24th Apr 2006 07:02
Sigma Technology Group PLC24 April 2006 For Immediate Release 24 April 2006 Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 Sigma Technology Group plc (AIM: SGM) ("Sigma" or the "Group"), the investmentmanagement and corporate advisory group, which currently focuses on three areas:specialist fund management, property and commercialisation of University IP, ispleased to announce its preliminary results for the year ended 31 December 2005. Brian Hadfield, Chairman, said: "Sigma has made significant progress in 2005 across all areas of its business.The work it has undertaken during the year has resulted in the first closing ofa new £6 million fund in the sustainable energy sector in January 2006 and in aHeads of Agreement for its first University relationship with Robert GordonUniversity. The property sector closed three transactions during the year. Welook forward to an exciting year ahead and the Directors anticipate a strongperformance from all areas of the business in 2006." 24 April 2006 Operational highlights • Launch of Sigma Sustainable Energies Fund in January 2006: - first closing £6.0 million - FTSE 100 utility company Scottish & Southern Energy plc a trade investor - long term fund management contract - first investment made in Ocean Power Delivery Limited, an off shore wave energy company • High level of investment activity: - 18 transactions completed across the Group in 2005 - flotation of one investee company, Vividas Group plc, on AIM • Property subsidiary - Strategic Investment Management Limited: - disposed of 2 properties for a total consideration of £43.8 million - completed acquisition of £36.2 million head office building - post year end completed acquisition of a £46.5 million pre-let development property- generated fees of £2.2 million • Heads of Agreement signed for first university relationship with Robert Gordon University: - long term partnership re spin out of Intellectual Property (IP) - Sigma to receive equity and licensing revenue for its services - intention to establish Sigma managed fund for investment in spin out companies • Proposed change of name to Sigma Capital Group plc Financial highlights • Turnover up 49% to £3.33 million (2004: £2.23 million)• PBT before write down of investments increased by 147% to £0.64 million (2004: £0.26 million)• Earnings per share excluding write down of investments up 39% to 0.64p (2004: 0.46p)• Cash balances increased to £2.0 million (2004: £0.9 million) ENQUIRIES:Sigma Technology Group plcNeil Crabb, Joint Managing Director Tel: 020 7653 3200Graham Barnet, Joint Managing Director Tel: 0131 220 9444 Buchanan CommunicationsDiane Stewart/Isabel Podda/Amy Rajendran Tel: 020 7466 5000 Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 CHAIRMAN'S STATEMENT The Group continued to make progress during 2005. Turnover increased by 49% to£3,332,000 (2004: £2,230,000) and included the consolidation of Sigma'ssubsidiary, Strategic Investment Management Limited ("Si Management"), for thefull year. The Group reported an increase of 147% in profit before tax and writedown of investments of £639,000 (2004: £259,000). During the year, Sigma workedon its stated strategy of increasing funds under management and broadening itsbusiness model as manifested in the development of relationships with ScottishUniversities. This effort bore fruit in 2006 with the first closing of the SigmaSustainable Energies Fund ("Sustainable Energies Fund") and signed Heads ofAgreement on its first university partnership. Si Management also had a goodyear with the completion of one property limited partnership and the sale of twoproperties and this has continued into 2006 with the completion of a furtherproperty limited partnership. The Group has continued to keep its overheadsunder control and is profitable at an operating level in the year to date. TheGroup's cash balances increased to £1,995,000 (2004: £858,000). Fund management Sigma established a further long-term fund with the first closing of theSustainable Energies Fund in January 2006, with funds under management of £6million. As well as being the fund manager, Sigma has committed to invest£400,000. The Sustainable Energies Fund will provide funding for companiesdeveloping sustainable energy technologies and has attracted limited partnersfrom both public and private sectors including the FTSE 100 utility company,Scottish & Southern Energy plc, which committed £2.4 million. Other investorsare the European Regional Development Fund (£2.4 million), Scottish EnterpriseFife (£500,000) and a group of private investors (£300,000). This fund willremain open to additional investors until January 2007 and Sigma is activelyseeking further limited partners. The Sustainable Energies Fund has just completed its first transaction with£500,000 invested in Ocean Power Delivery Limited ("OPD"). OPD is an