Formation Group announced loss

The sports management and marketing company announced its interim results for the six months ended 28 February 2005. Turnover increased by 25% to reach £6.9m, up from £5.5m in the same period the year before. Administrative expenses increased by 8.3% to reach £4.0m leading to operating profit before goodwill amortization at  414,000, as a result of an improved operating margin of 6.0% compared to 3 .9% the year before. The group’s operating loss after goodwill amortization fell from minus £232,000 in the six months ended 28 February 2004 to £43,000 in the six months to the end of February 2005. At the end of February 2005, Formation Group had net debt of £966,000 compared to a cash balance of £880,000 on 28 February 2004. However, during the six months the group managed to generate cash of £487,000 and had paid all the deferred consideration on all acquisitions made apart from £129,000 allocated for the Sponsormatic acquisition. Going forward Formation has committed future gross profit of £4.0m at the period end of which £1.8m will be recognized in the financial year ending 31 August 2005. The group now has three divisions: Sports Marketing, Wealth Management and Representation. Before central costs and goodwill these divisions generated total profits of £1.02m, broken down as follows: Sports Marketing £616,000 or 60.4% (up 9.4% from the year before), Wealth Management £269,000 or 26.4% (down 1.1% from the previous period) and Representation, the original activity of the group, £135,000 or 13.2% (up from a loss of £105,000) the year before. Sports Marketing has also seen strong growth in turnover, up by 21% from the previous period to reach £3.45m as it continues to act for a large number of Europe’s leading brands in consultancy, media buying and on project work.

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