30 Jul 2009 13:01
Formation Group PLC
Proposals in connection with the sale of certain subsidiaries and the purchase by the Company of certain of its own shares
Formation Group PLC ("Formation" or the "Company"), is pleased to announce that it has entered into an agreement for the sale of certain subsidiaries of the Group to a company ultimately controlled by Gresham LLP, for a total cash consideration of £16.435 million. The Company also announces a proposed purchase of 15,985,658 Ordinary Shares by the Company from Exiting Directors and certain other employees of the Disposal Subsidiaries.
The Disposal, as a result of its size, is conditional upon Independent Shareholders' approval as required by the AIM Rules. The Company is also seeking the approval of Independent Shareholders before it effects the Buyback.
A circular, containing further details of the Disposal and Buyback is expected to be posted to Shareholders today and will be available on the Company's website www.formationgroupplc.com.
John Lawrence MBE, Non-executive Chairman, Formation, commented:
"It is the view of the Independent Directors that the agreed offer represents an excellent opportunity for the Group to realise value. The cash value for the Disposal Subsidiaries is equivalent to approximately 7.47p per share representing a premium of 35.83 per cent. to the Company's current market capitalisation and will enable the Group to focus upon its property management and IFA businesses in a concerted manner. In addition to the cash consideration, Formation has also transferred to the Purchaser the deferred consideration obligations in relation to the James Grant Media Group acquisition.
These are challenging times within both the property and financial services sectors. As a debt free, cash positive business, the recommendation to shareholders to accept this offer will, we believe, better equip the Group to tackle these challenges. There will doubtless be opportunities within both sectors to realise incremental shareholder value as the wider economy improves."
Enquiries:
Formation Group PLC Tel: 0161 980 1210
John Lawrence MBE
Mike Wallwork
Zeus Capital Tel: 0161 831 1512
Richard Hughes
Ross Andrews
OVERVIEW
The Company announces that it has entered into an agreement for the sale of certain subsidiaries of the Group to the Purchaser (a company ultimately controlled by Gresham), for a total cash consideration of £16.435 million. The consideration may be adjusted to take account of certain indebtedness and cash of the Disposal Subsidiaries at Completion and could be increased if the Purchaser or the Disposal Subsidiaries are sold within 12 months of Completion. The Disposal, as a result of its size, is conditional upon Independent Shareholders' approval as required by the AIM Rules.
The Company also announces the proposed purchase of 15,985,658 Ordinary Shares by the Company from the Exiting Directors and certain other employees of the Disposal Subsidiaries. The Company is seeking the approval of Independent Shareholders before it effects the Buyback.
A General Meeting of the Company is being convened to seek the approval of Independent Shareholders for the Disposal and the Buyback. The General Meeting will be held at 10.00 a.m. on 24 August 2009. The Disposal is conditional on passing the Resolutions and the Buyback becoming effective.
The Exiting Directors are all proposed shareholders in, and proposed directors of, the Purchaser. As the Exiting Directors are also currently directors of and shareholders in the Company, the AIM Rules classify the Disposal as a related party transaction. In addition, as certain of the Selling Shareholders are directors of the Company and/or some of the Disposal Subsidiaries, the AIM Rules also classify the Buyback as a related party transaction. Accordingly, the Exiting Directors have not taken part in the Independent Directors' consideration of the Disposal and the Buyback.
The Independent Directors, having consulted with Zeus Capital, who have taken into account the Independent Directors' commercial assessment of the transactions and the irrevocable undertakings received from certain major Shareholders, consider the terms of the Disposal and the Buyback Agreements, in the context of the transaction as a whole, to be fair and reasonable insofar as the Independent Shareholders are concerned.
