Formation Group
PLC
(“Formation” or the
“Group”)
Interim Results
for the Six Months ended 28 February
2017
The Group is pleased to announce its interim results for the six
months ended 28 February 2017.
Formation Group is focused solely on property development and
project management providing professional services to its clients
within this sector.
HIGHLIGHTS
- Revenue from continuing operations of £20.184 million (2016:
£10.178 million).
- Operating profit from continuing operations of £0.048 million
(2016: Operating loss £0.084 million).
- Profit for the financial period of £0.015 million (2016: profit
£2.379 million)
- Cash position as at 28 February
2017 of £1.579 million (31 August
2016 £0.33 million).
- Final distribution of funds received from the investment in
Norwich House profit share agreement.
- Further completion of the units in the 159-161 Iverson Road
development with some revenues realised within the financial period
reported and expectations that the remaining units will complete in
the current financial year.
- New profit share agreement entered into on the 28 February 2017 with London (North) Properties Limited (“London
(North)”) and Pinacle Developments Limited (“Pinacle”) in relation
to a development property at 34 Wembley Hill Road, Wembley.
Outlook
- The Group is trading in line with management’s expectations and
the Board remains confident about the Group’s prospects for the
remainder of the year.
Enquiries:
Formation Group Plc
David Kennedy; Chief Executive
Officer
020 7920 7590
NEX Corporate Advisor
Peterhouse Corporate Finance Limited
Fungai Ndoro and Mark Anwyl
0207 469 0930
Chairman’s Statement
I am pleased to report the Group’s results for the six months
ended 28 February 2017.
The Group continues to grow its revenue, whilst maintaining
profitability, over the period. This has mainly been achieved
through increased instructions for our project management services.
Furthermore, the Company is confident that the units at the 159-161
Iverson Road development will be sold and contribute to the revenue
of the second half of the year. The Group is confident that it can
continue to source value enhancing development opportunities.
William O’Dea
Non-Executive Chairman
19 May 2017
Chief Executive Officer’s Report
Overview
Revenue for the period was £20.184 million from continuing
operations (2016 £10.178 million) and operating profit from
continuing operations was £0.048 million (2016 £0.084 million
loss).
Revenue for the period is underpinned by an order book with
large project management contracts in place.
In line with the Group’s current dividend policy, no interim
dividend is being declared. However, the Directors will review the
position at the time of the final results for the year ending
31 August 2017.
Project Management Division
-Formation Design & Build
Limited
The company is now working on four projects namely two large and
two medium sized contracts having completed one project in the
period.
-Formation Construction Limited
This company was formed in early 2012, to project manage
construction work and at present the company is working on two
large contracts having completed three projects in the period.
During the period, the on-going health and safety executive
investigation into Formation Construction Limited following
an accident on one its construction sites was still in progress.
The directors have no further updates at this stage.
Property Development Division
-Formation Homes (London) Ltd
As previously announced, Formation Homes acquired the
development site known as ‘Iverson Road’, using a mixture of
development funding and cash from the Group’s resources. The scheme
comprises 19 residential units and 1 commercial unit. The Group is
pleased to announce that the majority of the units have been sold
with the expectations that the remaining units will happen within
the current financial year.
Discontinued Operations
-FG Bradford & FG Bristol Ltd
In the prior period Dunbar Assets plc took management of the
properties at FG (Bristol) Limited
and FG (Bradford) Limited and were
actively marketing these with a view to sell. The properties
held in these companies were disposed of on the 2 October 2015 with a positive write back of
£1.076 million relating to the loans secured on these properties.
These companies were non trading within the financial period.
Risks and Uncertainties
It is important to the board that we continue to provide all our
shareholders with a balanced view of the business including its
risks and uncertainties.
The Group’s core activity is now Project Management, Property
Development and Property Share investing activities such as the
lucrative Norwich House profit share
agreement. The Group expects that profits from the property
development division and property investing activities will form a
substantial part of its profitability in the future.
Outlook
Formation Group is now placing primary focus on property
development and property investing activities in addition to its
project management business in order to materially boost
shareholder value. This can be evidenced in the improved trading
position over the last year and the confidence in this continued
trend in the short and medium term future.
David
Kennedy
Chief Executive Officer
19 May 2017
The interim accounts will be published on the company's
website www.formationgroupplc.com
Consolidated income statement
For the six months ended 28 February
2017
|
|
6
months ended |
|
6
months
ended |
|
Year
ended |
|
|
|
28
Feb. 2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
Note |
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
2 |
20,184 |
|
10,178 |
|
29,410 |
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
(18,969) |
|
(9,145) |
|
(26,488) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
1,215 |
|
1,033 |
|
2,922 |
|
|
|
|
|
|
|
|
|
Administrative expenses |
|
(1,167) |
|
(1,117) |
|
(2,189) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) from continuing operations |
2 |
48 |
|
(84) |
|
733 |
|
|
|
|
|
|
|
|
|
Finance
(Expense) / income |
|
(33) |
|
1,438
|
|
1,424 |
|
|
|
Finance
costs |
|
- |
|
- |
|
- |
|
Profit before taxation |
|
15 |
|
1,354 |
|
2,157 |
|
|
|
|
|
|
|
|
|
Taxation |
4 |
- |
|
- |
|
(394) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the financial period from continuing operations |
|
15 |
|
1,354 |
|
1,763 |
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
Profit for
the financial period from discontinued operations |
3 |
- |
|
1,025 |
|
1,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the financial period |
|
15 |
|
2,379 |
|
2,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Owners of
parent |
|
15 |
|
2,379 |
|
2,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 |
|
2,379 |
|
2,785 |
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
From
continuing operations |
|
|
|
|
|
|
|
Basic |
5 |
0.0003p |
|
0.61p |
|
0.79p |
|
Diluted |
5 |
0.0003p |
|
0.61p |
|
0.79p |
|
|
|
|
|
|
|
|
|
From
discontinued operations |
|
|
|
|
|
|
|
Basic |
5 |
0.0p |
|
0.46p |
|
0.46p |
|
Diluted |
5 |
0.0p |
|
0.46p |
|
0.46p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
continuing and discontinued operations |
|
|
|
|
|
|
|
Basic |
5 |
0.0003p |
|
1.08p |
|
1.24p |
|
Diluted |
5 |
0.0003p |
|
1.07p |
|
1.24p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A separate consolidated statement of comprehensive income for
Formation Group Plc has not been presented as there are no items to
be recognised within it.
Consolidated statement of financial position
As at 28 February 2017
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
Property, plant and
equipment |
|
25 |
|
25 |
|
22 |
Investments accounted
for using the equity method |
|
- |
|
- |
|
- |
Investment
property |
|
275 |
|
275 |
|
275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
300 |
|
297 |
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
Inventories |
7 |
2,495 |
|
11,039 |
|
7,245 |
Trade and other
receivables |
|
9,789 |
|
9,063 |
|
9,888 |
Cash and cash
equivalents |
|
1,579 |
|
603 |
|
330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,863 |
|
20,705 |
|
17,463 |
Assets
included in disposal group classified as held-for-sale |
3 |
- |
|
- |
|
- |
|
|
|
|
|
|
|
Total
assets |
|
14,163 |
|
21,005 |
|
17,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
Trade and other
payables |
|
(3,767) |
|
(2,522) |
|
(4,065) |
Bank overdrafts and
loan |
8 |
- |
|
(8,508) |
|
(3,314) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,767) |
|
(11,030) |
|
(7,379) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current
assets |
|
10,095 |
|
9,675 |
|
10,084 |
|
|
|
|
|
|
|
Long term
liabilities |
|
|
|
|
|
|
Bank Overdraft and
loan |
8 |
- |
|
- |
|
- |
|
|
|
|
|
|
|
Total
liabilities |
|
(3,767) |
|
(11,030) |
|
(7,379) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
|
10,396 |
|
9,975 |
|
10,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
2,205 |
|
2,205 |
|
2,205 |
Share premium
account |
|
2,106 |
|
2,106 |
|
2,106 |
Capital redemption
reserve |
|
61 |
|
61 |
|
61 |
Share option
reserve |
|
22 |
|
22 |
|
22 |
Retained earnings |
|
6,002 |
|
5,581 |
|
5,987 |
|
|
|
|
|
|
|
Total equity
attributable to the owners of the parent |
|
10,396 |
|
9,975 |
|
10,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in equity
For the six months ended 28 February
2017
|
Called up
share
capital |
Share
premium
account |
Treasury shares |
Capital
redemption
reserve |
Share option
reserve |
Retained
earnings |
Total
equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Balance at 1 September
2015 |
2,205 |
2,106 |
- |
61 |
22 |
3,202 |
7,596 |
|
|
|
|
|
|
|
|
Profit and total comprehensive income for the financial period |
- |
- |
- |
- |
- |
2,379 |
2,379 |
Balance at 29 February 2016 |
2,205 |
2,106 |
- |
61 |
22 |
5,581 |
9,975 |
|
|
|
|
|
|
|
|
Profit and total
comprehensive income for
the financial period |
- |
- |
- |
- |
- |
406 |
406 |
|
|
|
|
|
|
|
|
|
|
Balance at 31 August
2016 |
2,205 |
2,106 |
- |
61 |
22 |
5,987 |
10,381 |
|
|
|
|
|
|
|
|
Profit for the financial period |
- |
- |
- |
- |
- |
15 |
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 28 February
2017 |
2,205 |
2,106 |
- |
61 |
22 |
6,002 |
10,396 |
|
|
|
|
|
|
|
|
Consolidated statement of cash flows
For the six months ended 28 February
2017
|
|
6
months
ended |
|
6
months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
Note |
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
Net cash
generated/(used) by operations |
6 |
4,790 |
|
(2,857) |
|
5,354 |
Interest paid |
|
- |
|
(24) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
inflow/(outflow) from operating activities |
|
4,790 |
|
(2,881) |
|
5,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
Cash invested in
Wembley House profit share |
|
(5,000) |
|
- |
|
- |
Cash inflow in respect
of Norwich House profit share |
|
4,787 |
|
- |
|
- |
Purchases of property,
plant and equipment |
|
(14) |
|
(6) |
|
(11) |
Repayments of
investment accounted for using the equity method |
|
- |
|
- |
|
- |
Disposal of Property
held for resale |
|
- |
|
3,312 |
|
- |
|
|
|
|
|
|
|
Net cash
(used)/generate by investing activities |
|
(227) |
|
3,306 |
|
(11) |
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
Reduction in
loans |
|
(3,314) |
|
(1,455) |
|
(6,646) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used) by
financing activities |
|
(3,314) |
|
(1,455) |
|
(6,646) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents |
|
1,249 |
|
(1,030) |
|
(1,303) |
|
|
|
|
|
|
|
Cash and cash
equivalents at the beginning of the period |
|
330 |
|
1,633 |
|
1,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of the period |
|
1,579 |
|
603 |
|
330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Interim Information
For the six months ended 28 February
2017
1. Basis of preparation
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The group’s statutory financial statements for
the year ended 31 August 2016,
prepared under IFRS, have been filed with the Registrar of
Companies. The auditor’s report on those financial statements was
unqualified and did not contain a statement under Section 498 (2)
or (3) of the Companies Act 2006.
The interim financial information has been prepared in accordance
with the recognition and measurement principles of International
Financial Reporting Standards (IFRS) and on the same basis and
using the same accounting policies as used in the financial
statements for the year ended 31 August
2016. The interim financial statements have not been audited
or reviewed in accordance with the International Standard on Review
Engagement 2410 issued by the Auditing Practices Board.
2. Segment information
Discontinued operations in the period primarily relate to the
winding down of FG Bradford Limited and FG Bristol Limited
|
|
6 months
ended |
|
|
6 months
ended |
|
|
Year
ended |
|
|
28 Feb.
2017 |
|
|
29 Feb.
2016 |
|
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Audited) |
|
Revenue |
Profit |
|
Revenue |
Profit |
|
Revenue |
Profit
from |
|
|
From
continuing |
|
|
from
continuing |
|
|
Continuing |
|
|
Operations |
|
|
operations |
|
|
Operations |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
£'000 |
£'000 |
By class of
business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project
Management |
14,839 |
|
|
10,178 |
|
|
23,356 |
|
|
|
|
|
|
|
|
|
|
Development |
5,345 |
|
|
- |
- |
|
6,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,184 |
1,215 |
|
10,178 |
1,033 |
|
29,410 |
2,922 |
|
|
|
|
|
|
|
|
|
Unallocated corporate
expenses |
|
(1,167) |
|
|
(1,117) |
|
|
(2,189) |
|
|
|
|
|
|
|
|
|
Operating
profit/(loss) from continuing operations |
|
48 |
|
|
(84) |
|
|
733 |
3. Discontinued operations
The results of the discontinued operations which have been
included in the consolidated income statement, were as follows:
|
|
6 months
ended |
|
6 months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Profit from
discontinued operations |
|
- |
|
1,025 |
|
1,022 |
|
|
|
|
|
|
|
Attributable tax
expense |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from
discontinued operations |
|
- |
|
1,025 |
|
1,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Interim Information
For the six months ended 28 February
2017
3. Discontinued operations
(continued)
Following the sale of the properties with FG (Bradford) Ltd and FG (Bristol) Limited, the companies were non
trading entities during the period.
For notes on Formation Wealth Solutions Ltd, please refer to the
note 9.
4. Taxation
A deferred tax asset has not been recognised as the reversal of
tax losses is uncertain.
5. Earnings per share
Earnings/(loss) per share are based on the following profits and
numbers of shares:
|
|
6 months
ended |
|
6 months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Profit/(loss) for the
period: |
|
|
|
|
|
|
Basic and diluted
earnings - continuing operations |
|
15 |
|
1.,354 |
|
1,763 |
Basic and diluted
earnings - discontinued operations |
|
- |
|
1,025 |
|
1,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings- continuing and discontinued operations |
|
15 |
|
2,379 |
|
2,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of |
|
Number
of |
|
Number
of |
|
|
Shares |
|
Shares |
|
Shares |
|
|
'000 |
|
'000 |
|
'000 |
|
|
|
|
|
|
|
Weighted average
number of shares: |
|
|
|
|
|
|
Basic |
|
44,103 |
|
220,515 |
|
220,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
45,660 |
|
224,355 |
|
224,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Interim Information
For the six months ended 28 February
2017
6. Reconciliation of profit from
operations to net cash from operations
|
|
6 months
ended |
|
6 months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Operating
profit/(loss) for the year from continuing operations |
|
15 |
|
(84) |
|
733 |
Operating profit from
discontinued operations |
|
- |
|
1,049 |
|
1,022 |
Impairment of
investment |
|
- |
|
- |
|
- |
Depreciation of
property, plant and equipment |
|
11 |
|
7 |
|
15 |
Disposal of asset
classed as held for sale |
|
- |
|
- |
|
3,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows
before movements in working capital |
|
26 |
|
972 |
|
5,081 |
Decrease/(increase) in
inventories |
|
4,750 |
|
(1,419) |
|
2,743 |
Decrease/(increase) in
receivables |
|
572 |
|
(1,048 |
|
(1,869) |
Decrease in
payables |
|
(558) |
|
(1,362) |
|
(601) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated/(used)
in by operations |
|
4,790 |
|
(2,857) |
|
5,354 |
|
|
|
|
|
|
|
Notes to the Interim Information
For the six months ended 28 February
2017
7. Inventories
|
|
6 months
ended |
|
6 months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Work In Progress |
|
2,495 |
|
11,039 |
|
7,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,495 |
|
11,039 |
|
7,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The inventory is held at the lower of cost and net realisable
value, net of payments received on account. Net realisable value is
based on the estimated selling prices less any further costs
expected to be incurred. There have been no write down of
inventories or amounts recognised in the income statement during
the period. The inventory relates to the development site at 161
Iverson Road.
Notes to the Interim Information
For the six months ended 28 February
2017
8. Bank overdrafts and loans
|
|
6 months
ended |
|
6
months
ended |
|
Year
ended |
|
|
28 Feb.
2017 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Bank loan - term loan
facility |
|
- |
|
(8,507) |
|
(3,314) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,507) |
|
(3,314) |
|
|
6 months
ended |
|
6
months
ended |
|
Year
ended |
|
|
29 Feb.
2016 |
|
29 Feb.
2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
£'000 |
|
£'000 |
|
£'000 |
On demand or within
one year |
|
- |
|
(8,507) |
|
(3,314) |
Due more than one
year |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average interest rates paid were as
follows:
|
|
6 months
ended
28 Feb. 2017 |
|
6 months
ended
29 Feb. 2016 |
|
31 Aug.
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%. |
|
% |
|
% |
Bank loan |
|
9 |
|
9 |
|
7 |
Formation Homes (London)
Limited had bank loan of £8,507 million, which was repayable within
eighteen months of the date taken out. This was subsequently repaid
in full on 7 October 2016.This facility was secured by Titlestone
Real Estate on the completed 159-161 Iverson Road development. The
interest rate payable on this loan was a fixed term rate of 9%.
9. Events after the balance sheet
date
On 16 February 2017 a formal
resolution was passed by the board to begin the liquidation of
Formation Wealth Solutions Limited, a process which is still
ongoing. The company had been non-trading for a number of years and
as a result the directors believed it best to close the
company.