26th Sep 2005 07:01
Sigma Technology Group PLC26 September 2005 For immediate release 26 September 2005 Sigma Technology Group plc ("Sigma" or the "Group") Interim Results for the Six Months to 30 June 2005 Sigma, the UK venture capital investment management and advisory group thatspecialises in two sectors, technology and property, announces its interimresults for the six months ended 30 June 2005. FINANCIALS • Turnover increased to £2.2m (2004: £0.6m) +266% • Net profit before write down of investments £0.3m (2004: £0.1m) +200% • Investment write downs £0.5m (2004: £0.4m) • Cash balances increased to £1.9m (2004: £1.5m) OPERATIONS • Continued high investment activity : 7 investments in the period - 3 new; 4 follow on • Successful flotation of a further investee company on AIM • Strategic relationship with IP2IPO together with share placing raising £0.4m • Completed £8.6m equity fund raising for third property limited partnership • Sold property held by first property limited partnership and agreed sale of property held by second limited partnership which will generate profit in property subsidiary of over £0.6m Brian Hadfield, Chairman, said: "We are pleased to report improved results over the same period last year. Ourdiscussions with Scottish Universities are progressing well and we believe thatthere are a number of opportunities for investment realisations in the comingtwelve months." ENQUIRIES Sigma Technology Group plcNeil Crabb, Joint Managing Director Tel: 020 7653 3200 Buchanan CommunicationsDiane Stewart/Isabel Podda/Amy Rajendran Tel: 020 7466 5000 CHAIRMAN'S STATEMENT Results I am pleased to report a continued improvement in our performance in theseresults for the six months ended 30 June 2005. The figures show a significantincrease in turnover to £2,172,000 (2004: £607,000) due primarily to theconsolidation of Sigma's property subsidiary, Strategic Investment ManagementLtd ("Si Management"), for the full six months but also due to an enhancedperformance in the underlying businesses. Before taking into account the write down of investments of £527,000 (2004:£365,000), the Group generated an increased net profit of £323,000 (2004:£125,000). The loss for the period reduced to £204,000 (2004: (£240,000).Overheads have remained in line with the growth in revenue and continue to beclosely monitored as part of the prudent management of the business. TheGroup's cash balances increased to £1,885,000 (2004: £1,514,000). The net assets of the Group have been restated in line with the new accountingstandard Financial Reporting Standard 25 Financial Instruments: Disclosure andPresentation. Under this standard, the preference shares in the holdingcompany, which total £750,000, and the preference shares in Si Management notheld by Sigma have to be included as liabilities rather than as share capitaland reserves. Consequently, restated net assets at 30 June 2005 were£2,786,000. Although included as current liabilities, the preference shares inSigma cannot be repaid until the holding company generates profits in excess of£9m. Investment activity Investment activity continued in the first half of the year with three newinvestments being made by the Sigma Innovation Fund (East of Scotland) whilstthe Sigma Technology Venture Fund ("Venture Fund") (together "the Funds")invested further monies in four of its existing investments. A summary of theseinvestments is included in the notes accompanying this statement. Sigmacontinues to review its investment portfolio for companies that would benefitfrom flotation on the Stock Market and one such company, Vividas Group plc, wasfloated on AIM on 31 March 2005 raising £5.5m before expenses. At 30 June 2005 the Funds held investments in 16 technology companies. We arepleased with the overall performance of the Funds to date with certain of thecompanies now moving into profitability. Over the last six months, there havebeen a number of unsolicited approaches to investee companies by potential tradebuyers which it is hoped will translate into some successful exits over the nexttwelve months. Si Management Si Management had a productive first half, completing the equity fund raising of£8.6m for its third property limited partnership which had acquired an officebuilding in Cheltenham in December 2004, let to Eagle Star. It also disposed ofthe property held by the Si Chalfont Park Limited Partnership in March 2005generating an annual return for investors of 9%. Si Management has nowestablished three limited partnerships to date, raising total funds of £16million, £24 million and £36 million respectively. Since 30 June 2005, Si Management's second limited partnership exchangedcontracts for the sale of its B&Q retail