Final Results for the year ended 31 August 2013

FORMATION GROUP PLC

('Formation' or 'the Group')

Preliminary Results for the year ended 31 August 2013

Business Highlights

· The Group has continued its drive to cut overheads in order to ensure a lean cost base going forward.

· Group Revenues have grown by 148% this year from £2.359m to £5.849m on the back of an increasing workload driven by the current strong London property market. We look forward to continued growth over the coming year with various work contracts in place and further commitments anticipated over the coming months.

· The trading results for the year have improved, after allowing for the share of joint venture profits of £1.243m last year, with Group revenue from continuing operations increasing to £5.84 million (2012 £2.4 million). This has resulted in a loss before taxation and exceptional items from continuing operations of £0.24 million (2012 loss: £0.54 million). The Directors believe that that is a better comparison of year on year results as it omits the exceptional one off item (being the share of joint venture profits) for the year ended 31 August 2012.

· An RNS post year end on 5th February 2014 on Aldgate announced that Julius Properties Limited were involved in a legal dispute with Redrow Homes Limited over a title issue relating to the property at No 1 Commercial Street, London E1. This situation casts doubt upon Julius Properties Limited's ability to repay JV Finance Ventures Limited's investment into Aldgate. However, it is anticipated that Formation Group will be in receipt of the majority of these funds by June 2014. The directors are of the belief that this is unlikely to have any consequence on the ability of the Group to continue as a going concern.

· Net proceeds received from profit share in Whitechapel of £413,000 which was used to reduce the working capital loan.

· The primary focus of the Group now remains on consolidation and the property sector.

David Kennedy, The Interim Chairman of Formation reports that:

This year has seen a continued improvement in the Groups underlying financial performance. The efforts of the Directors and management in previous years are now showing through financially. We now look forward to operating a secure capital based Property Group going forward.

 Enquiries:

Formation Group PLC - David Kennedy; Chief Executive Officer - 020 7920 7590

NOMAD to Formation Group PLC;

Zeus Capital Limited - Ross Andrews / Andrew Jones - 0161 831 1512

CHAIRMAN'S STATEMENT

Group Revenues have grown by 148% this year from £2.359m to £5.849m on the back of an increasing workload driven by the current strong London property market. We look forward to continued growth over the coming year with various work contracts in place and further commitments anticipated over the coming months.

This year has seen a continued improvement in the Groups underlying financial performance. The efforts of the Directors and management in previous years are now showing through financially. As at the year end, one of the company's subsidiaries, Formation Design & Build Ltd, was involved in a potential dispute of alleged unpaid bills by a contractor. The Directors strongly believes that this claim has no merit. During the year Proactive Sports Management Ltd was placed into liquidation. This will now allow the Group to focus and operate entirely in the construction and property development sector.

An RNS post year end on 5th February 2014 on Aldgate announced that Julius Properties Limited were involved in a legal dispute with Redrow Homes Limited over a title issue relating to the property at No 1 Commercial Street, London E1.This situation casts doubt upon Julius Properties Limited's ability to repay JV Finance Ventures Limited's investment into Aldgate. Following further discussions it is anticipated that Formation Group Plc would be in receipt of the majority of these funds of £6.8m by June 2014.

The Chief Executive Officers Report provides further detail on the individual projects, companies and properties within the Group at present.

A strong base of experienced construction and property personnel is retained within the Group. It looks forward to utilizing this experience to its advantage over the coming year. It is anticipated that access to future cash incomes and an improving credit rating for banking purposes will also allow the Group to drive further improvements, generate profits and enhance shareholder value.

As a result the Group is in a position to the services of D. Khan and N. O'Carroll as Directors.

The Board and Staff

The Group has continued to resolve and divest itself of the problems of the past in a difficult and challenging environment. It is now free to focus on the property development and construction activities.

We now look forward to operating a secure capital based Property Group going forward.

David Kennedy

Interim Non-Executive Chairman

Chief Executive Officer's report

Introduction

This has been a demanding year for the Group. There has however been an increase in revenue and the tough measures of the past in regard to staffing, overheads etc. are now benefitting the Groups financial stability.

