2006 ANNUAL REPORT AND ACCOUNTS Formation Group PLC
Annual report and financial statements
for the year ended 31 August 2006
Registered number: 4145632
Auditors
Deloitte & Touche LLP, 
Chartered Accountants
Manchester
Solicitors
DLA Piper UK LLP,
101 Barbirolli Square,
Manchester, M2 3DL
Nominated Adviser and Broker
WH Ireland Limited,
11 St James Square,
Manchester, M2 6WH
Bankers
National Westminster Bank Plc,
1 Spinningfields Square,
Manchester, M3 3AP
Registrars
Lloyds TSB Registrars,
The Causeway, Worthing,
West Sussex, BN99 6DA Formation Group PLC • 2006 Annual Report and Accounts
Page
Highlights 2
Chairman’s statement 4
Chief Executive’s report 6
Directors’ report 14
Corporate governance 17
Directors’ remuneration report 20
Statement of Directors’ responsibilities 23
Independent auditors’ report on the
consolidated financial statements 24
Consolidated income statement 26
Consolidated statement of recognised
income and expenses 27
Statement of changes in shareholders’
equity 28
Consolidated balance sheet 29
Consolidated cash flow statement 30
Notes to consolidated financial
statements 31
Independent auditors’ report on the 
Company financial statements 60
Company balance sheet 61
Notes to the Company financial
statements 62
1
CONTENTS 2 Formation Group PLC • 2006 Annual Report and Accounts
OPERATING PROFIT FROM
CONTINUING OPERATIONS ROSE BY 23% 
[
] Formation Group PLC provides a range 
of specialist services to professional
athletes and other high net worth
individuals and organisations in the
sports and entertainment sector.
Services include wealth management &
professional services, bespoke property
investments and representation.
KEY POINTS
• Post year end – sale of 
Sports Marketing division to 
Sportfive Gmbh & Co KG:
- £10.223m was paid in cash on
completion 
- an additional amount of up to
£1.050m is payable in cash after
the year ended 31 August 2007
depending on performance and
the continued employment of
selected senior management
- net gain on disposal of
approximately £4.5m 
• Group focused on:
- Wealth Management 
& Professional Services
- Bespoke property investments
- Representation
• Financial Results for the year,
including Sports Marketing division:
- Revenue from continuing
operations increased by 13%
to £15.1m (2005: £13.4m)*
- Operating profit from continuing
operations rose by 23% to
£1.6m (2005: £1.3m)*
- Profit before tax from continuing
operations grew by 20% to
£1.5m (2005: £1.3m)*
- Basic earnings per share from
continuing operations increased
20% to 0.91 pence 
(2005: 0.76 pence)*
- Adoption of International
Financial Reporting Standards
("IFRS") with effect from 1
September 2004
• Proposed final dividend of 0.105p 
per share (2005: 0.095p), 
an increase of approximately 11%
• Board remains confident of Group’s
prospects for the future:
3 Formation Group PLC • 2006 Annual Report and Accounts
HIGHLIGHTS
* restated in accordance with IFRS The disposal of the Sports Marketing
division, approved by shareholders on 
24 October 2006, after the year end,
was a significant step for the Group.
Accounting for a material part of Group
revenue in the last financial year, the
sale fundamentally transforms the shape
of the business and allows us to
concentrate on activities that we
consider to be higher growth
opportunities. The offer from Sportfive
Gmbh & Co KG, enabled us to realise
value for the Group and now leaves
Formation focused on its Wealth
Management & Professional Services
operation, as well as new property
ventures and its Representation division. 
These two divisions serve two distinct
customer groups. The first is high net
worth athletes and entertainers who
require financial planning and ancillary
services, along with career advice. 
The second is sporting organisations and
clubs for whom we can broker financial
solutions.
Looking forward, we see good
opportunities to develop the on-going
businesses both organically and by
acquisition. Our culture, brand identity
and expertise are well established and
the proceeds of the disposal of the
Sports Marketing division will provide
the financial platform to put this
strategy into practice. As at 31 October
2006, the Group’s net cash amounted to
£7m leaving us in very robust shape
financially.
THE BOARD AND STAFF
I am pleased to welcome to the board,
Laurie Turnbull and Ian Battersby. 
They joined respectively as Non-
Executive Director and Director of
Wealth Management on 2 May 2006 
and 24 October 2006. 
Laurie Turnbull is an experienced senior
executive in both public and private
companies. For over 15 years, he was
Chief Executive Officer of Texas Group
plc, the venture capital company and
was active in numerous acquisitions 
and initial public offerings. Laurie is
currently Chief Executive of PenMc Plc,
and Non Executive Chairman of 
CBG Group Plc.
