FRM.L Regulatory News (FRM)

15 Nov 2007 07:01

Formation Group PLC15 November 2007 FRM.L15 November 2007 FORMATION GROUP PLC ("Formation" or "the Group") Preliminary Results for the year ended 31 August 2007 Formation provides a range of professional services to high net worthindividuals and organisations within the sports, entertainment and propertysectors. Business Highlights • Acquisition on 21 June 2007 of Columbia Design & Build Limited (now renamed Formation Design & Build Limited) for £14.6 million - forming the Group's Property Development & Investment division • Acquisition on 31 August 2007 of accountancy practice, O J Kilkenny & Co Limited, for a total consideration of approximately £6 million - adds complementary new offering within our Professional Services division • 10% equity stake acquired in Columbia Formation Group (Ireland) Limited for £4.2 million - re-developing two prime sites in Dublin, with combined land value of €235 million • Achieved the FSA status of 'directly authorised' for wealth management business, Kingsbridge • Investment adviser, raising approx £25 million from Formation's wealth management clients, for two property investment funds (The Whitechapel Property Fund Limited and The Aldgate East Property Company Limited) Financial Highlights • Total profit before tax* of £6.3 million (2006: £0.9 million) - includes exceptional profit from the disposal of the Sports Marketing division in October 2006 • Total basic earnings per share increased to 4.02p (2006: 0.46p) • Net funds of £3.6 million (2006: £2.1 million) at the end of the year • £4.0 million of net funds as at 31 October 2007 • Committed future gross profit at year end of £12.9 million (2006: £2.8 million) - of which £6 million is expected to be recognised in the financial year ending 31 August 2008 • Proposed dividend increase of 10% - 0.115p per share (2006: 0.105p) * sum of profit before taxation from continuing operations of £1.4 million(2006:£0.2 million), profit before taxation from discontinued operations of £0.3million (2006: £1.0 million) and profit on disposal of discontinued operationsof £4.6 million (2006: loss of £0.3 million) John Lawrence, Chairman of Formation, commenting, said: "The recent acquisitions are in line with the previously stated strategicdevelopment of the Group. Whilst we have yet to see the full benefits of thesetwo acquisitions in financial terms, it is clear in our opinion that thesebusinesses add scale and substance to our client proposition and will bematerial contributors to the Group's operations going forward. The two divisions of the Group complement each other with our high net worthProfessional Services clients benefiting from the investment opportunitiesflowing from our Property Development & Investment business. Looking forward, we see many opportunities to further enhance the ongoingbusinesses both from an organic and a selective acquisition standpoint. We havea dynamic business which is constantly striving to develop services for ourclients and enhance returns for our shareholders. As such, the board remainsconfident for the Group's future prospects". Enquiries: Formation Group PLC Neil Rodford, Chief Executive T: 0161 980 1210www.formationgroupplc.com Mike Wallwork, T: 07795 613844 Communications Director Biddicks Katie Tzouliadis T: 020 7448 1000 WH Ireland Limited Katy Mitchell/David Youngman T: 0161 832 2174 CHAIRMAN'S STATEMENT The financial year ended 31 August 2007 has been an excellent year forFormation. Total profit before tax rose to £6.3 million with profits fromcontinuing operations of £1.4 million, exceeding market expectation by more than10%. By all measures, the Group has delivered substantial growth, supported by astrong balance sheet. The recent acquisitions are in line with the previously stated strategicdevelopment of the Group. Whilst we have yet to see the full effect of these twoacquisitions in financial terms, it is clear in our opinion that thesebusinesses add scale and substance to our client proposition and will bematerial contributors to the Group's operations going forward. The two divisions of the Group complement each other with our high net worthProfessional Services clients benefiting from the investment opportunitiesflowing from our Property Development & Investment business. The Board and Staff I am delighted to welcome Noel O'Carroll to the board. Noel joined as Directorof our Property Development & Investment division following the acquisition ofFormation Design & Build Limited. I am also delighted to formally welcome MikeWallwork as Group Communications Director and all the staff within the twobusinesses we have acquired this year. Every business is dependent upon the skill, dedication and enthusiasm of itsstaff. Formation has staff which possess these attributes in abundance and Iwould like to thank them, on behalf of the board, for their continued effort andcontribution. Their hard work is very much appreciated, understood, valued andintrinsic to our continued growth and success. Prospects Looking forward, we see many opportunities to further enhance the on-goingbusinesses both from an organic and selective acquisition standpoint. We have adynamic business which is