INFORMATION ON THE DISPOSAL SUBSIDIARIES
Subject to the approval of Independent Shareholders at the General Meeting, the Board has agreed to dispose of the Group's operations in the areas of talent management, sports representation, accountancy and taxation and sports corporate finance carried on by the Disposal Subsidiaries. A summary of each of these operations is set out below:
JGMG's wholly-owned subsidiary, James Grant Media Limited, specialises in the provision of talent management services to its clients across a number of sectors of the entertainment industry in the UK. These services extend to broadcast network, commercial and IP rights contract negotiation;
PSM is a sports representation business providing management services and career advice to professional football athletes and other high net worth individuals operating primarily in the UK, Europe and US. Primarily, PSM works on behalf of clients to negotiate playing contracts with their football clubs and other commercial contracts on their behalf;
OJK specialises in providing tax advice, accounts preparation and royalty examinations for clients in the music, sport and entertainment industries; and
FSC is a specialist broker, providing financial solutions to sporting organisations and football clubs. FSC assists clients to maximise their cash flow and future income from existing commercial contracts.
The table below summarises the consolidated financial performance of the Disposal Subsidiaries for the three financial years ended 31 August 2008 and the six months ended 28 February 2009, which information has been extracted, without material adjustment, from the consolidation schedules used in connection with the preparation of the audited consolidated financial statements for Formation as at, and for the three financial years ended 31 August 2006, 31 August 2007 and 31 August 2008 and the consolidation schedules used in connection with the preparation of the interim financial statement for Formation as at, and for the 6 month period ended, 28 February 2009:
| Year ended 31 August 2006 £'000 | Year ended 31 August 2007 £'000 | Year ended 31 August 2008 £'000 | 6 months ended 28 February 2009 £'000 | |
| Revenue | 3,428 | 3,982 | 9,826 | 6,053 |
| Operating Profit | 1,164 | 1,252 | 3,446 | 2,674 |
| Profit Before Tax | 1,165 | 1,252 | 2,859 | 2,719 |
| Net Assets | 2,958 | 4,540 | 9,211 | 10,980 |
BACKGROUND TO AND REASONS FOR THE DISPOSAL
In February 2009, Gresham, and a management team led by Neil Rodford, Mark Page and Peter Powell, and other members of the management team of the Disposal Subsidiaries, made an indicative cash offer for the Disposal Subsidiaries. Whilst the initial offer was rejected, a subsequent revised offer led to the Independent Directors entering into heads of terms with Gresham relating to the Disposal and the Buyback on 29 April 2009. Following press speculation, the Company announced, on 26 May 2009, that it had received indications of interest relating to certain parts of the Group's business and that it had entered into a period of exclusivity with Gresham.
Under the terms of the Disposal Agreement, the Purchaser will pay a total cash consideration of £16.435 million to the Company for the Disposal Subsidiaries. The total consideration includes £15.75 million in cash, plus £500,000 as a refund of the consideration to be paid by the Company pursuant to the Buyback, plus the sum of £500,000 previously paid by the Company to the sellers of JGMG on 5 May 2009 and less £315,000 to take account of estimated indebtedness as at Completion.
In considering whether to recommend the Disposal to Shareholders, the Independent Directors have considered a number of factors including:
Formation is currently classified as a real estate investment and services business by the London Stock Exchange and devolving the Company of its management components will allow the two parts of the Group, management services and professional services, to evolve within their chosen sectors.
In forming their view on the Disposal, the Independent Directors have also considered the deliverability and timing of the transaction, the receipt of irrevocable undertakings from certain major Shareholders as well as the future prospects of the Company. As such, the Independent Directors consider the Disposal to be in the best interests of Independent Shareholders as a whole and an opportunity for the Company to realise value.
THE CONTINUING GROUP
Details of the Continuing Group's businesses are set out below:
Construction Project Management
FD&B operates from offices in Hackney, London. The company was established in 1997 and manages residential or mixed use property development projects. FD&B oversees all stages of the development process with potential target sites being identified, evaluated, designed, built and managed through to completion. In addition, FAD, formed in July 2007, provides design services to complement FD&B's property management business.
