FRM.L Regulatory News (FRM)

3 Sep 2007 07:00

Formation Group PLC31 August 2007 Formation Group plc ("Formation" or "the Group") Acquisition of O J Kilkenny & Co Limited ("O J Kilkenny & Co Limited" or "OJK") Formation confirms that it has today completed the acquisition of 90 OrdinaryShares of O J Kilkenny & Co Limited, representing 90% of OJK. It is theintention of the Group to acquire the remaining 10% of OJK in due course. Key Points * Acquisition of 90% of O J Kilkenny & Co Limited, an accountancy practice from Osmond Kilkenny, Brian Murphy and Patrick Savage ("the Acquisition") * OJK specialises in advising clients in the entertainment and sporting industries * Based in London and established in 1986, OJK's principal accountancy activities include tax advice, accounts preparation and royalty examinations. They employ approximately 35 people * The Acquisition is in line with the Board's strategy of developing its Professional Services division by adding complementary services for the benefit of existing and new clients * The profit after taxation of OJK for the year ended 31 May 2007 was £421,169 and the asset value of OJK as at 31 May 2007 was £2,850,432 * The consideration is being satisfied as follows: - Initial cash consideration of £1.6m payable on completion - Issue of 2,242,152 ordinary shares in the Group on completion (calculated as £0.5m worth of shares, issued at 22.30p, being the average closing price over the 30 days prior to completion (the "Consideration Shares") ) - A further earn out arrangement is payable, in cash, up to a maximum of £1.6m on 31 October 2008 determined by reference to OJK achieving certain pre-defined post tax profit figures and Formation acquiring the remaining 10% of the OJK issued share capital - An additional earn out arrangement is payable, in cash, up to a maximum of US$0.6m determined by certain pre-determined conditions - In addition, commencing on the six month anniversary of completion the Group will pay a total cash sum equal to the amount of the net current assets of OJK as at 31 May 2007 less certain pre-defined amounts - The total cash consideration will be funded from existing Group cash reserves Formation's existing Professional Services Division Currently this division contains subsidiary companies providing WealthManagement, Representation Services, Insurance Services and Sports FinanceSolutions to professional athletes, sporting institutions and high net worthindividuals. Background to, and reasons for, the Acquisition Since the Group's disposal of its sports marketing division in October 2006,Formation's strategy has been to focus on its Professional Services division.More recently, via the acquisition of Columbia Design and Build Limited("Columbia") it has formed a second division - "Property Management andInvestment" and as a consequence, has added new revenue streams that arecomplementary to its operation. The addition of an accountancy practice to itsProfessional Services division adds an additional revenue stream for the Groupand a suite of complementary services for the Group's clients. Admission of Shares Application has been made to admit the Consideration Shares to trading on AIM.It is expected that the Consideration Shares will be admitted to trading on 7September 2007. ("Admission") The total number of shares in issue in the Group is now 208,015,112. Neil Rodford, Chief Executive of the Group commented; "I am delighted to announce the acquisition of O J Kilkenny & Co Limited. Thecompletion of this transaction adds another significant string to ourprofessional services bow complementing all existing businesses in this divisionas well as linking up with our recently formed Property Management andInvestment Division. Strategically, it has been an objective of the Group to move into theentertainment sector, whose clients and career paths are of a similar profile toour sports clients. This acquisition achieves that objective and is a naturalextension for our service proposition." Enquiries: Formation Group plc; Mike Wallwork, Communications Director; 0161 928 1210 W H Ireland Ltd; David Youngman; 0161 832 2174 This information is provided by RNS The company news service from the London Stock Exchange