Profit Share Agreement
Formation is pleased to announce that it has entered into a profit share agreement with London (North) Properties Limited (“London (North)”) and Pinacle Developments Limited (“Pinacle”) in relation to a development property at 34 Wembley Hill Road, Wembley (“Profit Share Agreement”).
The property has been granted planning approval to develop 89 apartments and associated car parking. The property also has an alternative planning approval for a 21 storey building containing 198 apartments, with car parking, communal and private amenity space, public realm improvements, landscaping and other associated works.
Under the terms of the Profit Share Agreement, Formation has advanced a loan of GBP5 million to London (North), to continue to allow London (North) to work on the development which commenced in February 2017. The loan attracts no interest but instead entitles Formation to 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). Payment of funds in relation to the Profit Share Agreement will be made to Formation once all of the units within the development have been sold.
David Kennedy and Patrick Kennedy, Chief Executive and Non-executive Director of Formation respectively, are also directors of both London (North) and Pinacle and therefore the agreement is considered to be a transaction with a related party under the NEX Exchange Growth Market Rules for Issuers. The Independent Directors of the Company consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
The Directors of the Company accept responsibility for the contents of this announcement.
Formation Group plc
Tel: +44 (0) 20 7920 7590
David Kennedy, Chief Executive Officer
Peterhouse Corporate Finance Limited (Corporate Adviser)
Tel: +44 (0) 20 7469 0930
Mark Anwyl / Fungai Ndoro
Formation Group Plc (NEX: FRM), headquartered in East London, is an NEX Exchange Growth Market traded Company focused on property development and project management services for medium and large scale building projects in London and the City periphery.
The Company’s portfolio includes both new build and conversion projects, and is also diversified through a limited exposure to commercial work and the rental sector.
The management team combines significant Plc experience with property expertise. The Company is well positioned to exploit a buoyant London residential property market, and believes that the newly added property development division will form a substantial part of its profitability in the future.