Current projects
Aldgate, Commercial Road, London
Background
In August 2007, Formation acted as investment adviser to Aldgate East Property Company Limited ('AEPC') which raised £19.8 million through the issue of Junior Unsecured Loan Notes and Subordinated Junior Unsecured Loan Notes (the 'Loan Notes') to retail investors, including clients of Formation's asset management company, Formation Asset Management Limited.
The proceeds from the issue of the Loan Notes, along with a proportion of a £93.0 million banking facility provided by Heritable Bank plc ('Heritable'), a subsidiary of Landsbanki, were used by Julius Properties Limited (the 'Developer') to acquire the land and commence the Aldgate development.
In performing its duties as investment adviser and providing underwriting facilities, Formation was paid an initial fee of £1.8m with a further fee (to be calculated by reference to the total profit from the development), payable on completion of the development. As part of the profit sharing arrangement, Formation and Balchan Management Limited (as trustee for the Impala Discretionary Settlement, the Developer's ultimate shareholder), each conditionally undertook to pay 50 per cent. of the Junior Unsecured Loan Notes including interest accrued thereon, to the extent that the Developer did not have sufficient funds to do so.
In October 2008, Ernst & Young LLP was appointed as Heritable's administrator ('Administrator'). The administration of Heritable has resulted in the Developer being unable to continue funding the Aldgate development. The Developer continues to engage with the Administrator in order to agree on a mutually acceptable resolution. Given the current economic backdrop, the Developer is unable to provide any certainty regarding the refinancing and consequently the likelihood of completing the development within the original timeframe.
Under the terms of the agreements entered into in respect of the Loan Notes between the Developer and AEPC, in the event that the Aldgate development is not completed before 28 August 2011 when the Loan Notes become redeemable, or earlier if certain construction and sales conditions are not met including cessation of construction by the developer, and then only upon the request of the issuer (AEPC), Formation may be liable to assist the Developer with any shortfall in repaying AEPC the initial funding and interest due by AEPC from its issue of the Loan Notes. Formation's maximum liability under this arrangement is £11.6 million, a sum previously disclosed as a contingent liability in its financial accounts.
As noted above, Formation's involvement in the Aldgate development is twofold:
Development update
The Aldgate development consists of 105,000 square feet of office and retail space and 212 residential units of which 74 have already been sold as affordable housing units. Prior to the appointment of the Administrator construction had reached the 15th out of 22 floors.
The Company is aware that discussions are ongoing between the Developer and the Administrator. The position in respect of these discussions remains largely unchanged from that reported by the Company in May although the Company remains hopeful that a satisfactory resolution will be found.
Whitechapel, Commercial Road, London
The development commenced in 2006 and contracts have been exchanged on all of the residential units, six live/work units and one rental unit having a combined value of £44 million.
Completion of all the private residential units valued at £37.2 million is due in August 2009. Completion of the affordable housing units has already taken place generating £3.06 million of revenue.
Clancy Barracks, Dublin
This development consisting of 430 apartments commenced in 2007 and Phase 1 is forecast by the Board to complete in September 2009. FD&B is managing the project on behalf of Columbia Formation Group Ireland Limited. The Company has agreed to purchase 11 apartments within the development at a price of Euro 4.7 million.
Leman Street, London
The Leman Street development is in respect of the proposed construction of a 250 room hotel. The development is being managed by FD&B on behalf of Pinehill Capital. To date, FD&B in conjunction with FAD, has assisted with the clearing of the site, the preparation of designs and submission of planning applications. Final planning permission is expected within the next few months with construction expected to commence in early 2010 and practical completion of the development is scheduled for early 2012.
Other projects
In addition, FD&B is progressing a number of other construction opportunities including the possible development of a circa 250 room hotel in Dublin.