An RNS post year end on 5th February 2014 on Aldgate announced that Julius Properties Limited were involved in a legal dispute with Redrow Homes Limited over a title issue relating to the property at No 1 Commercial Street, London E1.This situation casts doubt upon Julius Properties Limited's ability to repay JV Finance Ventures Limited's investment into Aldgate. However, it is anticipated that Formation Group will be in receipt of the majority of these funds by June 2014. The directors are of the belief that this is unlikely to have any consequence on the ability of the Group to continue as a going concern.

The Group has resolved its sports related litigation issues of the past and liquidated Proactive Sports Management Limited which it had acquired in order to assist in the conduct of these litigation issues. Post year end the Group has handed the management of its investment properties in Bristol and Bradford to managing agents recommended by Dunbar Assets Plc who provide non-recourse funding on both properties.

The primary focus of the Group now remains on consolidation and the property sector.

Results

The trading results for the year have improved after allowing for the share of joint venture profits of £1.243m last year with Group revenue from continuing operations increasing to £5.84 million (2012 £2.4 million).This has resulted in a loss before taxation and exceptional items from continuing operations of £0.24 million (2012 loss: £0.54 million).The Directors believe that that is a better comparison of year on year results as it omits the exceptional one off item for the year ended 31 August 2012.

Dividend

The Group has always sought to reward shareholders by way of an annual dividend payment. In the last five years however the Group has been unable to do so.

Whilst we have strengthened our position in this regard, trading and cash resources remain weak, hence the directors, have decided not to pay a shareholders dividend. The decision will continue to be reviewed as the Groups resources and performance improves.

Business Overview

The Group continues to develop its interest in the construction and property development/management business, generating income through project development and management of small/medium scale building projects. Rental incomes to a far lesser extent are also generated on various residential and commercial investments retained by the Group.

Some schemes in which we have been involved this year are:

(i) Batemans Row, London EC1

Project management on the construction of 5 large penthouse apartments in a restricted inner London location above a seven storey building incorporating 36 No residential units and commercial spaces.

(ii) Boundary Street, London E1

Project management on the construction of 3 penthouse apartments above a seven storey mixed use building.

(iii) Princelet Street, London E1

Project management on the construction of 10 apartments involving the conversion and rooftop extension of a warehouse building in a restricted inner London location.

(iv) Salter Street, London E14

Project management on the demolition of a warehouse and new build construction of 18 apartments and a commercial unit adjoining the entrance to Westferry Road, Docklands Light Railway station.

(v) Park Road, London N8

Project management on the new build construction of 9 apartments and associated car parking on the site of a former pub.

(vi) Finchley Road, London NW3

Project management on the new build construction of 22 luxury apartments above a large basement area and associated car parking in an affluent North London location.

(vii) Boleyn Road, London N16

Project management on the demolition of a pub and the new build construction of 9 No apartments above a ground floor and basement commercial unit.

As stated in previous years this area of our business was under pressure due to the lack of the availability of bank funding for speculative development. We have seen an increasing appetite from banks this year and the buoyant London property market is looking promising in the immediate future.

We would hope to be able to expand our business on this basis following the anticipated repayment of our investment in Aldgate.

Investment Properties Retained

The Group currently has an interest in the following income producing investment properties:

(i) 52-58 Commercial Road, London E1

Formation Group Plc had an entitlement to 40% of the profits of the above development.

The profit element attributable to Formation Group PLC is now finalized at £1,188,676. As announced on 29th August 2013 Formation Group Plc received the sum of £412,676 and a further sum of £501,000 post year end as announced on 14th February 2014, leaving an outstanding balance of £275,000 from the 40% profit share owed to it.

In settlement of this balance Rocquefort Properties Limited will now hold in trust 11 No car parking spaces valued at £25,000 each for Formation Group Plc. The spaces are to be sold or let as directed by Formation Group Plc who will then receive the net proceeds.

