Final Results

SGM

Sigma Capital Group plc

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

Sigma Capital Group plc, the specialist asset management and advisory group now focused on venture capital and property, is pleased to announce its audited final results for the year ended 31 December 2010.

Key Points

·; Challenging year but foundations for future growth in place

·; Revenue from services - £1.84m (2009: £2.41m)

·; Operating loss before tax and exceptional items - £0.98m (2009: profit of £0.89m). Two significant exceptional items* - totalled £2.62m (2009: nil)

·; Profitable in second half before exceptional items

·; Loss before tax - £3.60m (2009: profit before tax of £0.89m)

·; Loss per share - 7.59p (2009: earnings per share of 3.68p)

·; Unencumbered cash balances at year end - £1.8m (2009: £2.4m)

·; Net assets per share at year end - 11.1p (2009: 19.3p)

·; Venture capital fund management

- Generated trading profit in year

- Now focused on realisation phase for funds

·; Property operations strengthened and new opportunities emerging

·; Frontier IP, University IP commercialisation business, admitted to AIM in January 2011 raising £1m (gross) - 46.7% shareholding retained by Sigma

·; Appointment of Non-executive Director announced today

·; Enhanced prospects for 2011 and beyond

* Exceptional items: £1.37m related to goodwill impairment in respect of university IP commercialisation business and £1.25m related to the full provision of a property guarantee

David Sigsworth, Chairman, said:

"2010 was a challenging year but I am pleased to report that prospects for the Group in 2011 have significantly improved, underpinned by the work we have done to refocus our activities.

 As expected, second half figures in 2010 were better than the first half, with revenues from services up by 11% over the first half, and the Group delivered a small profit before exceptional items in the second half. However, financial results for the year as a whole were affected by two significant items, which resulted in Sigma reporting a loss before tax.

Looking ahead over the new financial year, we have established a strengthened platform from which to develop our property business and the Group continues to generate profit and cash from our venture capital fund management activities. We therefore expect Sigma to deliver a materially enhanced performance in the first half of 2011 compared to the same period last year. In addition, the Group's financial position remains robust and should strengthen further as cash balances increase."

Company website: www.sigmacapital.co.uk

Sigma Capital Group plc

Preliminary Results

for the year ended 31 December 2010

Chairman's Statement

Introduction

In my report at the half year, I advised that the general economy presented ongoing challenges but that, at the trading level, we expected results for the second half of the financial year to be better than the first half. This proved to be the case, with revenue from services in the second half increasing by 11% over the first half. Administrative overheads in the second half were reduced by 6%. The result was a small profit before exceptional items in the second half.

As we highlighted in our trading update in January 2011, results for the year as a whole were affected by two significant exceptional items. The first is a goodwill impairment of £1.37 million, which relates to Frontier IP Group Plc ("Frontier IP") and the change in its classification from a subsidiary to an associate company of the Group. As an associate company, Frontier IP will be accounted for as an investment, at fair value, in Sigma's balance sheet. Previously, as a subsidiary, its assets and liabilities were fully consolidated into Sigma's accounts. The second exceptional item relates to the full provision we have made against the Group's guarantee of £1.25 million to the Bank of Scotland in support of our sixth property limited partnership. 

At the year end, in the lead up to Frontier IP's admission to AIM and associated placing, the Group reduced its shareholding in Frontier IP from 77.4% to 65.5% and, following Frontier IP's admission to AIM in January 2011, the Group's shareholding comprised 46.7% of the issued share capital. The reduction of the Group's shareholding in Frontier IP to below 50% has resulted in Frontier IP being reclassified as an associated company as previously mentioned and, going forward, Sigma's primary activities will comprise venture capital fund management and property investment and asset management.

Results

Revenue from services for the year to 31 December 2010 was £1.84m (2009: £2.41m). The decrease against last year mainly reflected a reduced revenue contribution from our property activities. Total revenue was £1.42m (2009: £3.54m) and is stated after taking into account both realised and unrealised profit and losses on the disposal and revaluation of investments. The unrealised losses on the revaluation of investments in 2010 amounted to £0.42m, significantly lower than in 2009, when losses on revaluation were £2.45m. At the same time, total revenue in 2009 was boosted by the profit of £3.58m on the disposal of Frontier IP Limited. The operating loss before tax and exceptional items was £0.98m (2009: profit £0.89m) and the trading loss on this basis was £0.56m (2009: £0.24m). The loss before tax for the year was £3.57m (2009: profit £0.90m). The trading loss for the year from our venture capital fund management and property businesses, which comprise our continuing businesses, was £0.23m (2009: £0.07m).