Wealth Management & IFA
Operating from offices in Wilmslow, Formation Asset Management Ltd operates as an independent financial adviser offering financial planning, insurance protection and investment advice to athletes, entertainers and other third party professional service providers as well as high net worth individuals. Predominantly serving sports professionals based in the UK, FAM provides advice in all areas of wealth management including tax planning, insurance protection, investment portfolio development and wealth accumulation.
Wealth Solutions
Formation Wealth Solutions Limited provides bespoke investment and wealth management solutions targeted at IFA's and other third party professional service providers and high net worth individuals. With access to unique and exclusive wealth strategies including property, tax planning, structured products and bespoke investment funds, FWS is able to reach a broader high net worth client base whilst serving other professional third parties.
CHANGES TO THE BOARD OF DIRECTORS OF THE COMPANY
Each Exiting Director has agreed to resign from his role as a director of the Company and each other member of the Continuing Group on Completion.
All other members of the Board will remain as directors of the Company. Following Completion, the directors of the Company will consist of John Lawrence as Non-Executive Chairman, Noel O'Carroll, who will become interim Chief Executive Officer (as well as remaining as managing director of the property division), Ian Battersby as director of Wealth Management and Michael Kennedy and Patrick Kennedy as non-executive directors.
In addition, Michael Wallwork, currently head of communications and company secretary of the Company, will be retained on a full-time basis for a period of seven months from Completion (not withstanding his proposed participation in the Purchaser's business, including, inter alia, his receipt of equity in the Purchaser with effect from Completion). In addition, the Purchaser has agreed to make certain other employees of the Disposal Subsidiaries available to the Company including Mark Page (the Company's existing Finance Director) for agreed periods after Completion to assist with the ongoing requirements of the Company.
The Company recognises the need to appoint a new full-time Chief Executive Officer and Finance Director as soon as possible following Completion and will commence its search for appropriate candidates immediately after Completion.
USE OF FUNDS AND INVESTING STRATEGY
Use of Proceeds
Of the £16.435 million sale proceeds which are proposed to be received by the Company on Completion, the Company proposes to repay all of its circa £7 million bank facility with Bank of Scotland (Ireland) Limited. The balance of approximately £8 million, after expenses and the Buyback, will be retained by the Continuing Group and will be used to pursue development opportunities across the Continuing Group's construction business as well as to explore selective acquisition opportunities for the wealth management division to supplement organic growth.
On Completion the Company will have cash resources of approximately £8 million. The Directors believe, after due and careful enquiry, that if the Group's potential liabilities in respect of the development at Aldgate do not crystallise within the next 12 months, which is the assessment of the Directors, then the Group has sufficient working capital for its present requirements, that is for a period of 12 months from the date of the Circular.
The Directors have treated the Group's potential liabilities in respect of the development at Aldgate on the same basis as previously disclosed in the Company's financial statements, including specifically the audited financial statements for the financial year ended 31 August 2008 and the interim financial statements for the six months ended 28 February 2009.
It is the Board's belief that a debt free, cash positive Company will have greater flexibility to facilitate a successful outcome for the loan note holders in the Aldgate development and realise shareholder value following a successful project outcome. A cash positive Company will also have greater flexibility to tackle the challenges facing all real estate investment and services companies.
Investing Strategy
The net proceeds of the Disposal should enable the Continuing Group to take advantage of the opportunities that exist to develop further the remaining businesses. In particular, the Continuing Group intends to focus on the development of the property management business, whilst at the same time, evaluating additional options and opportunities which augment the existing service offering to the Continuing Group's investment client base or to realise further value for Shareholders in this area.
Litigation
The Group has commenced litigation proceedings against several parties who have not fulfilled contractual obligations with certain members of the Group. Documents entered into pursuant to the Disposal Agreement, provide for the Company to receive 75 per cent. of aggregate net settlement and for the Purchaser to receive 25 per cent. of aggregate net settlement of all sums which are due to the Group in relation to such litigation. The Company will retain control of the legal proceedings.