warehouse to one of the UK's leadingfinancial services companies. Completion is scheduled to take place on 29September 2005 and it is anticipated that the partnership will generate anannual return in excess of 25% for its investors. As a result of this disposal,Si Management expects to earn a fee of approximately £600,000 which will bereflected in Sigma's consolidated accounts for the year ended 31 December 2005.Si Management continues to actively seek properties suitable for further limitedpartnership transactions. Strategic alliance As previously announced, in March 2005 Sigma entered into an agreement withIP2IPO Ltd ("IP2IPO") whereby IP2IPO agreed to support Sigma in the developmentof strategic relationships with Scottish Universities. Discussions are ongoingwith several Scottish Universities as a result. As part of the agreement, 5% ofthe Company's shares were placed with IP2IPO at 20p per share raising £361,000. Investment performance Once again, Sigma's results have been adversely affected by the write down ofinvestments. The Group's direct investment in Micap Group plc ("Micap"), an AIMlisted company, accounted for £305,000 of the total write down of £527,000. At30 June 2005, the investment in Micap after this write down was included in theconsolidated balance sheet at £426,000. The balance of the investment writedown is principally due to the fall in the net asset value of the Venture Fund.This is a result of the underperformance of three investments, the winding up ofa fourth and the conservative valuation approach. Both of the Funds are at anearly stage which means that any poor performance of investments has animmediate impact whereas good performance of investments takes longer to flowthrough to net asset value. In addition, listed investments are valued at bidprice and subject to marketability discounts of up to 25%. If the listedinvestments held by the Venture Fund were included at mid market price then thewrite down due to the Venture Fund of £189,000 would have been reduced by£104,000. Outlook We continue to make progress in the development of the business with SiManagement reporting a particularly strong half. Sigma also retains directholdings in certain listed investments including Micap and Adventis Group plcand an option over shares in Vividas Group plc. These holdings afford thepossibility of gains on realisation albeit the timing is uncertain. Ourstrategy remains to grow funds under management and to broaden our businessmodel as in the development of relationships with the Scottish Universities. Brian HadfieldChairman 26th September 2005 Sigma Technology Group plc CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 June 2005 Six months Six months Year ended ended ended 31 30 June 30 June December 2005 2004 2004 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Turnover 2,172 607 2,230Other income 78 10 177 2,250 617 2,407 Cost of sales (848) - (589)Gross profit 1,402 617 1,818 Operating expenses (net) Operating expenses (net) before write down of investments andloans and before transfer to work in progress (1,107) (774) (1,668)Write down of investments and loans (527) (365) (996)Transfer to work in progress - 172 - (1,634) (967) (2,664) Operating loss (232) (350) (846) Share of associates' operating profit - 76 47Loss on ordinary activities before finance charges (232) (274) (799) Interest receivable - Group 28 32 58Interest (net) - Associate - 2 4Loss on ordinary activities before taxation (204) (240) (737) Taxation 2 - - -Loss for the period after taxation (204) (240) (737) Minority interests (232) - (92)Retained loss for the period (436) (240) (829) Basic loss per share (1.17)p (0.66)p (2.30)pDiluted loss per share 3 (1.17)p (0.66)p (2.30)p There are no recognised gains or losses other than those stated in the aboveprofit and loss accounts. All of the operations of the Group are continuing. Sigma Technology Group plc CONSOLIDATED BALANCE SHEET At 30 June 2005 As at As at As at 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000Fixed assetsIntangible assets 62 - -Tangible assets 79 123 103Unquoted investments 4 1,884 1,987 2,003 2,025 2,110 2,106Current assetsWork in progress - 172 -Debtors 679 565 1,644Investments 4 682 1,142 923Loans due after more than one year - 50 -Cash at bank and in hand 1,885 1,514 858 3,246 3,443 3,425Creditors: amounts falling due within one year Minority interests - non-equity (837) - (837) Preference share capital (750) (750) (750) Other creditors (480) (870) (959) (2,067) (1,620) (2,546) Net current assets 1,179 1,823 879Total assets less current liabilities 3,204 3,933 2,985 Creditors: amounts falling due after more than one year Minority interests - non-equity (418) - (418) Share