Before exceptional items, the Group generated a small profit in the second half of the year. Administrative costs increased by 3% year on year, with the increase reflecting the strengthening of our property team. However, we reduced costs by 6% in the second half of the year compared with the first half and have continued to take steps to reduce costs as we refocus our activities.

Net assets per share at the year end stood at 11.1p (2009: 19.3p) with unencumbered cash balances at £1.82m (2009: £2.36m). At 31 December 2010, the other principal assets attributable to shareholders were the investment in the venture capital funds of £1.48m and the holding in Frontier IP of £1.63m.

The Directors do not recommend the payment of a final dividend for the year.

Purchase of own shares

To enable Frontier IP to attract investment from VCTs and EIS funds, Sigma's shareholding in Frontier IP needed to be below 50% when Frontier IP's fundraising completed. To achieve this, Sigma agreed with certain of its existing shareholders that they would, effectively, swap some of their Sigma shares for shares in Frontier IP. As a result, on 31 December 2010, the Company purchased a total of 3,370,857 Sigma shares from these shareholders at a price of 9.7p per share. The shares purchased were immediately cancelled and this resulted in a reduction in Sigma's issued share capital of 7.2%, leaving a balance of 43,401,578 ordinary shares with voting rights and increasing the remaining percentage holdings of all Sigma shareholders by 7.8%. The transactions resulted in a balancing payment of £30,000.

Operational Review

During 2010, Sigma's activities comprised three areas: venture capital fund management, property asset management and the commercialisation of university IP. These activities are reviewed below.

Venture Capital Fund Management

The venture capital fund management business continued to be profitable at the trading level. Looking forward, over the course of the next few years, to December 2015, the four venture funds we manage will come to the end of their lives. The investment team is therefore focused on managing the process of realising value from the 20 investments held in these funds and delivering the resultant cash back to the limited partners of each of the funds, including Sigma.

Three of the four funds have been fully invested for some time and over the year we were successful in sourcing and agreeing follow-on investment from third party investors to support the funding needs of investee companies in these funds. The fourth fund has continued to invest and to participate in follow-on rounds in its existing investments where appropriate.

We saw significant progress in 2010 with a number of the investments, including Exterity Ltd, DEM Solutions Ltd, SFX Technologies Ltd and Factonomy Ltd which all saw significant increases in revenue over the previous financial year and also with i-design group plc, an AIM quoted investee company, which reported positive trading momentum. In addition, Extramed Ltd, Onzo Ltd, IRT Surveys Ltd, AviIT Ltd and B1 Medical Ltd all received follow-on investments during 2010. Aquamarine Power Ltd completed two funding rounds in the year, the most recent being an £11m investment from strategic investors ABB and Scottish and Southern Energy plc. Follow-on investment activity has continued in 2011 with Factonomy Ltd closing a new round in March. We added Ampair Energy Ltd to the Sigma Sustainable Energy Fund II portfolio in 2010.

2010 was a difficult year for two investments in particular; after the year end, St Andrews Fuel Cells Ltd, which was a small investment by the Sigma Sustainable Energies Fund, was wound up and McLaren Software Ltd was sold to IDOX plc at a price below the cost of the investment.

While the environment for exits since 2008 has remained challenging for earlier stage companies, we believe there are now signs of improvement. The investment team is working with the management teams of the investee companies and with co-investors to ensure that there is an active focus on exit activity where appropriate. Encouraging discussions are underway with parties interested in acquiring several of the investments and the team will continue to engage with further potential acquirers.

After the year end, we agreed the restructuring of the limited partners' commitments to the Sigma Sustainable Energy Fund II. The restructuring caps at £3.5m future draw downs by the fund, taking total maximum commitments to £12.4m. Future draw downs will be used for follow-on funding in the fund's existing investments and for Sigma's fund management fees for the next five years as currently contracted. Importantly, the agreement also includes a separate compensation payment to Sigma, which totals £0.8m.

