Acquisition & Trading Update

SGM

Sigma Capital Group plc

("Sigma", "the Group" or "the Company")

Acquisition of Inpartnership Limited

and

First Half Trading Update

Sigma, the specialist asset management and advisory group, is pleased to announce it has acquired the entire issued ordinary share capital of Inpartnership Limited ("Inpartnership"), which undertakes large scale property-related regeneration projects, working as a bridge between public and private sector organisations. Inpartnership has been acquired from two parties, URWI (Inpartnership) Limited ("URWI"), an investment vehicle controlled jointly by West Coast Capital ("WCC") and HBOS plc, and West Coast Capital (Trading) Limited ("WCC Trading"), a wholly owned subsidiary of WCC. The consideration payable for the acquisition is £347,000, to be satisfied by the issue of 2,170,078 new Sigma ordinary shares of 1 pence each at a price of 16 pence per share.

Under the terms of the agreement, in addition to the consideration payable, once Inpartnership has achieved a minimum overhead recovery in any one year, WCC Trading is entitled to a share of any future development profits from Inpartnership's existing projects (the "Development Profit"). Out of the first £10 million of Development Profit generated, Sigma will receive a minimum of £6.9 million with WCC Trading entitled to a maximum of £3.1 million. Thereafter, WCC is entitled to a 10 per cent. share of any further Development Profit in perpetuity from the existing projects. Additional information on the Development Profit is set out below.

Founded in 2001 and operating from offices in Manchester and Birmingham, Inpartnership was established as an investment led property-related regeneration company, specialising in the creation of long term, asset-backed partnerships with the public sector. Inpartnership has secured three partnerships, with Liverpool City Council, Solihull Metropolitan Borough Council and Salford City Council, each ranging from 10 to 20 years' duration. The partnerships hold long term option arrangements with the respective local authorities for a mix of residential, commercial, education and health opportunities. In total, the partnerships provide for the delivery of around 10,000 new homes, a significant number of new retail centres, health/medical centres, schools and mix of retail/leisure facilities. The total development value of the opportunities held within the three partnerships is estimated at over £2 billion. Further information on the three partnerships is set out below.

For the year ended 31 March 2011, the unaudited financial statements show that Inpartnership generated revenue of £692,000 and an operating loss of £74,000 before one-off exceptional items. At 31 March 2011, Inpartnership had net assets of £344,000 after adjusting for the post balance sheet capitalisation of loans and charges of £1.46 million. Inpartnership will have no debt from the date of acquisition.

The existing senior management team at Inpartnership, comprising Duncan Sutherland and Graeme Hogg, co-founders of the company, will remain as directors of Inpartnership, assisting with its integration with the Group and its ongoing development supported by members of Sigma's property team. Reflecting the increasing importance of the Group's property-related activities, Sigma has today also announced the appointment of John Hamilton and Gwynn Thomson, directors of its property subsidiary, to its Board of Directors.

Inpartnership's major projects

In-Liverpool LLP

In-Liverpool LLP (the "Liverpool Partnership") is a limited liability partnership formed in March 2007 between Liverpool City Council and Inpartnership. It has been established to re-develop any surplus land assets at the discretion of the Council.

The Liverpool Partnership holds a 10-year option agreement over a 60 acre site in the Norris Green area of the City, five miles from Liverpool City centre. It already holds outline planning consent for the development of over 1,100 new homes on this site. The site is largely cleared and ready for development and is classified as the first phase of the regeneration programme. Discussions are well advanced for the option arrangements to be extended across a number of additional sites. Land in the Liverpool Partnership can be developed using any combination of the following three ways: by the Liverpool Partnership - Inpartnership earns a management fee and participates in a profit share; by Inpartnership - Inpartnership earns a fee and an agreed priority profit; or by the Liverpool Partnership selling a site on the open market - Inpartnership earns a percentage of the sales price achieved. At least 20 per cent. of the land must be disposed of by sale on the open market.

The North Solihull Partnership

The North Solihull Partnership (the "NS Partnership") is a limited partnership formed in May 2005 between Solihull Metropolitan Borough Council, Bellway Homes, Whitefriars Housing Association and Inpartnership. The NS Partnership was created to regenerate the entire North Solihull area of around 1,000 acres over a 15 to 20 year period. Plans provide for approximately 8,125 new homes, five new primary schools, four fully refurbished primary schools and five new village centres with retail, commercial, health and community uses.