The Company has recently received two complaints from clients of the Company's asset management business in relation to a property development in Spain. The Company is currently investigating these complaints and the circumstances surrounding this investment and is liaising with its appointed compliance specialists, professional indemnity insurers and lawyers.
RELATED PARTY TRANSACTIONS AND DISPOSAL RESULTING IN A FUNDAMENTAL CHANGE OF BUSINESS
Proposed Disposal
The Exiting Directors have formed a management team which will own and manage the Disposal Subsidiaries following Completion and the Exiting Directors will have a financial interest in the equity share capital of the Purchaser. As a result, the Disposal is treated as a related party transaction under the AIM Rules.
By virtue of its size, completion of the Disposal will result in a fundamental change of business for the Company. As such, the Disposal requires the prior approval of Independent Shareholders to be given at a General Meeting, in accordance with the AIM Rules.
Proposed Buyback (Related Party Transaction)
The Company has agreed (conditionally on Completion and subject to Shareholders' approval) to enter into the Buyback Agreements pursuant to which it will purchase (in aggregate) 15,985,658 Ordinary Shares from the Selling Shareholders. Such Ordinary Shares represent 7.27 per cent of the issued share capital of the Company as at 29 July 2009, being the latest practicable date prior to the date of this announcement.
The purchase price of 3.1278 pence per Ordinary Share represents a discount of 43.13 per cent. compared to the middle market price of 5.5 pence per Ordinary Share as at the close of business on 29 July 2009 being the latest practicable date prior to this announcement. An aggregate sum of £500,000 is payable by the Company on the Buyback being effected but, as mentioned earlier, this sum will be refunded to the Company as part of the cash paid to it by the Purchaser on Completion.
The Independent Directors consider the Buyback to be earnings enhancing and propose to hold the Buyback Shares in treasury.
As certain of the Selling Shareholders are directors of the Company, the Buyback is a related party transaction for the purposes of the AIM Rules.
A copy of the Buyback Agreements between the Company and each of the relevant Selling Shareholders is available for inspection at the registered office of the Company from the date of this announcement until the time of the General Meeting and will be available for inspection at the General Meeting.
Waiver of LTIP and EMI Options (Related Party Transaction)
In addition to their entry into the Buyback Agreements, each of Neil Rodford and Mark Page and other employees of the Disposal Subsidiaries (including employees of the Company whose employment will transfer to the Purchaser or a Disposal Subsidiary on Completion) will waive the options that they hold over Ordinary Shares and rights awarded to them pursuant to the EMI Option Plan, the LTIP and the USOP, without compensation, save as referred to below. Lyle Yorks, a director of PSM has (subject to completion) agreed to waive both his rights to receive 700,000 Ordinary Shares and his right to receive a bonus of circa £330,000 which will be due to him pursuant to a bonus arrangement entered into in 2007. Mr Yorks will receive £175,000 compensation from the Company in respect of such waivers. In aggregate, options in respect of 6,496,545 Ordinary Shares will be waived (including the options being waived by Neil Rodford and Mark Page).
As at the close of trading on 29 July 2009, the latest date prior to the date of the Circular, 220,515,112 Ordinary Shares were in issue, of which 515,000 were held in treasury. All 15,985,658 of the Ordinary Shares to be purchased pursuant to the Buyback are proposed to be held in treasury.
As such, the total number of voting rights in the Company immediately after the Buyback is expected to be 204,014,454. As such, 204,014,454 is expected (after the Buyback) to be the number used in the denominator for calculation of percentage interests in Ordinary Shares.
CONCERT PARTY
Interests of David Anthony Kennedy and related parties
David Anthony Kennedy was born in Tipperary, Ireland on 17 February 1952. He emigrated to England in 1997 where he commenced a career in the construction industry and subsequently in property development. David Kennedy is associated with all of the current property developments of the Company referred to in this announcement.