CHAIRMAN’S STATEMENT
4 Formation Group PLC • 2006 Annual Report and Accounts THE SUCCESS OF THE GROUP
IS DEPENDENT ON THE SKILL AND DEDICATION
OF ALL ITS STAFF
[
]
5 Formation Group PLC • 2006 Annual Report and Accounts
Ian Battersby has been involved 
at a senior level with the Wealth
Management Division since 2000 and
has been Business Development Director
of Kingsbridge Asset Management
Limited since 2003, responsible for
product development, sector penetration
and high net worth client management. 
The success of the Group is dependent
on the skill and dedication of all its
staff and I would, once again, like to
thank all of our employees for their
contribution and efforts in the year.
Their hard work is very much recognised
and valued.
John Lawrence
Non-Executive Chairman
16 November 2006 RESULTS
During the year, the Company adopted
International Financial Reporting
Standards ("IFRS") for the first time. 
The comparative figures for the year
ended 31 August 2005 have been
restated in accordance with IFRS. 
The comparative figures were included 
in our interim results for the six months
ended 28 February 2006, and details of
the adjustments on transition can be
found in note 2 of the consolidated
financial statements.
For the year ended 31 August 2006,
Group revenue from continuing
operations was 13% higher than last
year at £15.1 million (2005: £13.4
million). Profit before taxation from
continuing operations was £1.5 million,
a rise of 20% over last year (2005: £1.3
million). The loss before taxation from
discontinued operations was £0.6
million (2005: profit of £0.3 million).
Basic earnings per share from continuing
operations increased by 20% to 0.91p
(2005: 0.76p). Basic earnings per share
from continuing and discontinued
operations was 0.46p (2005: 0.93p). 
At 31 August 2006, the Group’s continuing
operations committed future gross profit
was £2.8 million (2005: £5.2 million).
£1.5 million will be recognised in the
financial year ending 31 August 2007.
This year on year decline is mainly due
to the disposal of six subsidiary
companies during and post the year end. 
At 31 August 2006, Group net funds
stood at £2.1 million (2005: £0.4
million), with cash of £1.0 million
generated from operations during the
year (2005: £2.2 million). There was an
inflow from acquisitions and disposals 
of subsidiary undertakings of £0.8
million (2005: an outflow of £3.2
million) and a net inflow from the issue
of new share capital and purchases of
own shares of £0.7 million (2005: £nil). 
The Directors are recommending a final
dividend payment for the financial year
of 0.105p per share (2005: 0.095p) 
an increase of approximately 11% per
share. Subject to shareholder approval 
at the Annual General Meeting on 
19 December 2006, this will be paid on
22 December 2006 to shareholders on
the register at the close of business on
24 November 2006.
TRADING
During the period under review,
Formation Group PLC had three
operating divisions:
• Sports Marketing, trading through
Fox Advertising, RC&A Sports
Management, Bermitz Sports
Advertising, Sponsormatic and Active
Sports Marketing. Fox Advertising,
RC&A Sports Management, Bermitz
Sports Advertising and Sponsormatic
all provide outdoor advertising and
media to corporate brands. 
Active Sports Marketing provides
CHIEF EXECUTIVE’S REPORT
6 Formation Group PLC • 2006 Annual Report and Accounts FOR THE YEAR ENDED 31 AUGUST 2006, 
GROUP REVENUE FROM CONTINUING OPERATIONS
WAS 13% HIGHER THAN LAST YEAR 
[
]
7 Formation Group PLC • 2006 Annual Report and Accounts
marketing services to the same target
audience. The division was disposed of
on 31 October 2006; 
• Wealth Management & Professional
Services, trading as Kingsbridge Asset
Management, CBG Sports and Capital
Sports Solutions. Kingsbridge provides
financial planning and advice to
sporting athletes and associations.
Capital Sports Solutions and CBG
Sports provide brokerage cash flow
management advice to sporting
organisations and clubs and general
insurance products respectively;
• Representation, trading as 
Proactive Sports Management, provides
representation and management
services to professional footballers 
and entertainers.
SPORTS MARKETING
The division delivered a strong
performance, in line with our
expectations at the start of the year.
Revenue for the year increased to 
£8.3 million (2005: £6.7 million) and
the segmental operating profit for the
division was £1.26 million 
(2005: £1.21 million).
On 31 October 2006, the Group disposed
of this division for a consideration of 
up to £11.273 million. In the Board’s
opinion, the offer from Sportfive Gmbh
& Co KG represented the opportunity to
crystallise the underlying value of this
division. On completion, the Group
received initial consideration of £10.223
million. A further £1.050 million is
dependent on the financial performance
of the division in the year to 31 August
2007 and the retention of key
employees. Based on the receipt of the
initial consideration, the net gain on
disposal is approximately £4.5 million.  OUR PRODUCTS ARE OFTEN BESPOKE
AND TAILORED TO MEET OUR CLIENTS’ NEEDS
[
]
8 Formation Group PLC • 2006 Annual Report and Accounts Through Kingsbridge Asset Management,
this division offers financial planning,
insurance protection and management
advice to individual athletes,
entertainers and other high net worth
individuals. Revenue for the year was
£3.6 million (2005: £3.3 million) and
the segmental operating profit was
£543,000 (2005: £526,000). 
Serving predominantly professional
football players and coaches based in
the UK, we provide advice to these
clients in all areas of wealth
management, including tax planning,
investments and insurance protection.
Given the specialised nature of the
division’s client base, our products are
often bespoke and tailored to meet
clients’ needs, unlike a more traditional
independent financial advisor. Future
opportunities consist of increasing our
market share in our chosen segments
and adding complementary businesses. 
This division also provides financial
brokerage services to sporting
associations and clubs via Capital Sports
Solutions. The Board is pleased with the
progress we are making in this area and
is investigating the possibility of using
the Group’s capital to create a bespoke
sporting fund. 
WEALTH MANAGEMENT
& PROFESSIONAL SERVICES
9 Formation Group PLC • 2006 Annual Report and Accounts Following the disposal of Proactive
Scandinavia, our Scandinavian football
agency business based in Denmark, on
10 July 2006, this division consists of
two operating companies. Excluding
Proactive Scandinavia, revenue of the
continuing operations was £3.1 million
(2005: £3.4 million) and segmental
operating profit was £995,000 
(2005: £1,061,000). The Representation
division currently acts for 107 
(2005: 200) players throughout the
world, of whom 81 (2005: 118) have
represented their country at international
level. The division completed 60 
(2005: 102) transfers or contract
renewals in the year, a 41 per cent
decrease year on year.
We remain committed to this division
and are confident about its medium term
prospects after a significant period of
instability and uncertainty. The Premier
League enquiry undertaken by Lord
Stevens has not yet been completed.
However, we welcome this initiative and
will comply with all recommendations
which are implemented. We believe any
increased compliance and regulation will
be of benefit to the division and the
industry going forward. 
As at 31 August 2006, the division 
had committed future gross profit of
£2.8 million (2005: £3.2 million
excluding Proactive Scandinavia) of
which £1.5 million will be recognised in
the year ending 31 August 2007.
REPRESENTATION
10 Formation Group PLC • 2006 Annual Report and Accounts ACTING FOR 107 PLAYERS WORLDWIDE, 
OF WHOM 81 HAVE REPRESENTED 
THEIR COUNTRY AT INTERNATIONAL LEVEL
[
]
11 Formation Group PLC • 2006 Annual Report and Accounts THE BUSINESS HAS BEEN SIGNIFICANTLY
TRANSFORMED AND PROSPECTS FOR OUR
RETAINED OPERATIONS LOOK POSITIVE
[
]
12 Formation Group PLC • 2006 Annual Report and Accounts
The Group’s key challenges are focused
on four areas: our ability to recruit new
clients in all divisions; our ability to
retain and motivate senior sales
personnel and management; the
continued desire for live English football
matches, both domestically and
internationally, which underpin the
financial health of football clubs and,
therefore, players’ salaries; and finally,
the sustainability of the UK and
European residential and commercial
property sectors.
RISKS AND
UNCERTAINTIES The business has been significantly
transformed over recent months and
prospects for our retained operations
look positive. The view is reinforced by
the level of contracted income within
the Group and our strong cash position.
The proceeds from the disposal of
subsidiaries provide the Group with a
solid platform from which to grow and
our focus will be to generate progressive
earnings growth for our shareholders.
This will be done though a mix of
continuing organic growth and selective
acquisition. We view the next phase of
the Group’s development with much
optimism.
Neil Rodford
Chief Executive
16 November 2006
OUTLOOK
13 Formation Group PLC • 2006 Annual Report and Accounts 14 Formation Group PLC • 2006 Annual Report and Accounts
The Directors present their annual report on the affairs of the Group, together with the financial statements and auditors'
report, for the year ended 31 August 2006.
Principal activities and business review
The principal activities of the Group comprise the provision of management, financial and marketing services in the
football sector, to corporate brands, professional athletes and sporting associations and organisations, in the UK and
overseas, and the provision of worldwide hospitality and event management.
The subsidiary undertakings principally affecting the profits and net assets of the Group in the year are listed in note 6 to
the Company financial statements.
On 9 May 2006, the Company issued 11,487,381 new shares to David Kennedy, a property developer. Mr Kennedy is using
his experience and contacts to assist the Company in identifying and creating opportunities in the property sector which
can potentially be sold to clients.
On 10 July 2006, the Company disposed of Proactive Scandinavia A/S, its Scandinavian football agency for a total cash
consideration of £2.0 million. Details of this disposal are contained in note 25 to the consolidated financial statements.
On 4 August 2006, Bermitz Sports Advertising Limited, a provider of outdoor sports advertising and corporate hospitality,
was acquired by the Company’s subsidiary, Fox Sports Limited. Details of this acquisition are contained in note 24 to the
consolidated financial statements.