Edinburghbased offshore wave energy company set up in January 1998 to develop theirPelamis wave energy converter technology. The company received significant mediainterest recently when it secured the world's first order for a wave farm andbegan shipping equipment to Portugal in March. Revenue for the last financialyear was £4.8 million and existing investors include Norsk Hydro TechnologyVentures, 3i, Sustainable Asset Management and the Carbon Trust. GeneralElectric announced last week that it had also taken a stake in OPD. Sigma's existing funds, the Sigma Technology Venture Fund and the SigmaInnovation Fund (East of Scotland), made a total of seven new investments andeight follow on investments during the year. One existing investment, VividasGroup plc, floated on AIM in March 2005 raising £5.5 million before expenses.Heads of terms have recently been agreed on the disposal of one fund investmentand corporate activity remains strong. Property The property activities of the Group carried out through Si Management put in astrong performance in 2005. The properties held in the first two limitedpartnerships set up by Si Management were sold and generated returns of over 21%and over 40% to their investors over a period of 2.3 years and 1.7 yearsrespectively. Si Limited Partnership No 3, established in 2004 to acquire the Eagle Star headoffice building in Cheltenham, was fully capitalised in 2005 at £36.2 million.Last week, Si Management completed its fourth property acquisition through SiLimited Partnership No 4. The property acquired was a development officebuilding in the St Paul's area of Liverpool for £46.5 million. Si Managementearned a gross fee of £2.2 million before third party costs from thistransaction, which will be reflected in Sigma's results in the first half of2006. Since 2002, Si Management has raised total funds of over £120 million anddisposed of assets for £44 million. Universities Sigma has signed Heads of Agreement for its first university partnership withRobert Gordon University ("RGU"). A separate press release is being issuedtoday. This will be a long-term partnership formed to maximise the commercialvalue of technologies developed by RGU. The partnership will cover the threefaculties of RGU and areas of particular interest include the research strengthsin Energy and the Environment and Health and Welfare. For its help inidentifying and progressing commercial opportunities, Sigma will receive equityin any spin-out company and a share of RGU's licensing revenue. Sigma and RGUalso intend to establish a fund to be managed by Sigma and which will invest inRGU spin-out companies. This is the first visible sign of the progress that hasbeen made following on from the strategic partnership announced with IP2IPO Ltdin April 2005. Investment write-downs The results of the Group have again been affected by significant investmentwrite-downs. This is primarily due to the reduction in the price of the quotedholdings, held directly on Sigma's balance sheet and in the Sigma TechnologyVenture Fund. Restatement of net assets As reported with the Interim Results, the net assets of the Group have beenrestated in line with Financial Reporting Standard 25 Financial Instruments:Disclosure and Presentation. This requires Sigma's preference shares and thepreference shares in Si Management not held by Sigma to be included asliabilities rather than as share capital. The effect is to reduce the net assetsof the Group as at 31 December 2005 by £2,005,000 to £2,748,000 (2004: reductionof £2,005,000 to £2,567,000). Change of name The Board is to propose at the AGM that the company change its name to SigmaCapital Group plc. Your Board considers that the proposed name better reflectsthe breadth of Sigma's current activities. Outlook The fund management business should continue to build on its objective ofgrowing funds under management, while we would expect to see both a steady rateof new investment and, increasingly, realisations. Our property activities arecurrently more transactional in nature, making the outlook harder to predict,but we are seeing good deal flow and continue also to review potentialprofitable exits afforded by the strong underlying market. We are encouraged tohave reached agreement on our first relationship with a University, and believethat our interaction in this area gives another opportunity to build significantlong term capital value within the Group by exploiting our existing skills. Withongoing tight control of costs the Board is optimistic of continued progressduring 2006. Brian Hadfield Chairman 24 April 2006 Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2005 Audited Audited Notes 2005 2004 £'000 £'000 Turnover 3,332 2, 230 Other income 290 177 ------- ------- 3,622 2,407 Cost of sales (868) (589) ------- -------Gross profit 2,754 1,818 Operating expenses (net)------------------------------ ------ ------- -------Operating expenses (net) before write down ofinvestments and loans and before transfer toinvestments (2,183) (1,668) Write down of investments and loans (1,005) (996)------------------------------ ------ ------- ------- (3,188) (2,664) ------- -------Operating loss (434) (846) Share of Associates' operating profit - 47 ------- -------Loss on ordinary activities before interest (434) (799) Net interest receivable - Group 68 58Net interest receivable - Associates - 4 ------- -------Loss on ordinary activities before taxation (366) (737) Taxation 4 114 - ------- -------Loss for the financial year after tax (252) (737) Minority interests (513) (92) ------- -------Retained loss for the year (765) (829) ======= ======= Basic loss per share 5 (2.04)p (2.30)pDiluted loss per share 5 (2.04)p (2.30)p None of the Group's activities were discontinued during the year and there areno recognised gains and losses in either year other than those included in theprofit and loss account. Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 CONSOLIDATED BALANCE SHEET At 31 December 2005 Audited Audited Notes 2005 2004 £'000 £'000Fixed assetsIntangible assets 60 -Tangible assets 69 103Unquoted investments 6 1,913 2,003 ------- ------- 2,042 2,106 Current assetsDebtors 1,017 1,644Investments 374 923Cash at bank and in hand 1,995 858 ------- ------- 3,386 3,425Creditors: amounts falling due within one year------------------------------- ------ ------- -------Minority interests - non-equity (1,255) (837)Other creditors (675) (959)------------------------------- ------ ------- ------- (1,930) (1,796) ------- -------Net current assets 1,456 1,629 ------- -------Total assets less current liabilities 3,498 3,735 Creditors: amounts falling due after more than oneyear Minority interests - non-equity - (418)Preference share capital (750) (750) ------- ------- Net assets 2,748 2,567 ======= ======= Capital and reservesCalled-up share capital 381 361Share premium account 14,043 13,673Merger reserve (249) (249)Capital reserve (7) (7)Profit and loss account (11,372) (10,607) ------- ------- Shareholders' funds 2,796 3,171 Minority interest - equity interests (48) (604) ------- ------- 2,748 2,567 ======= ======= Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2005 Audited Audited 2005 2004 £'000 £'000Net cash inflow/(outflow) from operating activities 962 (638) Returns on investments and servicing of finance 68 58 Taxation - corporation tax paid (6) - Capital expenditure and financial investment (354) (785) Acquisitions and disposals - cash acquired withreclassification of associate to subsidiary - 433 ------- -------- Cash inflow/(outflow) before financing and managementof liquid resources 670 (932) Management of liquid resources 96 10 Financing - issue of equity 371 - ------- --------Increase/(decrease) in cash in the year 1,137 (922) ======= ======== Reconciliation of net cash flow to movement in net funds 2005 2004 £'000 £'000Increase/(decrease) in cash in the year 1,137 (922) Cash outflow/(inflow) from increase/(decrease) in liquidresources 30 (10) ------- --------Changes in net debt resulting from cash flow 1,167 (932)Reclassification of investments from fixed assets to currentassets 20 -Transfer to investments - 172Current asset investments written down (599) (487) ------- --------Movement in net funds in the year 588 (1,247) Net funds at 1 January 2005 1,781 3,028 ------- --------Net funds at 31 December 2005 2,369 1,781 ======= ======== Reconciliation of operating loss to net cash inflow/(outflow) from operatingactivities 2005 2004 £'000 £'000Operating loss (434) (846)Depreciation charge 52 73Amortisation charge 2 -Decrease/(increase) in debtors 925 (1,157)(Decrease)/increase in creditors (462) 468Profit on disposal of current asset investments (126) -Transfer to investments - (172)Write off of investments and loans 1,005 996 ------- --------Net cash inflow/(outflow) from operating activities 962 (638) ======= ======== Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 Analysis of cash flows Audited Audited 2005 2004 £'000 £'000Returns on investments and servicing of financeInterest received 68 58Interest paid - - ------- -------- 68 58 ======= ========Capital expenditure and financial investmentPurchase of tangible fixed assets (18) (9)Disposal of tangible fixed assets - 1Purchase of fixed asset investments (358) (814)Disposal of fixed asset investments 22 37 ------- -------- (354) (785) ======= ======== Management of liquid resources 2005 2004 £'000 £'000Purchase of current asset investments (50) (3)Disposal of current asset investments 146 13 ------ ------- 96 10 ====== ======= Analysis of changes in net funds 1 January Cash movement Non-cash 31 December 2005 movement 2005 £'000 £'000 £'000 £'000Cash at bank andin hand 858 1,137 - 1,995Current assetinvestments 923 30 (579) 374 -------- -------- -------- --------- Total 1,781 1,167 (579) 2,369 ======== ======== ======== ========= The non-cash movements in 2005 are reclassification of an investment from fixedasset investments to current asset investments (£20,000) and write down ofinvestments (£599,000). The non-cash movements in 2004 were: a) Loans due after one year - write off ofloan; b) Current asset investments - write down of investments (£437,000) lessamount transferred to investment in Adventis Group plc (£172,000). Sigma Technology Group plc Preliminary Results for the year ended 31 December 2005 NOTES 1. This preliminary announcement was approved by the Board of Directors on24 April 2006. 2. The financial information set out in this announcement does notconstitute the Group's statutory financial statements for the years ended 31December 2005 and 2004. Statutory financial statements for 2004 for SigmaTechnology Group plc have been delivered to the Registrar of Companies. TheCompany's auditors reported on these financial statements and their report wasunqualified and did not contain a statement under section 237 (2) or (3) of theCompanies Act 1985. Accounting policies 3. The accounting policies set out in the financial statements for theyear ended 31 December 2004 have been adopted in drawing up the financialinformation set out in this announcement together with the accounting policiesfor goodwill and for financial liability and equity. Goodwill arising on consolidation represents the difference between the fairvalue of consideration given and the fair value of the identifiable net assetsacquired. Goodwill arising on acquisition of subsidiaries and businesses iscapitalised within intangible fixed assets and is amortised on a straight linebasis over the expected useful economic life of the underlying assets being 20years in relation to currently recognised goodwill. Financial liabilities and equity are classified according to the substance ofthe financial instrument's contractual obligations rather than the financialinstrument's legal form. The preference shares of the Company are classified asa liability as these are redeemable for a fixed amount as soon as the Companyhas distributable reserves to enable it to do so. The non-equity minorityinterests are classified as a liability as these are redeemable for a fixedamount at a fixed date. Taxation 4. The tax credit is arrived at as follows: 2005 2004 £'000 £'000UK corporation tax - current tax on profits of the year (184) -Deferred tax - recognition of losses 298 - -------- --------Taxation on profit on ordinary activities 114 - -------- -------- The charge to taxation arises in the Company's subsidiary, Si Management. Thedeferred tax asset in this subsidiary is recognised in the balance sheet as SiManagement anticipates making sufficient taxable profits to utilise itsunrelieved trading losses. Loss per share 5. The calculations of loss per share are based on a loss after taxation andminority interests of £765,000 (2004: loss £829,000) and on the weighted averagenumber of ordinary shares outstanding during the year ended 31 December 2005 of37,502,657 (2004: 36,093,540). Diluted loss per share is calculated by adjusting the weighted average number ofordinary shares in issue on the assumption of conversion of all dilutivepotential ordinary shares. The Group has only one category of dilutive ordinaryshares, those share options granted where the exercise price is less than theaverage price of the Company's shares during the year. The calculation ofdiluted loss per share is based on the same loss figures as above and on thenumber of dilutive ordinary shares outstanding during the year ended 31 December2005 of 37,713,985 (2004: 36,300,022). However, as the dilutive effect is toreduce the net loss per share, the effect is not shown and diluted loss pershare is the same as the basic loss per share. Investments 6. In accordance with Sigma's accounting policies, its investment in its managedfunds is included in the financial statements at cost less provision forimpairment. However, within the actual funds, the investments are valued inaccordance with BVCA Guidelines, which for quoted investments is bid price plusa marketability discount where appropriate and for unquoted investments isestimated current value which can be greater than or less than cost. At 31December 2005, Sigma's investment in its managed funds is included in thebalance sheet at £1,828,000. Applying Sigma's respective percentage holdings tothe value of the funds as determined in accordance with BVCA Guidelines, thevalue of Sigma's investment remains at £1,828,000. If the funds' quotedinvestments were valued at mid market price with no marketability discount, thenthe value of Sigma's investment would increase by £84,000 to £1,912,000. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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