Formation Group PLC Profit Share Agreement (5264S)

TIDMFRM

RNS Number : 5264S

Formation Group PLC

08 July 2015

8 July 2015

Formation Group plc

Profit Share Agreement

Formation Group plc ("Formation" or "Company") is pleased to announce that it has entered into a profit share agreement with Sunbel Development Limited ("Sunbel") and Pinacle Developments Limited ("Pinacle") in relation to a development property at Cromer Court, 9-19 Streatham High Road, London which is being converted from office space to 98 residential units.

Under the terms of the agreement, Formation has advanced to Sunbel the sum of GBP2,443,671.31 to continue work on the development which commenced in June 2014. The loan attracts no interest but instead Formation will be entitled to receive 40 per cent. of the net profit arising on the development (i.e. the profit generated from sales of units after the repayment of debt utilised to purchase the site, the cost of development, taxation and repayment of the loan advanced by the Company). Payments of the various costs and profit share will be made once 95 per cent. by value of the units within the development have been sold.

David Kennedy and Patrick Kennedy, Chief Executive and Non-executive director of Formation respectively, are directors of both Sunbel and Pinacle and thus the agreement is considered to be a transaction with a related party under the AIM Rules for Companies. The directors of Pinacle, other than David Kennedy and Patrick Kennedy, having consulted the Company's nominated adviser Northland Capital Partners Limited, consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

As at 7 July 2015 the majority of units in the development had been reserved. It is anticipated that approximately half of the units will be completed by the end of August 2015 and the balance completed by the end of September 2015.

**ENDS**

For further information www.formationgroupplc.com or contact the following:

 
 Formation Group Plc                   Tel: 020 7920 7590 
  David Kennedy; Chief Executive 
  Officer 
 Nominated Adviser:                    Tel: 020 7382 1100 
  Northland Capital Partners Limited 
  William Vandyk / Gerry Beaney 
 Sole Broker:                          Tel: 020 7469 0930 
  Peterhouse Corporate Finance 
  Limited 
  Fungai Ndoro / Duncan Vasey

This information is provided by RNS

The company news service from the London Stock Exchange

END

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