A detailed review of the business of the Company and its subsidiary undertakings, including discussion of the principal
risks and uncertainties facing the Group, and likely future developments are contained in the Chief Executive’s report.
Events after balance sheet date
On 5 October 2006, the Group announced the sale of its Sports Marketing business for a maximum consideration of
£11.273 million. This sale was approved at an Extraordinary General Meeting on 24 October 2006 and the disposal was
completed on 31 October 2006. Details of the disposal are contained in note 30 to the consolidated financial statements.
Results and dividends
The audited financial statements for the year ended 31 August 2006 are set out on pages 26 to 59.  The Group’s profit for
the year after taxation was £543,000 (2005 – £1,069,000).
The Directors recommend the payment of a final dividend of 0.105 pence per share (2005 - 0.095 pence).  No interim
dividend was declared this year (2005 – £Nil). Payment of the recommended final dividend, if approved at the Annual
General Meeting, will be made on 22 December 2006 to shareholders on the register at 24 November 2006. 
International financial reporting
During the year, the Company adopted International Financial Reporting Standards (“IFRS”) for the first time. Financial
statements for the year to 31 August 2006 and all subsequent periods will be prepared in accordance with IFRS. In order
that the comparative figures for the year to 31 August 2005 could be prepared under IFRS, this required an opening
balance sheet at 1 September 2004 to be prepared. The comparative figures were included in our interim results for the six
months ended 28 February 2006, and details of the adjustments on transition can be found in note 2 to the consolidated
financial statements.
Directors
The Directors who served during the year were as follows:
J.E. Lawrence Non-Executive Chairman
I.A. Craig Non-Executive Director 
L.A. Turnbull Non-Executive Director (appointed 2 May 2006)
J.E. Smith Non-Executive Director (resigned 27 June 2006)
N. Rodford Chief Executive 
J. Foxcroft (resigned 31 October 2006)
M. Kennedy
D. McKee (resigned 24 October 2006)
M. Page Finance Director and Company Secretary
I. Battersby was appointed as a Director of the Company on 24 October 2006.
Directors’ report
For the year ended 31 August 2006
  15 Formation Group PLC • 2006 Annual Report and Accounts
L.A. Turnbull and I. Battersby having been appointed as Directors since the last Annual General Meeting submit themselves
for election at the next Annual General Meeting.
J.E. Lawrence and M. Page retire by rotation at the next Annual General Meeting and, being eligible, offer themselves for
re-election.
Brief biographical details of the Directors are contained in the Corporate Governance Report.  Details of Directors’
remuneration and interests in the shares and share options of the Company are included in note 7 to the financial
statements and in the Directors’ remuneration report.
Supplier payment policy
The Company’s policy, which is also applied by the Group, is to settle terms of payment with suppliers when agreeing the
terms of each transaction, ensure that suppliers are made aware of the terms of payment and abide by the terms of
payment.  Trade creditors of the Company at 31 August 2006 were equivalent to 90 days’ (2005 – 110 days’) purchases,
based on the average daily amount invoiced by suppliers during the year. 
Substantial shareholdings
On 6 November 2006 the Company had been notified, in accordance with sections 198 to 208 of the Companies Act 1985,
of the following interests in the ordinary share capital of the Company.
Name of holder Number Held (%)
D. McKee 11,596,667 9.18
D. Kennedy 30,137,813 23.85
P. Stretford 9,856,000 7.80
Imperial Trust 4,700,000 3.72
Texas Holdings Limited 8,590,000 6.80
K.B. Moran 11,593,916 9.18
Acquisition of the Company’s own shares
Further to the shareholders’ resolution on 14 December 2005 the Company purchased 1,100,000 ordinary shares with a
nominal value of 1p, and representing 0.9% of the Company’s called up ordinary share capital for consideration of
£137,945. The reason for the purchase was to enhance earnings per share. At the end of the year, the Directors had
authority, under the shareholders’ resolution of 14 December 2005, to purchase through the market 10,387,381 of the
Company’s ordinary shares at a maximum price which may be paid for a share equal to not more than 105 per cent.  of the
average of the last prices for that share for the preceding five business days. This authority expires on the earlier of the
next annual general meeting and 14 December 2006.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the
applicant concerned.  In the event of members of staff becoming disabled every effort is made to ensure that their
employment with the Group continues and that appropriate training is arranged.  It is the policy of the Group that the
training, career development and promotion of disabled persons should, as far as possible, be identical with that of other
employees.
Employee consultation
The Group places considerable value on the involvement of its employees and has continued to keep them informed on
matters affecting them as employees and on the various factors affecting the performance of the Group.  This is achieved
through formal and informal meetings and e-mail communication.  Employee representatives are consulted regularly on a
wide range of matters affecting their current and future interests.  The enterprise management incentive plan, the
unapproved share option plan and the Non-Executive share option plan (all share option plans) are open to senior
employees within the Group.  Options granted under the plan are exercisable after 3 years and lapse after 10 years.  
