Profit Share Agreement

8 July 2015

Formation Group plc

Profit Share Agreement

Formation Group plc ("Formation" or "Company") is pleased to announce that it has entered into a profit share agreement with Sunbel Development Limited ("Sunbel") and Pinacle Developments Limited ("Pinacle") in relation to a development property at Cromer Court, 9-19 Streatham High Road, London which is being converted from office space to 98 residential units.

Under the terms of the agreement, Formation has advanced to Sunbel the sum of £2,443,671.31 to continue work on the development which commenced in June 2014. The loan attracts no interest but instead Formation will be entitled to receive 40 per cent. of the net profit arising on the development (i.e. the profit generated from sales of units after the repayment of debt utilised to purchase the site, the cost of development, taxation and repayment of the loan advanced by the Company). Payments of the various costs and profit share will be made once 95 per cent. by value of the units within the development have been sold.

David Kennedy and Patrick Kennedy, Chief Executive and Non-executive director of Formation respectively, are directors of both Sunbel and Pinacle and thus the agreement is considered to be a transaction with a related party under the AIM Rules for Companies. The directors of Pinacle, other than David Kennedy and Patrick Kennedy, having consulted the Company's nominated adviser Northland Capital Partners Limited, consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

As at 7 July 2015 the majority of units in the development had been reserved. It is anticipated that approximately half of the units will be completed by the end of August 2015 and the balance completed by the end of September 2015.

**ENDS**

For further information www.formationgroupplc.com or contact the following: