394 214 (856) (1,171)
Net assets employed 36,087 32,255 10,620 2,636 2,597
Basic earnings/(loss)
per ordinary share (pence) 4.02 3.39 0.38 (1.87) (2.57)
Sigma Capital Group plc | Annual Report & Financial Statements 2016 55
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 10am on 23 June 2017 at 18 Alva Street,
Edinburgh, EH2 4QG 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.
FOR
AGAINST
WITHHELD
Ordinary Resolutions
1.
2.
3.
4.
5.
6.
7.
Receipt of the financial statements for the year ended
Re-appointment of James Cairns McMahon as a director
Re-appointment of Graham Fleming Barnet as a director
31 December 2016 together with the reports of the Directors and the auditor nn
nn
nn
nn
nn
nn
nn
Approval of the report on Directors’ remuneration
for the year ended 31 December 2016
Re-appointment of the auditor
Remuneration of the auditor
General authority to allot securities
Special Resolutions
8.
General disapplication of pre-emption rights
Signature(s) or Common Seal
nn
Date
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
nn
FULL NAME (BLOCK CAPITALS)
Notes
1.
2,
3.
A member may appoint a proxy of his or her choice.
If a proxy 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.
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.
4. Only members or their proxies may attend the meeting.
5.
6.
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.
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 18 Alva Street,
Edinburgh, EH2 4QG no later than 10am on 21 June 2017.
#
56 Sigma Capital Group plc | Annual Report & Financial Statements 2016
from operations up 877% or £1.63m to £1.82m (2014:
£0.19m)
>
(2014: £0.21m)
Profit before tax up nearly 10 times to £2.14m
>
(2014: 0.38p)
Basic earnings per share up 626% to 2.76p
>
35.9p (2014: 17.4p)
Net assets per share more than doubled to
>
£5.22m)
Cash at year end increased to £25.14m (2014:
EDINBURGH:
18 Alva Street
Edinburgh
EH2 4QG
MANCHESTER:
Floor 3, 1 St Ann Street
Manchester
M2 7LR
LONDON:
Regus House
45 King William Street
London EC4R 9AR
T: 0333 999 9926
W: www.sigmacapital.co.uk