Directors’ report continued 16 Formation Group PLC • 2006 Annual Report and Accounts
Employee consultation (continued)
At 31 August 2006, a total of 13 employees had options granted under the plan. The Group also operates a Group-wide
bonus scheme based on the achievement of the Group’s budgeted operating profit. This scheme is open to substantially 
all employees.
Charitable and political donations
The Group made charitable donations of £6,809 in the year (2005 - £13,000). The Group did not make any political
contributions.
Auditors
In the case of each of the persons who are Directors of the Company at the date when this report was approved:
• so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 1985) of
which the Company’s auditors are unaware; and
• each of the Directors has taken all the steps that he ought to have taken as a Director to make himself aware of any
relevant audit information (as defined) and to establish that the Company’s auditors are aware of that information.
A resolution to re-appoint Deloitte & Touche LLP as the Company’s auditor will be proposed at the forthcoming Annual
General Meeting.
9-13 Manchester Road By order of the Board,
Wilmslow
Cheshire
SK9 1BQ
M. Page
Secretary
16 November 2006 
Directors’ report continued 17 Formation Group PLC • 2006 Annual Report and Accounts
Introduction
The Company’s shares are listed on the Alternative Investment Market (AIM) and as such there is no requirement to
publish a detailed Corporate Governance statement.  However, in accordance with best practice, a detailed Corporate
Governance statement is set out below.
Board of Directors
The Board currently comprises the Non-Executive Chairman, the Chief Executive, the Finance Director, the Director of
Wealth Management, the Director of Legal & Professional Services and two other Non-Executive Directors.  The three Non-
Executive Directors are considered by the Board to be independent of management and free from any business relationship
that could materially interfere with the exercise of their independent judgement.  Brief biographical details of the
Directors appear below.
John Lawrence (Aged 61) Non-Executive Chairman
John Lawrence formed JEL Energy Conservation Services in 1975, which was sold to Thorn EMI.  Following this he was
Chairman and CEO of a number of Thorn EMI technology companies.  Since 1993 he has been an investor and has held
Non-Executive positions with a number of public and private companies.  He is currently a Director of W.H. Ireland Group
PLC and Aberdeen Growth VCT 1 plc and Non-Executive Chairman of BES Consulting Limited. 
Neil Rodford (Aged 37) Chief Executive
Neil Rodford joined the Group in January 2001 and was previously the Group’s Chief Operating Officer.   He has previously
held positions as Managing Director of Fulham FC and was a Business Development Manager of the Keegan Partnership. 
Mark Page ACA (Aged 43) Finance Director and Company Secretary
Mark Page joined the Group as Financial Controller having previously held positions at Coopers & Lybrand and Big Food
Group PLC.
Ian Battersby (Aged 48) Director of Wealth Management
Ian Battersby joined Kingsbridge in July 2000 at the time of their AIM Listing and has been their Business Development
Director since that time. Ian has a strong corporate background and prior to joining Kingsbridge, he was Regional
Commercial Director for LloydsTSB Group and has held senior positions with Hill Samuel and NatWest.  Alongside his
activities in developing Kingsbridge's penetration into wider sports markets, he has been influential in the Group's
dialogue with Institutions and the professional sector, and the ongoing emergence of our Property Division.
Michael Kennedy (Aged 62) Director of Legal & Professional Services  
Michael Kennedy joined the Group in January 2005. He is a Senior Partner at the law firm Herbert Reeves and specialises
in property law. He has also represented football players for more than 20 years.
Alec Craig (Aged 49) Non-Executive Director
Alec Craig is Senior Partner of Halliwells LLP solicitors and is also Non-Executive Chairman of Tepnel Life Sciences PLC and
a Non-Executive Director of Aberdeen Growth Opportunities VCT PLC. 
Laurie Turnbull (Aged 56) Non-Executive Director
Laurie has extensive experience in a senior capacity in both public and private companies. For over 15 years, he was Chief
Executive Officer of Texas Group plc, the venture capital company and was active in numerous acquisitions and initial
public offerings. Laurie is currently Chief Executive of PenMc Plc, the Aim quoted shell company, and Non-Executive
Chairman of CBG Group Plc, the Aim quoted insurance broker and financial services company.
The Board meets monthly throughout the year and the Board members are in frequent contact between meetings.  The
Board is responsible for the overall Group strategy, reviewing trading performance, formulating policy on key areas of the
business and major acquisition decisions.
In order to enable the Board to discharge its duties all Directors have full and timely access to all relevant information.
The Directors also have access to independent professional advice at the Company’s expense.
The Non-Executive Directors are appointed for specific terms.  All Directors are subject to election by shareholders at the first
Annual General Meeting after their appointment and thereafter are required to seek re-election at least every three years. 
Corporate governance 18 Formation Group PLC • 2006 Annual Report and Accounts
Nominations Committee
The Board operates a Nominations Committee for the appointment of Directors.  The members of the Committee are J.E.