of Associates' net liabilities - (173) -Net assets 2,786 3,760 2,567 Capital and reservesCalled-up share capital 379 361 361Share premium account 14,035 13,673 13,673Merger reserve (249) (249) (249)Capital reserve (7) (7) (7)Profit and loss account (11,043) (10,018) (10,607)Shareholders' funds 3,115 3,760 3, 171 Minority interest - equity interests (329) - (604) 2,786 3,760 2,567 Sigma Technology Group plc CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2005 Six months Six months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 809 269 (638)Return on investments and servicing of finance 28 32 58Capital expenditure and financial investment (121) (579) (785)Acquisitions and disposals - cash acquired with reclassification ofassociate to subsidiary - - 433Cash inflow/(outflow) before financing and management of liquidresources 716 (278) (932)Management of liquid resources (50) 12 10Financing - issue of equity 361 - -Increase/(decrease) in cash in the period 1,027 (266) (922) Reconciliation of operating loss to operating cash flowsOperating loss (232) (350) (846)Depreciation and amortisation charges 31 39 73Transfer of costs to work in progress - (172) -Decrease/(increase) in debtors 965 (154) (1,157)(Decrease)/ increase in creditors (479) 541 468Profit on disposal of fixed asset investments (3) - -Transfer to investments - - (172)Write off of investments and loans 527 365 996Net cash inflow/(outflow) from operating activities 809 269 (638) Analysis of changes in net funds As at As at As at 30 June 2005 30 June 31 December 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Increase/(decrease) in cash in the period 1,027 (266) (922)Cash outflow/(inflow) from change in liquid resources 50 (12) (10)Change in net funds resulting from cash flows 1,077 (278) (932)Transfer to investments - - 172Reclassification of investments from fixed assets to current assets 20 - -Debt arising on reclassification of associate as subsidiary - - (1,255)Current asset loans and investments written down (311) (44) (487)Movement in net funds in the period 786 (322) (2,502)Opening net (debt)/funds (224) 3,028 3,028Adjustment to opening net funds as a result of implementation ofFRS 25 - (750) (750)Closing net funds/(net debt) 562 1,956 (224) Sigma Technology Group plc Interim Results for the Six Months to 30 June 2005 NOTES 1. Basis of presentation The interim financial statements have been prepared in accordance withapplicable Accounting Standards and on the basis of the accounting policies setout in the annual report and accounts of Sigma Technology Group plc ("Sigma")for the year ended 31 December 2004, which have remained unchanged except forthe adoption of FRS 21, FRS 22 and FRS 25. FRS 21 requires account to be taken of events occurring after the balance sheetdate. This standard has had no impact on Sigma's reported results. FRS 22relates to the calculation of earnings per share but this has had no impact onSigma's reported results. FRS 25 results in a change to the presentation ofnon-equity interests. Preference share capital and non-equity minorityinterests have been reclassified as creditors on the balance sheet and as debtfor the purposes of the cash flow statement. Comparative amounts have beenadjusted to reflect this change. The interim financial statements do not comprise statutory accounts for thepurpose of s240 of the Companies Act 1985. The comparatives for the full yearended 31 December 2004 are not the Company's full statutory accounts for thatyear. A copy of the statutory accounts for the year has been delivered to theRegistrar of Companies. The auditor's report on these accounts was unqualifiedand did not contain a statement under section 237(2) or 237(3) of the CompaniesAct 1985. The interim financial statements have not been audited or reviewed by theCompany's auditors. 2. Taxation An estimate has been made of the effective rate of taxation for the full year.On this basis, no charge to taxation has been made in the six months to 30 June2005. There was no charge for taxation in the prior year period due to theGroup reporting a trading loss. 3. Loss per share The calculation of loss per share is based on a loss on ordinary activitiesafter taxation for the six months ended 30 June 2005 of £436,000 (2004: loss of£240,000) and on the weighted average number of ordinary shares outstandingduring the six months ended 30 June 2005 of 37,113,615 (2004: 36,093,540). Thecalculation of diluted loss per share is based on the same loss figure and onthe weighted average number of diluted ordinary shares outstanding during thesix months ended 30 June 2005 of 37,408,020 (2004: 36,431,834). 