22nd Feb 2005 07:00
Formation Group PLC22 February 2005 22 February 2005 FORMATION GROUP PLC Kingsbridge Asset Management Limited - Variation of Earn-Out Formation Group PLC ("Formation" or the "Group"), a leading integrated sportsmanagement and marketing business, is pleased to announce that it has enteredinto a variation agreement with the vendor of Kingsbridge Asset ManagementLimited ("Kingsbridge") relating to the payment of deferred considerationpursuant to an earn-out arrangement ("Variation Agreement"). Kingsbridge was acquired by the Group in October 2003 for an initialconsideration of £2.06 million. In addition, deferred consideration of £0.4million was paid on 1 September 2004. Under the terms of the acquisitionagreement additional consideration of a maximum of £3.0 million is payabledepending on the trading performance of Kingsbridge in the three year periodending 31 August 2006. £0.67 million of this amount was paid in November 2004. Kingsbridge, which is based in Nottingham, provides advice to its clients in allareas of wealth management and acts for in excess of 1,000 clients,predominantly professional football players and coaches based in the UK. Inaddition to its football clients, Kingsbridge also advises clients from othersports such as Rugby, Cricket, Golf and Racing. In the year ended 31 August 2004, Kingsbridge's turnover was £3.1 million and the profit for the division was£0.7 million. Kingsbridge has continued to trade in line with the Board'sexpectations in the current financial year. Under the Variation Agreement, Formation has agreed to settle the terms of theadditional consideration earn-out for a cash payment of £1.11 million. Thisrepresents 47 per cent. of the maximum amount still remaining payable under theterms of the additional consideration earn-out. The payment required under theVariation Agreement will be settled by the Group's existing resources and newbank facilities. David McKee, a director of Formation, is related to the original vendorshareholder of Kingsbridge, Lynette Dawn Yates. David McKee therefore has abeneficial interest in 15,666,667 ordinary shares in Formation, representing13.6 per cent. of the issued share capital of the Group. The Variation Agreementis therefore a related party transaction for the purposes of Rule 12 of the AIMRules and as such David McKee did not vote at the Board Meeting on thisvariation. The Board (with the exception of David McKee) considers that, having consultedwith its nominated adviser, the Variation Agreement is fair and reasonableinsofar as its shareholders are concerned. The Board believes that there-negotiation of the additional consideration is in the best interests of theGroup and its shareholders as it represents better utilisation of the Group'scash resources. Furthermore the Variation Agreement will enable the Group toaccelerate its growth plans with additional resources being allocated to newpersonnel and upgrading of the IT infrastructure in Kingsbridge. Neil Rodford, Chief Executive of Formation Group, commented: "Since flotation in May 2001 it has been our intention to create an integratedsports management & marketing business offering clients a range of complementaryadvisory services. The acquisition of Kingsbridge was in line with this strategyand we have been pleased with the company's performance since it became part ofthe Formation Group. Our long term growth plans for Kingsbridge are more likelyto be achieved through additional investment in infrastructure and personnel andwe are delighted that the management of Kingsbridge share this vision." Enquiries: Formation Group Plc Tel: 01625 536411Neil Rodford, Chief ExecutiveMark Page, Finance Director This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FRM.L