Sigma Capital Group PLC – FINAL RESULTS

SIGMA CAPITAL GROUP PLC, the private rented sector and urban regeneration specialist final results for the year ended to 31 December 2018

KEY POINTS

Financial

Summary

• Financial results show the benefit of the first full year of The PRS REIT plc (the “REIT”)
  − launched by Sigma on 31 May 2017, it is the only UK-quoted REIT wholly dedicated to investment in new family rental homes
• Progressive dividend policy commenced, reflecting the transformation in the Company’s revenue and earnings profile and the Board’s confidence in growth prospects
• Launch today of the Sigma Scottish PRS Fund (“Scottish Fund”) in partnership with the Scottish Government. (See separate announcement)
  − initial resources of £43m to expand Sigma’s PRS activities into Scotland

Operational

• Second equity raise of £250m (gross) was completed for the REIT in February 2018, and £200m of debt facilities were secured in June 2018. A further £200m of debt facilities are in process, which will take the REIT’s gross funding resource to £900m
• By the end of 2018, the gross development cost of completed and contracted development for the REIT stood at £530m, almost 60% of the REIT’s expected funding
  − representing 3,575 homes, 775 of which were completed by the year end
• Sigma completed three self-funded housing developments in 2018, which were subsequently sold to the REIT for a combined £31.1m after an independent valuation
  − currently a further six self-funded sites are at various stages of development and will be sold to the REIT, subject to the fulfillment of contracted terms
• Completed homes are renting well and demand remains strong
• Sigma’s PRS property platform was expanded – both construction resource and geographic reach
  − first sites in the South (above M25) were started in the second half of 2018
• Internal resource was increased, and further investment in staff is planned to support ongoing growth

Prospects

• As referred to in March 2019, expected planning approval delays have affected the timetable for the delivery of homes. As a consequence, Sigma has changed the composition of the development pipeline in order to maximise the delivery of homes (and in turn, rental income) into the REIT, and prioritised the allocation of development sites towards the REIT versus self-funded development on Sigma’s balance sheet for subsequent sale to the REIT. With greater visibility on the impact of all of these factors, the Board is now resetting its expectations for Sigma’s performance in the current financial year
• Nonetheless, Sigma’s performance in 2019 is expected to improve materially over 2018, and the Company believes that there are further growth opportunities available

Graham Barnet, CEO of Sigma, commented: 

“The transformational effect of launching the PRS REIT is now evident. All key financial measures are significantly ahead year-on-year, and Sigma’s growth prospects remain very strong.

“We are also delighted to announce today the launch of the Sigma Scottish PRS Fund, which is being backed by the Scottish Government. It will see us expand into a new market, which has a similar urgent requirement for new homes as the rest of the UK.

“The private rental sector is becoming an increasingly central part of national housing delivery, and Sigma’s model, which delivers high quality, professionally-managed family homes has significant growth potential. Whilst planning delays have led us to change the mix of our development pipeline and reset our expectations for the current financial year, we still expect Sigma’s performance to improve materially over 2018, and see further growth opportunities for Sigma to grasp beyond those currently underway.”

sigma-capital