FRM.L Regulatory News (FRM)

5 Oct 2006 07:01

Formation Group PLC05 October 2006 5 October 2006Formation Group plcFRM.L FORMATION GROUP PLC ("Formation", "the Group" or "the Company") Disposal of Sports Marketing Division Formation Group plc, the sports marketing and management company, is pleased toannounce the proposed sale of the entire share capital of the subsidiariescomprising its Sports Marketing Division for a consideration of up to £11.116million. The sale has been agreed with Sportfive Gmbh & Co KG ("Sportfive") who will pay£10.066 million of the consideration in cash upon the completion of the deal.The balance, of up to £1.050 million, is payable in cash after the end of theyear ending 31 August 2007 and is dependent on the performance of the SportsMarketing Division for that year and the continued employment of selected seniormanagement. The sale of the Sports Marketing Division is subject to the approval ofShareholders at an Extraordinary General Meeting on 24 October 2006. The Sports Marketing Division comprises five subsidiaries: Fox Sports Limited,RC&A Sports Management Limited, Bermitz Sports Advertising Limited, SponsormaticApS and Active Sports Marketing Limited. Together they provide outdooradvertising, media and marketing services. The Sports Marketing Division advises a large number of UK and internationalcompanies on outdoor advertising for their brands. These services are providedthrough Fox Sports Limited (trading as Fox Advertising), RC&A Sports ManagementLimited and Bermitz Sports Advertising Limited, based in the UK, andSponsormatic ApS, based in Denmark. The Sports Marketing Division also provides sports marketing services, such assales promotion, brand consultancy, sports PR and event management. Theseservices are provided through Active Sports Marketing Limited. In its last full financial year ended 31 August 2005, the Sports MarketingDivision (as it was then constituted) recorded turnover of £6.7 million (2004:£5.5 million) and profit before common costs of £1.3 million (2004: £1.2million). Turnover for the six months ended 28 February 2006 was £4.79 million(2005: £3.45 million) and profit before common costs was £687,000 (2005:£616,000). The unaudited net asset value of the Sports Marketing Division (as itwas then constituted) as at 28 February 2006 was approximately £2.5 million. RC&A Sports Management Limited was acquired on 29 August 2005. In the 12 monthsended 30 June 2005, it recorded unaudited turnover of £1.37 million and a lossbefore tax of £20,000. Bermitz Sports Advertising Limited ("Bermitz") was acquired on 4 August 2006. Inthe 12 months ended 31 July 2006, Bermitz recorded unaudited turnover of £1.68million and profit before tax of £45,000. At 31 July 2006, the unaudited netassets of Bermitz were £206,000. The Board expects to report a profit on disposal of approximately £4.5 million,after taking into account the estimated professional costs of the transaction of£0.2 million. The Board believes that the proposed sale of the Sports Marketing Division toSportfive represents an opportunity to realise value for the Group. In addition,the net proceeds of the Disposal will enable the Group to take advantage of theopportunities that exist to develop further the remaining divisions within theGroup, both organically and by acquisition. In particular, the Board intends tofocus on the development of its wealth management division, which offersfinancial advice through Kingsbridge Asset Management Limited and the provisionof funding solutions for sporting clubs and associations via Capital SportsSolutions Limited. The Board has identified a number of additional serviceswhich would augment the existing service offering to the Group's client base.These include, but are not limited to: the development of a bespoke propertydepartment which would procure, develop and manage property assets in the UK andoverseas on behalf of clients; direct investment in property assets byFormation; the provision of legal and accounting services to the Group'sclients; and the continued development of the Group's joint venture in generalinsurance. A circular setting out details of the proposed transaction and including noticeof the Extraordinary General Meeting will be posted to shareholders today.Copies will be available to the public, free of charge, from the registeredoffice of the Company at 9-13 Manchester Road, Wilmslow, Cheshire SK9 1BQ. Neil Rodford, Chief Executive of Formation Group, commented; "The Board feels that this is an opportunity to crystallise the underlying valuein one of its trading divisions. It also provides us with the funds to developour other activities, especially the Group's wealth management business. I wouldlike to thank all the employees of the Sports Marketing Division for theirefforts and wish them and Sportfive continued success. " Philip Cordes, CEO Germany and International TV, Sportfive Group, said: "It is central to our strategy for growth that we have a significant presence inthe UK. We have a very mature football club business in Germany and France andthe acquisition of the Sports Marketing Division will allow us to grow our UKbusiness and to offer companies and clubs a broad range of very attractiveservices. The range of services these companies offer willperfectly complement our current core business of television rights." Enquiries: Neil Rodford, Chief Executive Tel: 00 44 (0)1625 539 832Formation Group plcDavid Youngman Tel: 00 44 (0)161 832 2174WH Ireland LtdKatie Tzouliadis Tel: 00 44 (0)20 7448 1000BiddicksCaroliene Gotz, Tel: 00 49 40 376 77-110Vice President Corporate CommunicationsSportfive Gmbh & Co KG, Hamburg Notes About Sportfive Gmbh & Co KG Established in 2001, Sportfive is Europe's leading football rights marketingcompany. The company has headquarters in Hamburg and Paris, with officesthroughout Europe and on all continents. In particular, it has a leading role inthe field of football marketing, offering comprehensive marketing services forfootball clubs and with exclusive marketing of the European TV rights for theUEFA EURO 2008 This information is provided by RNS The company news service from the London Stock Exchange