Sigma Capital Group PLC – Trading Update

Sigma Capital Group PLC – Trading Update

Sigma, the PRS, residential development and urban regeneration specialist, is pleased to provide a trading update for the financial year ended 31 December 2018.

Trading in the second half of the financial year, especially in the last quarter, was very strong, and the Board expects the Company’s full year results to show a significant uplift in revenue and profitability over the prior year, with pre-tax profit slightly ahead of current market forecasts. Profit before tax is expected to be approximately £12.4m (a year-on-year increase of 205%) on revenue of approximately £12.5m.   

These encouraging results partly reflect the strong macro-economic drivers underpinning the continuing successful growth of The PRS REIT plc (“PRS REIT”), the launch of which in May 2017 marked a significant milestone in the development of Sigma’s business model. Sigma’s subsidiary, Sigma PRS Management Limited (“Sigma PRS”), is Investment Adviser to the PRS REIT and the PRS REIT retains ‘first access’ rights to Sigma’s PRS Platform. 

Over the course of the second half, the Company made very good progress in driving the PRS REIT’s expansion, including into new geographic regions. Together with its main PRS partner, Countryside Properties, Sigma secured 20 additional development sites for the PRS REIT in this period.  Sigma also completed two self-financed PRS sites in the second half that were subsequently purchased by the PRS REIT for a total consideration of £22m. The Company has a further five self-financed sites under construction that are under contract to be purchased by the PRS REIT when completed and let. The sites are expected to deliver c. 280 PRS units for a GDC of c. £46.3m, and have estimated rental value (“ERV”) of £2.85m p.a. Completion is expected over the course of 2019 and first half of 2020.

As at 31 December 2018, the total number of sites that are completed or Contracted* for the PRS REIT stood at 43 across six regions. These sites have a gross development cost of £530m and will deliver 3,575 new homes, with 798 homes completed at the year end, including homes under direct development by Sigma. The ERV of these homes is £33.2m.

By the year end, Sigma PRS had c. £900m of the PRS REIT’s funding either deployed or Committed to deployment, including the £530m of completed or Contracted development referred to above. The Pipeline of development opportunity continues to grow, and now stands at around £1bn, all sourced through Sigma’s PRS Platform.    

Rental demand for family homes remains strong, helping to underpin yield targets, and management remains positive about growth prospects in 2019 and beyond.  It is also investing to support the Company’s ongoing growth over the coming year.

Results for the full year to 31 December 2018 are expected to be announced towards the end of April. It is also the Company’s intention to propose a final dividend for the year, marking the start of a progressive dividend policy. 

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