Lawrence (Chairman), I.A. Craig and L.A. Turnbull. The Nomination Committee is responsible for regularly reviewing the
structure, size and composition of the Board and identifying and recommending appropriate candidates for membership of
the Board when vacancies arise. In considering an appointment the Nomination Committee evaluates the balance of skills,
knowledge and experience of the Board and prepares a description of the role and capabilities of a particular appointment.
Relations with Shareholders
Communications with shareholders are given a high priority.  There is dialogue with both institutional and private
investors as well as general presentations after the interim and full year results are announced.  The Company also makes
available on its website (www.formationgroupplc.com) the latest Annual Report and Investor Presentation, as well as
relevant announcements. The Company also responds throughout the year to numerous letters from individual shareholders
on a wide range of issues on a timely basis.
All shareholders are given at least twenty days notice of the Annual General Meeting at which Directors are available for
questions.
Audit Committee
The Audit Committee monitors the adequacy of the Group’s internal financial controls, accounting policies and financial
reporting.  It reviews the interim and full year’s financial statements prior to submission to the main Board.  The
Committee liaises with external auditors and reviews the scope of the audit and is also responsible for overseeing all
matters associated with the appointments, terms, remuneration and performance of the auditors. 
Non-audit work undertaken by the auditors is limited to work that requires detailed knowledge derived from the statutory
audit (for example, taxation work) or to work where fees involved (either individually or annually in total) are not
considered to be material.  In other circumstances, proposed assignments are put out to competitive tender.
The Audit Committee has reviewed the remuneration received by Deloitte & Touche LLP for non-audit work.  The fees for
non-audit work are principally for taxation advice.  The Audit Committee has concluded that no conflict of interest exists
between Deloitte & Touche LLP audit and non-audit work and that their involvement was based on the most effective way
of conducting the Group’s business.
The Committee is composed of J.E. Lawrence (Chairman), I.A. Craig and L.A. Turnbull. The Chief Executive and Finance
Director also attend Audit Committee meetings by invitation.
Board and Committee Attendance
The following table details the number of Board and Committee meetings held in the year ended 31 August 2006 and the
attendance record of each Director. 
Board Remuneration Audit Nomination
Committee Committee Committee
Number of meetings 12 3 2 1
J.E. Lawrence 12 3 2 1
I.A. Craig 8 21 1
L.A. Turnbull (from May 2006) 3 1 – –
J.E. Smith (to June 2006) 9 1 2 –
N. Rodford12– 2 –
J.Foxcroft 5– – –
M. Kennedy 10 – – –
D. McKee 8 – – –
M. Page 11 – 2 –
Corporate governance continued 19 Formation Group PLC • 2006 Annual Report and Accounts
Financial Reporting and Going Concern
It is the Board’s duty to prepare a balanced and understandable assessment of the Group’s position and prospects.  A
regular review of the Group’s financial statements, cash balances and forecasts is undertaken by the Directors, enabling
them to make an informed judgement of the Group’s future trading ability.  At the time of approving the financial
statements, their judgement states that there is a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.  For this reason, the Directors continue to adopt the going
concern basis in preparing the financial statements.
A statement covering the Directors’ responsibilities for preparing the financial statements is included in the annexed
financial statements.
Internal Control
The Board has overall responsibility for the Group’s system of internal control, including financial, operational and
compliance controls and risk management.  The Board is responsible for reviewing its overall effectiveness of internal
control.  The system is designed to manage rather than eliminate risk and can provide only reasonable and not absolute
assurance against material misstatement or loss.
The Board confirms that, in accordance with the guidance “Internal Control: Guidance for Directors on the Combined
Code”, there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group.  This
process was in place throughout the year under review and up to the date of approval of the annual report. 
There is no formal internal audit department, as the Board does not consider this to be necessary due to the size of the
operations in the Group.  The Board will keep this decision under review as the Group grows.  The Finance Director and
Chief Executive are currently responsible for relevant control and monitoring procedures.  This information collated by
them is presented to the Board for the Directors to assess the effectiveness of the system of internal control.  In addition,
the Board monitors the Group’s significant risks on an ongoing basis.
Statement of Compliance with Code of Best Practice
Throughout the year ended 31 August 2006, the Company has been in compliance with the Code provisions set out in
Section 1 of the July 2003 FRC Combined Code on Corporate Governance. 
Corporate governance continued 20 Formation Group PLC • 2006 Annual Report and Accounts
Introduction
This report has been voluntarily prepared in accordance with the Directors’ Remuneration Report Regulations 2002, which
introduced new statutory requirements for the disclosure of Directors’ remuneration in respect of periods ending on or after
31 December 2002. The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority
and describes how the Board has applied the Principles of Good Governance relating to Directors’ remuneration. As required
by the Regulations, a resolution to approve the report will be proposed at the Annual General Meeting of the Company at
which the financial statements will be approved.