Over the next two to three years, the venture capital fund management business will generate strong cash flows, from a mix of management fees, retainers from investee companies and investment realisations from our own limited partnership interests in the venture capital funds. Looking forward, we have also already commenced preparation for our next initiative and expect to make good progress on this during 2011.

Property

As expected, in a year of transition for the Property Division and against challenging market conditions, the loss at the trading level increased. Nonetheless, we have made very good progress in restructuring and broadening the Property Division's asset management capabilities and our senior team is now geared towards the new opportunities we are developing.

As previously reported, the Group pledged £1.25m to Bank of Scotland ("the Bank") in 2007 as security for a guarantee given to the Bank by the vendor of the property held in SI Limited Partnership No 6. In 2009, this vendor went into administration and ultimately, after due consideration and in the light of the Bank's stance and falling property prices, we took the decision to make a full provision against the £1.25m security as at 31 December 2010. We are currently in talks regarding the options for this partnership. As manager of SI Limited Partnership No 4 and No 6, we are also in correspondence with investors about the possibility of contributing further equity in order to support the financial positions of these partnerships. It is worth noting that Sigma has no capital exposure to SI Limited Partnership No 4. In relation to SI Limited Partnership No 7, after the collapse of the developer, the partnership stepped into the developer's role and we have also been very active in maintaining the support of the partnership's bank, Bank of Ireland. We have made good progress towards re-establishing value in the underlying assets. A significant percentage of the space is now let and the practical completion of this mixed commercial and office development is expected imminently. We remain positive about a return of equity value in the future for the investors, which include Sigma, with a 19.1% stake, currently held at nil value. The work with Partnership No 7 has been spearheaded by the Property Division's new Asset Management Director.

As we previously reported, we have extended our commercial relationship with our largest shareholder, West Coast Capital ("WCC") and are working on a number of material property-related initiatives with WCC. We expect to bring some of these opportunities, as well as other projects we are working on ourselves, to fruition during 2011. In March, we were appointed to act in a fundraising for a new venture in the student accommodation sector for a well established provider in that arena. Since September 2010, we have been actively involved with Regenco Winchburgh Limited, a major residential development project situated to the west of Edinburgh, taking a management role. The overall budget for this development is in excess of £1 billion. The project is now in the final phases of planning and we expect building works to commence in 2011. In the last quarter of 2010, our work on this generated revenue of £50,000 and we expect an ongoing involvement in 2011. The project is being jointly managed on a day to day basis by our new Property Development Director and new Property Investment Director.

In 2010, we worked to develop new opportunities and to recover value in the historic assets we manage. The prime focus in 2011 is on new opportunities as we strive to build on our strong level of work in progress to create a profitable and valuable property division.

University IP Commercialisation

Frontier IP made a loss at the trading level but its overall results for the second half year saw it move into profit for the first time. This performance was driven in particular by an uplift in the value of its portfolio. During the year, Frontier IP received equity in two spin out companies, from Robert Gordon University and the University of Dundee, to bring itstotal portfolio of companies from these universities to six.

Frontier IP also made good progress in moving forward discussions with a number of universities regarding potential new relationships. Whilst there is considerable disruption in the university sector arising from changes to funding arrangements and general pressure on budgets, demand for Frontier IP's services is increasing as these institutions seek to extract value from their intellectual property.

Following the end of the year, Frontier IP took a significant step forward in its development when it was admitted to AIM. At the same time, it completed a placing to raise £1.0m (gross). As part of this transaction, IP Group plc, one of the leading companies in this sector, sold to Sigma all of its 3.9% shareholding in the Company and used the proceeds from the sale to purchase Frontier IP shares from Sigma. It also invested directly in Frontier IP with the result that IP Group plc now holds approximately 7.0% of Frontier IP's issued share capital. There is the potential for consolidation within the university IP commercialisation sector and Frontier IP's admission to AIM and accompanying placing underpins its objective to participate in this process.

Sigma remains the largest shareholder in Frontier IP and we continue to support and work with the business to help drive its value. Graham Barnet and Marilyn Cole have remained on the Board of Frontier IP, with Sigma receiving fees for their services.

