Bulk of the losses from writedowns at its Frontier IP investment arm
Asset management firm Sigma Capital has reported an annual pre-tax loss of £1.42 million for the 2011 financial year.
This compares with a pre-tax loss of £3.6 million reported for the 2010 financial year to December 31.
The bulk of the group's losses - £1.41 million – arose from Sigma's holding in Frontier IP Group Plc, which has lost more than half of its market value since listing in January 2011.
Sigma launched Frontier IP on the Alternative Investment Market (AIM) last year with £1 million of funding from a share placing as part of a strategy to "generate value from intellectual property derived from universities and research institutes and to secure independent, long term funding for the business”.
Last month, Frontier IP posted unaudited half-year results to December 31 showing revenues had more than halved to £119,000 against £296,000 the previous year and a pre-tax loss of £187,000 against a £69,000 profit a year earlier.
Sigma's net asset value has dropped to £3.73 million at the end of the 2011 year compared with a value of £5.68 million a year earlier, which Sigma said reflects the drop in Frontier IP's share price and the “illiquid nature of the stock”.
Sigma said it has now repositioned itself as a firm focusing primarily on property and urban regeneration and venture capital fund management.
Further write-downs of £367,000 are also reported on revaluation of the Sigma group property investments.
The Edinburgh-based firm said 2011 was a “transformational” year which saw revenues from services rise by 34 per cent to £2.47 million compared with £1.84 million the previous year.
Central to this transformation was Sigma Capital's acquisition last year of West Coast Capital's (WCC) stake in urban regeneration firm Inpartnership in a deal worth £347,000.
WCC, owned by Sir Tom Hunter, had previously acquired the 50 per cent stake in a multi-million pound deal backed by Bank of Scotland in 2007.
Under the terms of the all share buy-out by Sigma, WCC is entitled to a share of any future development profits made by Inpartnership from existing contracts.
Sigma said Inpartnership now has work started on development and regeneration projects worth around £3 billion.
Inpartnership, which has offices in Birmingham and Manchester, specialises in creating long-term asset-backed partnerships with the public sector.
The company has agreements in place ranging in length from 10 to 20 years, with Liverpool, Salford and Solihull Metropolitan Borough councils.
And earlier this week Sigma secured a £1.8 million, five-year management contract with Regenco Trading for its £1 billion Winchburgh development in West Lothian.
Sigma InPartnership Ltd has announced today it has agreed contract terms for the delivery 80 new homes with the Higher Broughton Partnership, a limited partnership between Sigma InPartnership, Salford City Council and Royal Bank of Scotland.
The firm said the agreement will bring in base fees of £350,000 in the next three years, as well as a share in the value of the housing units, estimated at £150,000 at present market values.
The development will commence in the summer with sales expected through 2013 and 2014.
David Sigsworth, chairman of Sigma, said:"Financial results for the year are in line with management expectations however they do not yet reflect the material transformation of Sigma's business activities and prospects.
“We substantially reshaped Sigma in 2011, aided by the acquisition of Inpartnership Ltd in August , and the group's activities are now focused on two areas, property and venture capital fund management.
“Our property activities comprise our core activity and we see some very exciting growth opportunities here.
“Our three council partnerships, which hold potential development opportunities worth over £2 billion in total, together with our involvement with the Winchburgh Development, one of the UK's single largest residential and mixed use developments with planning, worth an approximate £1 billion, provide us with a significant opportunity to build revenues and profit.
“We are making good progress with unlocking the value contained within our partnerships and we expect to see continuing momentum over the year.
“A combination of the scale of opportunity within our control and the momentum we are seeing across our projects give the board confidence that we can grow the business significantly in the year ahead and beyond.
“We are not opportunity constrained and we are making good progress with the significant opportunities we have captured. The board views the year ahead positively.”
Shares in Sigma Capital were up more than seven per cent in early trading today.