The Regulations require the auditors to report to the Company’s members on the “auditable part” of the Directors’
remuneration report and to state whether in their opinion that part of the report has been properly prepared in accordance
with Companies Act 1985 (as amended by the Regulations). The unaudited information is included below, whilst the
audited information is included within note 7 to these financial statements.
Unaudited information
Remuneration Committee
The Committee consists of the three Non-Executive Directors: J.E. Lawrence, I.A. Craig and L.A. Turnbull. The Committee is
chaired by J.E. Lawrence and its purpose is to determine the remuneration, benefits and the terms and conditions of
employment of the Executive Directors.  No Director plays a part in any discussion about his own remuneration.  
Remuneration policy
Executive remuneration packages are designed to reflect the duties and responsibilities of that Executive, taking into
account market conditions, and to ensure that the Group attracts and retains people of the highest calibre, rewarding them
for enhancing value to shareholders. The performance measurement of the Executive Directors and key members of senior
management and the determination of their annual remuneration package is undertaken by the Committee.  Within the
limits set out by the Articles of Association, the Board determines the remuneration of the Non-Executive Directors.
Audited details of the Directors’ remuneration are given in note 7 to the financial statements.
There are four main elements of the remuneration package for Executive Directors and senior management:
• Basic annual salary and benefits;
• Annual bonus payments;
• Share option incentives; and
• Pension arrangements.
Basic salary
Salaries for the Executive Directors are reviewed annually with any changes taking effect from the beginning of the next
financial year.  In deciding appropriate levels the Committee considers the Group as a whole and benchmarks the salary to
Executives in other companies of a similar size and nature.  Executive Directors’ contracts of service, which include details
of remuneration, will be available for inspection at the Annual General Meeting.
Annual bonus payments
The Committee establishes the objectives that must be met for each financial year if a cash bonus is to be paid.  In
setting appropriate bonus parameters the Committee benchmarks the salary to Executives in other companies of a similar
size and nature, as noted above. The Committee believes that any incentive compensation awarded should be tied to
interests of the Company’s shareholders and that the principal measure of those interests is total shareholder return.
Directors’ bonuses are based on meeting the financial targets of the Group and any relevant objectives personal to that
Director.
Share options
Grants of share options are at the discretion of the Board.  All grants are intended to promote a longer term involvement
in the well-being of the Company and capital growth benefits for option holders.  Options are not routinely granted on an
annual basis but made on an individual basis to reflect performance, increased responsibilities and promotions.
The Company operates three share option plans, the EMI plan, the unapproved plan and the Non-Executive plan. Grants of
Directors’ remuneration report 21 Formation Group PLC • 2006 Annual Report and Accounts
options under these plans are at market value.
Directors’ pension arrangements
Certain Executive Directors are eligible to be members of the Company’s money purchase (defined contribution) Group
personal pension scheme. The Company makes pension contributions of 10 per cent of basic salary for these Executive
Directors. 
Service agreements
All Executive Directors have service contracts with at least three months notice.  All Non-Executive Directors have specific
terms of engagement and their remuneration is determined by the Board within the limits set out in the Articles of
Association and based upon independent surveys of fees paid to Non-Executive Directors of similar companies.  Non-
Executive Directors can participate in the Non-Executive share option scheme but are not eligible to join the Company’s
pension scheme.
In the case of early termination of employment, the Committee will adopt the objectives outlined in the Combined Code.
Performance graph
The following graph illustrates the Company’s Total Shareholder Return (TSR) performance since 1 September 2001 relative
to the FTSE AIM index. The FTSE AIM comparator group was chosen as Formation Group PLC is a member of that index. The
graph looks at the value, until 31 August 2006, of £100 invested in Formation Group PLC on 1 September 2001 compared
with that of £100 invested in the FTSE AIM. The other points are plotted at half-year and financial year-ends.
The following graph illustrates the Company’s TSR performance for the year ended 31 August 2006, the period since the
last annual report and financial statements. The graph looks at the value, by 31 August 2006, of £100 invested in
Formation Group PLC on 1 September 2005 compared with that of £100 invested in the FTSE AIM. The other point is
plotted at the half-year end.
TSR performance graph
Value (£)
Aug 05 Feb 06 Aug 06
0.00
250.00
200.00
150.00
100.00
50.00
Formation
Group PLC
AIM
TSR performance graph
Value (£)
120.00
100.00
80.00
60.00
40.00
20.00
0.00
Aug
01
Feb
02
Aug
02
Feb
03
Aug
03
Feb
04
Aug
04
Feb
05
Aug
05
Feb
06
Aug
06
Formation
Group PLC
AIM
Directors’ remuneration report continued 22 Formation Group PLC • 2006 Annual Report and Accounts
Directors’ contracts
It is the Company’s policy that Executive Directors should have contracts with an indefinite term providing for a minimum
of three months’ notice. The details of the Directors’ contracts are summarised below.