constantly striving to develop services for ourclients and enhance returns for our shareholders. John Lawrence MBENon-Executive Chairman 15 November 2007 CHIEF EXECUTIVE OFFICER'S REPORT Introduction In line with our previously stated strategy, we have materially developed thebusiness during the last twelve months, with a major disposal and twoacquisitions. As a result, the profile of Formation has changed significantly,with the Group firmly focused on providing professional services to high networth individuals and organisations within the sports, entertainment andproperty sectors. The disposal, in late October 2006, of the Sports Marketing division, whichaccounted for a material part of the Group's turnover in previous years, was thefirst step, and provided the Group with funds to develop new and existingbusinesses. The acquisition of Columbia Design & Build Limited, now renamed Formation Design& Build Limited ("FD&B"), the property development management business followed in June2007. FD&B is a key business and its acquisition was in line with the board'sstrategy of creating a Property Development & Investment division and developingthe Group's bespoke property investment and wealth management activities. In June 2007, we acquired a 10% equity stake in Columbia Formation Group(Ireland) Limited ("CFGIL"), the holding company for two major propertydevelopments in Dublin. The combined land value of the two sites owned by CFGILhas recently been independently valued at over €235 million. Our second acquisition, which took place at the end of August, was of O JKilkenny & Co Limited ("OJK"), an accountancy practice which specialises in theentertainment and sports sectors. This acquisition further strengthens ouractivities within our Professional Services division. Results This financial period has produced another strong performance for the Group. Forthe year ended 31 August 2007, Group revenue from continuing operations was£11.1 million (2006: £6.8 million). Profit before taxation from continuingoperations was £1.4 million, (2006: £0.2 million). The Group made a profit fromthe disposal of the Sports Marketing division of £4.6 million and recorded £0.3million of profit before tax prior to its disposal. The Group thereforegenerated total profits before taxation of £6.3 million from both continuing anddiscontinued activities, compared to £0.9 million for 2006. Basic earnings per share from continuing operations increased by over 400% to0.66p (2006: 0.13p) whilst basic earnings per share from continuing anddiscontinued operations, was 4.02p (2006: 0.46p). At 31 August 2007, the Group had committed future gross profit from currentcontracts of £12.9 million (2006: £2.8 million). £6.0 million is expected to berecognised in the financial year ending 31 August 2008. At 31 August 2007, Groupnet funds stood at £3.6 million (2006: £2.1 million) with a net cash position of£4.0 million as at 31 October 2007. It is very satisfying and testimony to the hard work and effort of the wholeFormation team to be able to produce such a positive result. Set in the contextof such an evolutionary year, this is even more pleasing. Dividend The Directors are recommending a final dividend payment for the financial yearof 0.115p per share (2006: 0.105p) an increase of 10% per share. Subject toshareholder approval at the Annual General Meeting on 17 December 2007, thiswill be paid on 20 December 2007 to shareholders on the register at the close ofbusiness on 30 November 2007. Review of divisions Formation comprises two divisions, a Professional Services division and aProperty Development & Investment division. A review of trading within eachdivision is set out below. Professional Services division Overview Clients of our Professional Services division typically have high levels ofdisposable income and require bespoke professional advice. This division, whichspecialises in advising individuals and organisations within the sports andentertainment sectors, provides a full range of professional services,encompassing accountancy, corporate finance, representation and wealthmanagement. During the year under review, the division generated revenue of £7.5m (2006:£7.4m). Operating profit (before deduction of central overhead costs) increasedby 20% to £1.6m (2006: £1.3m). We are pleased with the progress we have made in developing this division overthe year. The acquisition of OJK on 31 August, has added accountancy and taxservices as well as a complementary client base from the entertainment sector. I am also pleased to highlight the improvement in the division's contractedincome. This gives us stronger visibility of predictable earnings as we lookforward, which enhances our financial position. We firmly believe that there are good opportunities to add scale and reach toour activities within this division. I look forward to reporting on thecontinued success of this division going forward. Accountancy Following the acquisition of 90% of OJK, completed on 31 August 2007, we are nowable to provide clients with a range of accountancy and tax advisory services.Established over 20 years ago, the business specialises in the sports andentertainment sectors and therefore the strategic fit is