David Kennedy and certain related parties comprise a Concert Party for the purposes of the City Code on Takeovers and Mergers and are interested in the following Ordinary Shares in the Company:
| Registered Shareholder | No of Ordinary Shares held as at the date of this announcement | Percentage of issued shares as at the date of this announcement (%) | Percentage of issued shares immediately after the Buyback (%) |
| David Anthony Kennedy | 8,823,529 | 4.01 | 4.32 |
| Streetwise Limited* | 74,747,354 | 33.98 | 36.64 |
| Fitel Nominees** | 30,822,813 | 14.01 | 15.11 |
| Matthew Kennedy*** | 16,500 | 0.01 | 0.01 |
| Philamena Kennedy**** | 219,900 | 0.10 | 0.11 |
| Total | 114,630,096 | 52.10 | 56.19 |
* Balchan Management Limited, as the parent company of Streetwise Limited, holds its Ordinary Shares for the beneficiaries of the Tulip Trust. The beneficiaries of the Tulip Trust are members of David Kennedy's immediate family.
** Fitel Nominees Limited holds its Ordinary Shares as nominee for David Anthony Kennedy who in turn, holds them on trust for Barolo Properties Limited. Barolo Properties Limited holds these shares on behalf of its ultimate parent company, Balchan Management Limited, which acts as trustee for the Impala Discretionary Settlement (of which David Kennedy and other members of his family are beneficiaries).
*** Matthew Kennedy is a nephew of David Kennedy.
**** Philamena Kennedy is a sister in law of David Kennedy.
IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings to vote, or (where applicable) to procure that the registered holder votes, in favour of the Resolutions have been given to the Company by the Independent Directors in respect of their entire beneficial holdings of 1,105,858 Ordinary Shares representing, in aggregate, approximately 0.50 per cent. of the issued Ordinary Shares.
In addition to the Independent Directors, Shareholders who in aggregate have a beneficial interest in 125,912,612 Ordinary Shares representing 57.23 per cent. of the issued Ordinary Shares have irrevocably undertaken to vote in favour of the Resolutions.
In aggregate, irrevocable undertakings to vote in favour of the Resolutions have been received in respect of 127,018,470 Ordinary Shares, amounting to 57.73 per cent. of the number of issued Ordinary Shares.
GENERAL MEETING
A General Meeting has been convened for 10.00 a.m. on 24 August 2009, at which the Resolution to approve the Disposal will be proposed as an ordinary resolution and will be passed if more than 50 per cent. of the votes are cast in favour. The Resolution to approve the Buyback will be proposed as a special resolution and will be passed if 75 per cent. or more of the total voting rights of eligible Shareholders votes are cast in favour. If the resolution to approve the Buyback is not passed the Disposal is not capable of being effected.
RECOMMENDATION
The Independent Directors, having consulted with Zeus Capital, who have taken into account the Independent Directors' commercial assessment of the transactions and the irrevocable undertakings received from certain major Shareholders, consider that the terms of the Disposal and the Buyback Agreements in the context of the whole transaction are fair and reasonable insofar as the Independent Shareholders are concerned. Accordingly, the Independent Directors unanimously recommend that Shareholders vote in favour of the Resolutions, as the Independent Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 1,105,858 Ordinary Shares, representing approximately 0.50 per cent. of the existing ordinary share capital of the Company.
In addition to the Independent Directors, Shareholders who in aggregate have a beneficial interest in 125,912,612 Ordinary Shares representing 57.23 per cent. of the existing ordinary share capital of the Company have irrevocably undertaken to vote in favour of the Resolutions.