The NS Partnership has to date delivered approximately 670 new homes and three primary schools with planning permission now obtained for the fourth school. Planning permission has also been obtained for the first village centre building, which is a retail and office building of 30,000 sq ft, and it is hoped this will be on site in late 2011. Inpartnership manages the schools delivery programme, the village centres and associated infrastructure. Inpartnership is also responsible for the delivery of the commercial development across the area for an agreed fee and priority profit arrangement.

Inpartnership is working with the NS Partnership to invest in the significant residential programme, in particular for the private and intermediate rental markets. 

Higher Broughton Partnership - Salford

The Higher Broughton Partnership (the "Salford Partnership") is a limited partnership formed in 2004 between Salford City Council, Royal Bank of Scotland and Inpartnership Ltd.

The Salford Partnership holds an option over approximately 30 acres of land in Higher Broughton in Salford, some 1.5 miles from Manchester city centre. The Salford Partnership is seven years into a 12-year programme of development and has completed 250 new homes and a new community facility, and is currently in the final negotiations for the delivery of a new health centre and approximately 6,700 sq.ft. of local retail units. The land can be drawn down and developed by Inpartnership or the Salford Partnership at a fixed price per acre. Inpartnership manages all the development work and is paid a management fee on a project by project basis. Development profits and enhanced land values are shared among the partners on a deal by deal basis. The next five years will see the development of a further 80 new homes and the development of the final main street frontage site previously housing a high rise apartment block.

Development Profit

The entitlement of WCC Trading to a share of the Development Profit only relates to any development profit arising from Inpartnership's existing projects at the date of acquisition by Sigma. To the extent that all other revenue generated by Inpartnership in any one year does not cover its overheads (with such overheads capped at £825,000), any Development Profit will be retained by Sigma to meet the overheads of Inpartnership. Over and above this entitlement to meet overheads, the Development Profit is to be split as follows:

1. The first £560,000 of Development Profit split 25 per cent. (£140,000) to Sigma and 75 per cent. to WCC Trading (£420,000);

2. The next £1.26 million of Development Profit split 50 per cent. to Sigma (£630,000) and 50 per cent. to WCC Trading (£630,000);

3. The next £8 million of Development Profit split 75 per cent. to Sigma (£6 million) and 25 per cent. to WCC Trading (£2 million);

4. Thereafter WCC Trading will receive a 10 per cent. share of any Development Profit with Sigma retaining 90 per cent.

Related Party Transaction

As WCC is a significant shareholder in Sigma, the acquisition constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies (the "AIM Rules"). Following the transaction, WCC will be interested in approximately 22 per cent. of the enlarged issued share capital of Sigma. In accordance with the AIM Rules, the directors of the Company, other than James McMahon, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the acquisition is fair and reasonable insofar as shareholders of the Company are concerned.

Application has been made for 2,170,078 new Sigma ordinary shares of 1 pence each to be admitted to trading on AIM. Dealings are expected to commence at 8.00 a.m. on Wednesday 17 August 2011.

First half trading update

As advised in our Annual Report for the year ended 31 December 2010, the Group will deliver a materially enhanced performance in the first half of the year compared to the same period last year and has traded profitably with a high level of ongoing activity. In addition, the Group's financial position remains robust and should strengthen further as cash balances increase.

Graham Barnet, Chief Executive of Sigma, said,

"The acquisition of Inpartnership represents an exciting and significant step forward for Sigma. As we highlighted in our Annual Report, we have been working with our largest shareholder, West Coast Capital, on a number of material property-related initiatives and the acquisition of Inpartnership brings the first of these initiatives to fruition.

Inpartnership expands Sigma's property development and investment activities, bringing well established, long term partnerships with three major UK local authorities. We see exciting potential in each partnership, with the total development value of the opportunities estimated at over £2 billion. We believe that the additional skills the Sigma team can bring to these opportunities as well as greater access to finance will unlock significantly more of the value that is inherent within the partnerships.

We are also very pleased to welcome the senior management team of Inpartnership to the Group and look forward to working with them on projects currently underway."

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