(ii) 175-180 Church Road, St. George, Bristol

FG (Bristol) Limited, a wholly owned subsidiary of Formation Group Plc owns 15 apartments,3 retail units and associated car parking at the above address. The apartments and retail units are income producing. Current expected gross rental income is circa £135,000 p.a.Dunbar Assets Plc currently provide non-recourse funding, secured upon the scheme, of £2,079,930. Post year end Dunbar Assets Plc recommended new managing agents for this property with a view to dispersing of the asset.

(iii) York House, Upper Piccadilly, Bradford, BD1 4PD.

FG (Bradford) Limited, a wholly owned subsidiary of Formation Group Plc, currently owns 24 apartments and a commercial unit at the above address. These properties are income producing. Current expected gross rental income is circa £110,000 p.a. Dunbar Assets Plc currently provide non-recourse funding ,secured upon the scheme of £2,212,753. Post year end Dunbar Assets Plc recommended new managing agents for this property with a view to dispersing of the asset.

Risks and Uncertainties

Going concern

As highlighted in note 1, the ability of the Group to continue trading as a going concern is dependent on the realisation of cash from its investment in J. V. Finance Ventures Limited and new construction contracts being won in the next twelve months. There is a significant level of uncertainty over the ability of the Group to continue as a going concern; however we have a reasonable expectation that the Group can have resources available to it from its major shareholder to continue in operational existence for the foreseeable future.

Divested Business

The past five years has seen a substantial refocus in the Group's activities. The recommendation by the Board and subsequent approval by shareholders to dispose of certain non-related businesses has strengthened the Groups financial position. The subsequent conditional sale by Julius of its interest in Aldgate has moved the Group a step closer to recouping its investment in Aldgate's rescue, albeit the post year end announcement on 5TH February 2014 advising of a legal dispute between Julius Properties Limited and Redrow Homes Limited.

Restructuring over the past five years has ensured that the core property business remains competitive, whilst also maintaining a strong nucleus with future access to cash reserves which will enable the Group to grow and prosper.

Outlook

The business has undergone significant change and challenges over the past five years. It has been creative in its approach to such change and challenges, and willing to take the tough decisions in relation to litigation issues, winding down and liquidating of companies when necessary and decisions on staffing in order to ensure the Groups survival in a difficult trading environment.

The outlook continues to be best described as more optimistic with a larger order book than last year and the belief that it will continue to grow. We believe the company is now in a position where it is ready to prosper from the significant recovery which is currently evident in the London property market. The company remains hopeful of having recourse to its cash investment in Aldgate in 2014, albeit the legal dispute mentioned above. The reinvestment benefits of this cash should help ensure future growth for the Group.

David Kennedy

Chief Executive Officer

27 February 2014

Consolidated statement of financial position

31 August 2013

 Consolidated statement of changes in equity

31 August 2013

 Consolidated statement of cash flows

for the year ended 31 August 2013

 1. Basis of preparation

The Directors have prepared working capital forecasts for the period to 31 August 2015. The ability of the Group to continue trading as a going concern is dependent on the continuing income streams from existing and new contracts, together with the expected realisation of the Group's investment from the Aldgate Development. Additionally, continued support may be required from its majority shareholder.

The Groups ability to continue as a going concern may be impacted by developments as announced following the year end in relation to the legal dispute on the Aldgate development. The directors are of the belief that this is unlikely to have an effect on the ability of the Group to continue as a going concern.

2. Earnings per share

The calculation of basic and diluted earnings per share is based on the following profits and numbers of shares:

Earnings per share is calculated by dividing the profit for the year attributable to equity shareholders by the weighted average number of shares in issue during the year.

The share options in issue are anti-dilutive in respect of the basic loss per share calculations in 2013 and 2012 and have therefore not been included.

3.Reconciliation of profit from continuing operations to net cash inflow from operating activities

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short term highly liquid investments with a maturity of three months or less.

 4. Annual Report and Accounts

The annual report will be sent to shareholders shortly. Additional copies will be available on the Company's website: www.formationgroupplc.com

5. Annual General Meeting

Formation's Annual General Meeting is to be held on the 28th March, 2014 at the offices of Imparando (UK) Limited, 3rd Floor, 52-58 Commercial Road, London E1 1LP at 11 am.