compelling. Weanticipate considerable benefits from this acquisition. Since the acquisition of OJK was concluded on the last day of the financialyear, it has understandably made no contribution to the year ended 31 August2007. Corporate Finance Formation Sports Capital Limited provides specialist corporate finance andbroking services to sport and media companies. Formation Sports Capital performed strongly over the year, completing a numberof sports finance deals. Our profile and reputation in the sports and mediafinance arena is increasing and we continue to cultivate relationships withfootball club and rights holders both in the UK and Europe. During the year, we commissioned a detailed appraisal of the business and of newbusiness opportunities. We are now in the process of refining our business modeland I look forward to reporting on developments. Representation Services Our representation services are provided by Proactive Sports Management (UK andUSA) who offer management services and career advice to professional athletes,predominantly footballers, and entertainers. It is acknowledged that the football marketplace is becoming more competitivewith an increasing number of top-flight players joining the Premiership fromcontinental Europe, South America and Africa. However, our Representation businesses performed well, delivering a consistentresult in this increasingly competitive environment. Over the year, we completed47 contract or transfer negotiations (2006: 60 contract or transfer negotiationsincluding those agreed by our Scandinavian representation business, which wesold in July 2006). I am also pleased to report that since the year end, we haveformed a Rugby representation service and we are looking to strengthen ourrepresentation services further both in the UK and USA. The Premier League enquiry undertaken by Lord Stevens concluded, with norecourse to our domestically licensed agents. Subsequent to this report beingpublished the English Football Association has sought to introduce newregulation in order to provide and police increased transparency to the industryfor the benefit of all stakeholders. We welcome these initiatives. However, anychanges in regulation should be appropriate and focused on the needs of theindustry. As a board member of the newly formed Association of Football Agentswe will continue to use this forum to lobby and present our views in aconstructive and appropriate manner. Wealth Management Kingsbridge Asset Management Limited ("Kingsbridge") provides our wealthmanagement services. It has been an important year for Kingsbridge. Following a thorough review ofthe business, we have refined our offering, completed a re-branding exercise andinvested in IT in order to streamline and enhance both our operational and salesprocesses. We believe the benefits are now evident for our consultants and backoffice staff as well as our clients. I am also pleased to highlight the fact that Kingsbridge achieved theaccreditation of a "directly authorised" business from the Financial ServicesAuthority during the period. Property Development & Investment division Overview Our Property Development & Investment division is a new division, formedfollowing the acquisition of Formation Design & Build Limited ("FD&B"), theproperty development company on 21 June 2007. With FD&B, we now have the abilityto source and develop property projects and to originate bespoke investmentproducts. The consideration for the acquisition of FD&B was by way of the issueof 70,588,235 ordinary shares in Formation, which has resulted in the KennedyFamily Trust (the previous ultimate owners of FD&B) becoming the Group's majorshareholder with a 53% shareholding. David Kennedy (a beneficiary of this trust)is a successful property developer, with whom we have worked with in the pastand we have in David a very knowledgeable, energetic and committed shareholderwho will be an integral part of our future. The division made a limited 10 week contribution to the Group's results in theperiod, adding revenues of £3.7 million and an operating profit of £0.4 million,in line with our projections. Established in 1997 and based in London, FD&B manages residential or mixed useproperty development projects. Its senior management team are qualified in arange of disciplines including quantity surveying, construction and civilengineering and construction management. In addition, FD&B has developednumerous contacts at sub-contractor level, which it can call upon. The businessis therefore able to oversee all stages of the development process. Historically, FD&B has project managed two or three large developments (withconstruction values each in excess of £20 million) and three smaller projects. FD&B provides the Group with the ability to source, evaluate, design and developbespoke property projects. With FD&B as part of the Group, we will be able tooffer existing and future clients an opportunity to invest (at an early stage)in the development projects both identified and managed by FD&B through bespokeinvestment products advised on by Formation. Currently, FD&B has three major management contracts for property developmentprojects in place. These are at: (i) 52 - 58 Commercial Road, London (ii) 1 Commercial Street / 111-120 Whitechapel High Street, London (iii) Clancy Quay, Dublin The total construction value of these three developments exceeds €315 million. Investments On 29 June 2007, we made a strategic 10% equity investment in Columbia FormationGroup (Ireland) Limited ("CFGIL"), a company set up to undertake there-development of the two sites in Dublin, Ireland; Clancy Quay, a 14.5 acresite beside Heuston Station in Dublin's city centre, and a site at Davitt Road,situated approximately two miles outside the city centre. Co-investors in CFGIL are Bank of Scotland (Ireland) Limited, with a 20% stakeand Impala Holdings Limited (a company wholly owned by the David Kennedy FamilyTrust) which holds a 70% stake in CFGIL. It will take time to build out these schemes and realise the resultant revenuestream. However, our 10% equity holding adds assets to the Group's balance sheetand importantly, demonstrates the Group's progress when considering our twostrategic partners in this company. We have also acted as Investment Adviser to two bespoke property funds, raisingapproximately £25 million of risk capital from the Group's wealth managementclient base. These two funds, The Aldgate East Property Company Limited and TheWhitechapel Property Fund Limited support the two London based developments at52 - 58 Commercial Road, London and 1 Commercial Street / 111-120 WhitechapelHigh Street, London. Charitable Causes The Group takes its corporate and social responsibilities seriously and we havean established charity committee, representative of the whole Group, whichdevises a number of fund raising initiatives. For the coming year we have chosenMedEquip4Kids, a provider of specialist healthcare equipment for babies andyoung children as the beneficiary of these initiatives. Our objective is toraise £30,000 for MedEquip4Kids (www.medequip4kids.org.uk) by the end of August2008. Risks and Uncertainties The Group's challenges centre upon four main areas: •The sustainability of the UK and European residential and commercial property markets. Given the macro economic environment and recent 'credit crunch' involving globalinstitutions, this area of risk needs to be continually assessed and managed andwe will continue with our prudent approach to seek independent expert advicebefore making commitments that incur potential liabilities in the propertysector. We have previously disclosed contingent liabilities within the twoproperty funds we have launched this year; Whitechapel and Aldgate East. In thecase of Whitechapel, we have already substantially reduced this risk followingoff plan bulk purchases of the units contained in the development. Aldgate Eastis in the very early stages of the build programme and is not due for completionuntil 2010/11. •The Group having a single majority shareholder. We firmly believe that David Kennedy's involvement with the Group is for thelong term, and his tremendous support of our initiatives is testament to thisview. However, we also acknowledge that a high percentage of the Group's sharecapital within the control of a single party is not without some degree of risk. •The Group's ability to recruit new clients within parts of its Professional Services division. Whilst enhanced TV rights income deals should, in our opinion, underpin playersalaries in the short to medium term, the influx of foreign players into theEnglish Premier League has meant a reduction in home grown talent breaking intothe top tiers of British football. Understandably foreign players have their ownmanagement infrastructures. The final area of risk affects many businesses; •The ability to attract and retain people of the right calibre. We are fortunate within Formation to have many first class, highly talentedpeople. The challenge as ever is to continue to motivate these people,acknowledge their achievements and provide a workplace and cultural environmentwhere they can excel and develop. Outlook The business has evolved during the last 12 months and the outlook for alltrading subsidiaries remains positive. We have made tactical acquisitions whichwe believe on the one hand underpin our professional service offering and on theother, provides an introduction into the property development market. Whilst theproperty market is not without its risk, we continue to have good visibility ofcontracted income across all business areas. We will continue to concentrate onfully integrating the businesses we have acquired and where appropriate,harmonise our professional services proposition for the benefit of our clients.At the same time we will look to add scale to our operation through a mixture oforganic growth and, if appropriate, further selective acquisitions. We view the next phase of the Group's progress with a great deal of excitementand optimism. We have a strong senior management team in place and a committed,enthused, skilled and professional team of employees to help achieve ourobjectives. Neil RodfordChief Executive FORMATION GROUP PLCConsolidated income statementFor the year ended 31 August 2007 2007 2006 Note £'000 £'000Continuing operationsRevenue - existing operations 7,487 6,766Revenue - acquisitions 3,651 - ---------------------- Revenue 2 