In aggregate, irrevocable undertakings to vote in favour of the Resolutions have been received in respect of 127,018,470 Ordinary Shares, amounting to 57.73 per cent. of the existing ordinary share capital of the Company.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context requires otherwise:
| "AIM" | AIM, the market of that name operated by London Stock Exchange plc |
| "AIM Rules for companies" | the rules for AIM companies published by London Stock Exchange plc |
| "Board" or "Directors" | the board of directors of the Company |
| "Buyback" | the proposed purchase by the Company of the Buyback Shares |
| "Buyback Agreements" | the agreements between the Company and each of the Selling Shareholders (and/or their related parties) pursuant to which the Company will, before Completion but subject to the Resolutions being passed, purchase the Buyback Shares |
| "Buyback Shares" | the 15,985,658 Ordinary Shares to be purchased by the Company in accordance with the Buyback Agreements |
| "Circular" | the circular to Shareholders of the Company to be dated 30 July 2009 |
| "Company" or "Formation" | Formation Group plc |
| "Completion" | the completion of the Disposal in accordance with the terms of the Disposal Agreement |
| "Continuing Group" | Formation and its subsidiary undertakings after Completion (excluding the Disposal Subsidiaries) and "member of the Continuing Group" shall be construed accordingly |
| "Disposal" | the proposed sale by the Company of the Disposal Subsidiaries pursuant to the Disposal Agreement |
| "Disposal Agreement" | the conditional sale agreement dated 30 July 2009 between the Company and the Purchaser relating to the Disposal |
| "Disposal Subsidiaries" | together, JGMG, PSM, OJK and FSC |
| "EMI Option" | options granted pursuant to the EMI Scheme |
| "EMI Scheme" | the Formation Group Plc Enterprise Management Incentive Scheme |
| "Euroclear" | Euroclear UK & Ireland Limited |
| "Exiting Directors" | together, Neil Rodford, Mark Page and Peter Powell |
| "FAD" | Formation Architectural Design Limited |
| "FAM" | Formation Asset Management Limited |
| "FD&B" | Formation Design & Build Limited |
| "Form of Proxy" | the form of proxy to be used at the General Meeting, which accompanies the Circular |
| "FSA" | The Financial Services Authority |
| "FSC" | Formation Sports Capital Limited |
| "FSMA" | The Financial Services and Markets Act 2000 (and all regulations promulgated thereunder) as amended |
| "FWS" | Formation Wealth Solutions Ltd |
| "General Meeting" | the general meeting of the Company to be convened for the purpose of considering the Resolutions to be held on 24 August 2009, |
| "Gresham" | Gresham LLP, a private equity partnership focused on investment in UK mid-market businesses of 1 South Place, London EC2M 2GT |
| "Group" | the Company and its subsidiary undertakings at the date of this announcement |
| "Independent Directors" | together, John Lawrence, Ian Battersby, Noel O'Carroll, Michael Kennedy and Patrick Kennedy |
| "Independent Shareholders" | Shareholders other than the Selling Shareholders |
| "JGMG" | James Grant Media Group Limited and its wholly owned subsidiary, James Grant Media Limited |
| "LTIP" | the Formation Group PLC Long Term Incentive Plan |
| "Notice of General Meeting" | the notice of the General Meeting to be set out in the Circular |
| "OJK" | O J Kilkenny & Co. Limited and OJK (Audit) Limited |
| "Option Waivers" | the waivers of options by Exiting Directors and certain other existing employees of the Disposal Subsidiaries where such options were granted pursuant to the EMI Scheme, the LTIP and the USOP, as described at paragraph 8.3 of Part I of the Circular |
| "Ordinary Shares" | ordinary shares of 1 pence each in the capital of the Company |
| "PSM" | Proactive Sports Management Limited and Proactive Sports Management USA Inc. |
| "Purchaser" | Cobco 902 Limited, a company ultimately controlled by Gresham |
| "Resolutions" | the resolutions to be proposed at the General Meeting to approve the Buyback and Disposal |
| "Selling Shareholders" | each of the Shareholders who have agreed to sell Ordinary Shares to the Company pursuant to the Buyback Agreements |
| "Shareholders" | the holders of Ordinary Shares from time to time |
| "USOP" | the Formation Group PLC Unapproved Share Option Plan |
| "Zeus Capital" | Zeus Capital Limited |