The fundraising by Frontier IP and its admission to AIM completes the third phase of our strategy for value creation from our university IP division and is a major step towards the rationalisation and tighter focus within our business. Our minority shareholding in Frontier IP at 31 December 2010 was held at £1.63m.

Board appointment

I am delighted that James McMahon, a partner in WCC, has joined the Board today as a non-executive director. Jim is a former senior partner in PricewaterhouseCoopers and was a founder partner of WCC with Sir Tom Hunter in 2001. He has ten years' experience in private equity, retail and public companies including Office Shoes, Booker plc, Flying Brands plc and Prestbury Group.

Outlook

2010 was a period of much change for Sigma. However, we have strengthened our team and established a stable platform from which to develop our property business and the Group continues to generate profit and cash from our venture capital fund management activities.

Looking ahead over the new financial year, we believe that prospects for Sigma have significantly improved and expect the Group to deliver a materially enhanced performance in the first half compared to the same period last year. In addition, the Group's financial position remains robust and is expected to strengthen further as cash balances increase. We look forward to updating on development in due course.

David Sigsworth

Chairman

26 April 2011

Sigma Capital Group plc

Results for the year ended 31 December 2010

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

For the year ended 31 December 2010

All of the operations of the Group are classed as continuing and there were no comprehensive gains or losses in either year other than those included in the comprehensive income statement.

Sigma Capital Group plc

Results for the year ended 31 December 2010

CONSOLIDATED BALANCE SHEET

At 31 December 2010

Sigma Capital Group plc

Results for the year ended 31 December 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2010

Sigma Capital Group plc

Results for the year ended 31 December 2010

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2010

Sigma Capital Group plc

Results for the year ended 31 December 2010

NOTES

1. This preliminary announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 26 April 2011.

2. Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 31 December 2010 or 31 December 2009. The report of the auditor on the statutory financial statements for each of the years ended 31 December 2010 and 31 December 2009 were (i) unqualified; (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the year ended 31 December 2009 have been delivered to the Registrar of Companies. The statutory financial statements for the year ended 31 December 2010 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

3. Segmental information - business segments

At 31 December 2010 the Group was organised into three main business segments: venture capital fund management; property asset management; and commercialisation of IP.

The segment analysis for the year ended 31 December 2010 is as follows:

The segment analysis for the year ended 31 December 2009 is as follows:

4. Provision for property guarantee

Full provision has been made for the non-current cash held in a pledge account as security for a guarantee given by a third party to the Bank of Scotland. In 2007, the property subsidiary guaranteed certain potential payments due by a third party in connection with Si Limited Partnership No 6. This third party was placed into Administration in 2009 and so will no longer meet its commitments in this regard. Payments are due to Bank of Scotland, the lender of debt finance to this partnership, by the property subsidiary if the trading performance of the property held by this partnership falls below a certain level. The maximum liability under the guarantee is £1,250,000 and the guarantee expires at 31 December 2012. The full amount in the pledge account has been called by the Bank of Scotland subsequent to the year end. This amount will be recoverable from this partnership if there is any surplus arising when the underlying property is sold and the bank debt secured on the property repaid.

5. Taxation

The charge to taxation is arrived at as follows:

The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised in accordance with Group policy.

6. (Loss)/earnings per share

The calculation of the basic (loss)/earnings per share for the year ended 31 December 2010 and 31 December 2009 is based on the (losses)/profits attributable to the shareholders of Sigma Capital Group plc divided by the weighted average number of shares in issue during the year.

Diluted (loss)/earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares. The Company has only one category of 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 (loss)/earnings per share is calculated by dividing the same (loss)/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 2010 of 46,728,458 (2009: 46,893,695).  For the year ended 31 December 2010, as the calculation for dilutive loss per share reduces the net loss per share, the diluted loss per share shown is the same as the basic loss per share.

7. Availability of statutory financial statements

Copies of the full statutory financial statements will be available from the Company's offices at 41 Charlotte Square, Edinburgh EH2 4HQ no later than 31 May 2011 and will also be available on its website at www.sigmacapital.co.uk.