11,138 6,766 Cost of sales (3,697) (343) ---------------------- Gross profit 7,441 6,423 Administrative expenses (6,293) (6,077) ----------------------Operating profit from continuing operationsExisting operations 768 346Acquisitions 380 - ---------------------- Operating profit from continuing operations 2 1,148 346 Investment income 261 8Finance costs (40) (107) ---------------------- Profit before taxation 1,369 247 Taxation (434) (88) ---------------------- Profit for the year from continuing 935 159operations Discontinued operationsProfit for the year from discontinued operations 3 4,748 384 ---------------------- Profit for the year attributable to equity holders of parent 5,683 543 ---------------------- Earnings per share 5From continuing operationsBasic 0.66p 0.13p ----------------------Diluted 0.65p 0.13p ---------------------- From discontinued operationsBasic 3.36p 0.33p ----------------------Diluted 3.28p 0.33p ---------------------- From continuing and discontinued operationsBasic 4.02p 0.46p ----------------------Diluted 3.93p 0.46p ---------------------- 2007 2006 £'000 £'000 Dividends paid 4 (131) (109) ---------------------- FORMATION GROUP PLCConsolidated statement of recognised income and expenseFor the year ended 31 August 2007 2007 2006 £'000 £'000 Exchange loss on foreign currency translation of foreign operations (13) (17) Profit for the year attributable to equity holders of parent 5,683 543 ---------------------- Total recognised income and expense for the year attributable to equity holders of the parent 5,670 526 ---------------------- FORMATION GROUP PLCConsolidated balance sheetAs at 31 August 2007 2007 2006 £'000 £'000Non-current assetsGoodwill 31,685 15,917Other intangible assets 26 42Property, plant and equipment 314 349Long term financial assets 4,862 -Deferred tax asset 20 124 ------------------------- 36,907 16,432 -------------------------Current assetsInventories 2,291 -Trade and other receivables 7,281 6,782Cash and cash equivalents 3,605 2,187 ------------------------- 13,177 8,969 -------------------------Total assets 50,084 25,401 ------------------------- Current liabilitiesTrade and other payables (9,938) (8,419)Current income tax liabilities (711) (753)Obligations under finance leases (37) (4)Bank overdrafts and loans - (44) ------------------------- (10,686) (9,220) -------------------------Net current assets/(liabilities) 2,491 (251) -------------------------Non-current liabilitiesTrade and other payables (1,560) (343)Obligations under finance leases (15) (30) ------------------------- (1,575) (373) -------------------------Total liabilities (12,261) (9,593) -------------------------Net assets 37,823 15,808 ------------------------- EquityShare capital 2,058 1,264Share capital to be issued 500 -Share premium account 2,106 694Treasury shares (689) (138)Capital redemption reserve 61 61Currency and other reserves 17,856 3,839Profit and loss account 15,640 10,088 ------------------------- Total equity attributable to the parent's shareholders 37,532 15,808 Minority interests 291 - -------------------------Total equity 37,823 15,808 ------------------------- FORMATION GROUP PLCConsolidated cash flow statementFor the year ended 31 August 2007 Note 2007 2006 £'000 £'000 Cash generated by operations 6 1,703 1,017Income taxes paid (101) (395)Interest paid (40) (108) ------------------------ Net cash inflow from operating activities 1,562 514 ------------------------ Investing activitiesInterest received 262 14Proceeds on disposal of property, plant and equipment 8 18Purchases of property, plant and equipment (1,075) (170)Purchases of trademarks and rights (1) (2)Deferred consideration paid (385) (356)Acquisition of subsidiaries (1,600) (242)Cash acquired with subsidiaries 425 135Acquisition expenses (141) (107)Purchase of long term financial assets (4,862) -Net proceeds on disposal of subsidiary companies 8,662 1,366Cash disposed of with subsidiary (1,986) (8) ------------------------ Net cash (used in)/generated by investing activities (693) 648 ------------------------ Financing activitiesDividends paid (131) (109)Proceeds on issue of shares 1,500 791Purchase of own shares (751) (138)Repayments of obligations under finance leases (12) (20) ------------------------ Net cash generated by financing activities 606 524 ------------------------ Net increase in cash and cash equivalents 1,475 1,686 Cash and cash equivalents at the beginning of the year 2,143 474 Effect of foreign exchange rate changes (13) (17) ------------------------ Cash and cash equivalents at end of the year 3,605 2,143 ------------------------ FORMATION GROUP PLC Notes to the preliminary announcementFor the year ended 31 August 2007 1. Basis of preparation The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 August 2007 or 2006, but isderived from these accounts. Statutory accounts for 2006 have been delivered tothe Registrar of Companies and those for 2007 will be delivered following theCompany's Annual General Meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRS), this announcement in itself does not contain sufficient information tocomply with IFRS. 2. Segment information For management purposes, the Group is organised into