4. Investments The principal investments held at 30 June 2005 together with an update as toprogress are set out below. Adventis Group plc is a direct investment, theothers are held by the Funds. Adventis Group plc Adventis floated on AIM in July 2004 as a specialist multi-media marketing andadvertising agency. In its first year as a public company, Adventis acquired Affiniti (UK) Ltd, a UKhealthcare advertising agency and also set up Adgenda Media, a specialist mediaplanning and buying company. Both have performed well and this is reflected inthe group's results to 30 June 2005 which show a significant increase in bothturnover and profit. i-Design Multimedia Limited i-Design provides user-interface design and ATM advertising solutions to thefinancial self-service market. The company has established the first ATM mediasales specialist agency in the UK. In May 2005, the company extended its exclusive deal with Nationwide BuildingSociety. Through this agreement, all of the available ATMs in the society'soff-premise network will be released to i-Design for third-party advertising,taking the total number of third party sites available to the company to over1,000. McLaren Software Limited McLaren has developed products that manage key document centric businessprocesses with a focus on high risk areas of cost and compliance within largeprogrammes of work. The company has achieved sales across a range of sectorsincluding pharmaceutical, engineering and construction, utilities and oil andgas. Mclaren's software is now selling on multiple platforms and the companycontinues to grow its blue chip customer base. PhotoTheraputics Limited The company is engaged in the research, development and manufacture of non-laserlight sources that offer solutions for use in both the medical and cosmeticmarkets. In May 2005, PhotoTheraputics raised £1.5m and during the course of the year hasfurther broadened its product range including the launch of a newskin-rejuvenation treatment branded Lumiere. In March 2005 PhotoTherapeuticsreceived FDA clearance for a combination light therapy treatment, in addition tothe clearances previously received by the company for the treatment of mild tomoderate acne. Tenison Technology EDA Limited Tenison provides technology for faster integration and verification of hardwareand software in system-on-chip designs. The company continues to make significant progress and in February 2005 ARMannounced that it was to use VTOCTM to support modelling for next-generationprocessor core designs. Other high profile customers include STMicroelectronics, Conexant and Seaway Networks. The investments made by the two funds in the six months ended 30 June 2005 areas follows: Total amount % holding (fully invested diluted) £'000 %Sigma Technology Venture FundMadge Ltd 1,167 19.3 Global supplier of advanced local area networking product solutions toenterprises and is the market leader in Token Ring networking. Follow oninvestment of £167,000.PetroData Ltd 481 See note (a) Development of products enabling real time remote access to critical datafrom well sites. Follow on investment of £38,000.Tenison Technology EDA Ltd 975 20.1 Electronic design automation tools company. See note (b) Follow on investment of £80,000 by means of a secured convertible loan.Vividas Group plc 1,127 15.2 Provides high quality interactive video to PCs without needing prior software See note (c)installation. Follow on investment of £63,000 Sigma Innovation Fund (East of Scotland)Trisent Communications Ltd 300 37.5 Develops low cost mobile telephone location tracking and alert technology.Attribute Ltd 250 43.3 Developed a data rationalisation tool which it sells along with supportingtraining and consultancy.Logicalware Ltd 250 35.6 Developed an email response management product that is a commercial opensource application offered as a hosted service on a subscription basis. Note: (a) A winding up order was granted on PetroData on 22 August 2005. The investment was written down to nil at 30 June 2005. (b) The total amount invested in Tenison at 30 June 2005 was £975,000 of which £400,000 had been invested by means of a secured convertible loan. A further £300,000 was invested in July 2005 at which time the loan stock, accrued interest and accrued preference dividends were converted into shares resulting in a holding of 24.7% on a fully diluted basis. (c) Vividas Group plc is listed on AIM and the holding is based on issued share capital. 5. Copies of the interim financial statements Copies of the interim financial statements will be sent to shareholders andcopies are available on request from the Company's registered office at 6thFloor, Bucklersbury House, 83 Cannon Street, London EC4N 8ST. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGM.L