two operating divisions;Professional Services and Property Development and Investment. These divisionsare the basis on which the Group reports its primary segment information. The Group had previously reported as three divisions. The Sports Marketingdivision was discontinued with effect from 31 October 2006 (see note 3), and theRepresentation and Wealth Management & Professional Services divisions werecombined into the Professional Services division following the establishment ofthe Property Development and Investment division. Segment information aboutthese businesses is presented below: 2007 2006 Operating Operating Revenue profit Revenue profitContinuing operations £'000 £'000 £'000 £'000By class of business:Professional Services 7,487 1,566 7,438 1,300Property Development and Investment 3,651 380 - -Sports Marketing 1,742 262 8,325 1,261Discontinued operations (1,742) (262) (8,997) (1,023) ----------------------------------------- 11,138 1,946 6,766 1,538 ----------- ---------Unallocated corporate expenses (798) (1,192) --------- ---------Profit from operations 1,148 346 --------- --------- 3. Results of discontinued operations On 31 October 2006, the Group completed the disposal of its Sports Marketingbusiness. The results of the discontinued operations which have been included inthe consolidated income statement, were as follows: 2007 2006 £'000 £'000 Revenue 1,742 8,997 Cost of sales (1,154) (4,924) --------------------------- Gross profit 588 4,073 Administrative expenses (326) (3,050) --------------------------- Operating profit from discontinued operations 262 1,023 Investment income 1 6Finance costs - (1) --------------------------- Profit before taxation 263 1,028 Attributable tax expense (92) (279) --------------------------- Profit from discontinued operations 171 749 --------------------------- Profit/(loss) on disposal of discontinued operations 4,577 (365) Attributable tax expense - - --------------------------- Profit/(loss) on disposal of discontinued operations 4,577 (365) --------------------------- Net profit attributable to discontinued operations 4,748 384 --------------------------- 4. Dividends 2007 2006 £'000 £'000Final dividend paid for the year ended 31 August 2006 of 0.105 pence per ordinaryshare (2005 - 0.095 pence) 131 109 -------------------------Proposed final dividend paid for the year ended 31 August 2007 of 0.115 pence perordinary share (2006 - 0.105 pence) 235 131 ------------------------- The proposed final dividend is subject to approval by shareholders at the AnnualGeneral Meeting and has not been included as a liability in these accounts. 5. Earnings per share Earnings per share are based on the following profits and numbers of shares: 2007 2006 £'000 £'000Profit for the year:Basic and diluted - continuing operations 935 159Basic and diluted - discontinued operations 4,748 384 ----------------------------Basic and diluted - continuing and discontinued operations 5,683 543 ---------------------------- 2007 2006 Number of Number of shares Shares '000 '000Weighted average number of shares:Basic 141,277 118,462Dilutive effect of share options 3,412 - --------------------------- Diluted 144,689 118,462 --------------------------- Earnings per share is calculated by dividing the profit for the yearattributable to equity shareholders by the weighted average number of shares inissue during the year. 6. Reconciliation of profit from operations to net cash flow fromoperations 2007 2006 £'000 £'000 Operating profit from continuing operations 1,148 346Operating profit from discontinued operations 262 1,023Depreciation of property, plant and equipment 85 168Amortisation of intangible assets 10 11Share option (credit)/charge (8) 47Loss on sale of tangible fixed assets 22 -Write off of intangible assets 6 - --------------------------- Operating cash flows before movements in working capital 1,525 1,595Increase in inventories (367) -(Increase)/decrease in receivables (1,130) 2,776Increase/(decrease) in payables 1,675 (3,354) --------------------------- Cash generated from operations 1,703 1,017 --------------------------- 7. Statement of changes in equity 2007 2006 £'000 £'000 Opening equity 15,808 14,691Dividends paid (131) (109)Profit for the year attributable to equity holders of the parent 5,683 543Issue of new shares 16,647 791Purchase of treasury shares (751) (138)Issue of treasury shares 200 -Other reserves movement due to share options charge 89 47Minority interest arising on acquisition of subsidiary undertaking 291 - Exchange loss on foreign currency translation recognised directly in equity (13) (17) ------------------------ Closing equity 37,823 15,808 ------------------------ 8. Annual Report and Accounts The annual report will be sent to shareholders on or about 23 November 2007.Additional copies will be available from that date on the Company's websitewww.formationgroupplc.com. 9. Annual General Meeting It is expected the Annual General Meeting of the Company will be held on oraround 17 December 2007, a further announcement will be made when the actualdate and location of the Annual General Meeting is determined. This information is provided by RNS The company news service from the London Stock Exchange