Date of contract Notice period
N. Rodford 1 September 2003 12 months
M. Page 21 February 2005 12 months
M. Kennedy 19 January 2005 3 months
By order of the Board,
J.E. Lawrence
Chairman - Remuneration Committee
16 November 2006 
Directors’ remuneration report continued 23 Formation Group PLC • 2006 Annual Report and Accounts
Financial statements 
United Kingdom company law requires the Directors to prepare financial statements for each financial year which give a
true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit
or loss of the Group for that period. In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
Other matters
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure that the financial statements comply with the Companies
Act 1985.  They are also responsible for the system of internal control, for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 
Statement of Directors’ responsibilities 24 Formation Group PLC • 2006 Annual Report and Accounts
Independent auditors’ report to the members of Formation Group PLC
We have audited the Group financial statements of Formation Group PLC for the year ended 31 August 2006 which
comprise the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the
consolidated statement of recognised income and expenses, the consolidated statement of change in shareholders' equity
and the related notes 1 to 30.  These Group financial statements have been prepared under the accounting policies set out
therein. We have also audited the information in the Directors’ remuneration report that is described as having been
audited.
We have reported separately on the individual Company financial statements of Formation Group PLC for the year ended 31
August 2006.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act
1985.  Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditors’ report and for no other purpose.  To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the annual report, the Directors’ remuneration report and the Group financial
statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted for use
in the European Union are set out in the statement of Directors’ responsibilities.
Our responsibility is to audit the Group financial statements and the part of the Directors’ remuneration report described as
having been audited in accordance with relevant United Kingdom legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the Group financial statements give a true and fair view, in accordance with
the relevant financial reporting framework, and whether the Group financial statements and the part of the Directors’
remuneration report described as having been audited have been properly prepared in accordance with the Companies Act
1985 and Article 4 of the IAS Regulation. We report to you whether in our opinion the information given in the Directors’
report is consistent with the Group financial statements.  We also report to you if we have not received all the information
and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and other
transactions is not disclosed.
Although not required to do so, the Directors have voluntary chosen to make a corporate governance statement detailing
the extent of their compliance with the Combined Code. We review whether the corporate governance statement reflects
the Company’s compliance with the nine provisions of the 2003 FRC Combined Code specified for our review by the Listing
Rules of the Financial Services Authority, and we report if it does not.   We are not required to consider whether the
Board’s statement on internal control covers all risks and controls, or form an opinion on the effectiveness of the Group’s
corporate governance procedures or its risk and control procedures.
We read the Directors’ report and the other information contained in the annual report for the above year as described in
the contents section including the unaudited part of the Directors’ remuneration report and we consider the implications
for our report if we become aware of any apparent misstatements or material inconsistencies with the Group financial
statements.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the
Group financial statements and the part of the Directors’ remuneration report described as having been audited. It also
includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Group
financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance that the Group financial statements and the
part of the Directors’ remuneration report described as having been audited are free from material misstatement, whether
caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the Group financial statements and the part of the Directors’ remuneration report described
as having been audited.
Independent auditors’ report 25 Formation Group PLC • 2006 Annual Report and Accounts
Opinion
In our opinion:
• the Group financial statements give a true and fair view, in accordance with IFRSs as adopted for use in the European
Union, of the state of the Group’s affairs as at 31 August 2006 and of its profit for the year then ended; 
• the Group financial statements and the part of the Directors’ remuneration report described as having been audited have
been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation; and,
• the information given in the Directors’ report is consistent with the Group financial statements. 
Separate opinion in relation to IFRS 
As explained in Note 1 of the Group financial statements, the Group, in addition to complying with its legal obligation to
comply with IFRSs as adopted for use in the European Union, has also complied with the IFRSs as issued by the
International Accounting Standards Board.  Accordingly, in our opinion the financial statements give a true and fair view,
in accordance with IFRSs, of the state of the Group’s affairs as at 31 August 2006 and of its profit for the year then
ended.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
Manchester
16 November 2006
Independent auditors’ report continued 26 Formation Group PLC • 2006 Annual Report and Accounts
Notes 2006 2005
£’000 £’000
Continuing operations
Revenue 3 15,091 13,350
Cost of sales (5,267) (4,528)
Gross profit 9,824 8,822
Administrative expenses (8,217) (7,517)
Operating profit from continuing operations 3 1,607 1,305
Investment income 4 9 7
Finance costs 4 (108) (56)
Profit before taxation 1,508 1,256
T axation 8 (431) (387)
Profit for the year from continuing operations 1,077 869
Discontinued operations
(Loss)/profit for the year for discontinued operations 9 (534) 200
Profit for the year attributable to equity holders of parent 5 543 1,069
Dividends 11 (109) (98)
Retained profit for the financial year 434 971
Earnings per share
From continuing operations
Basic and diluted 10 0.91p 0.76p
From continuing & discontinued operations
Basic and diluted 10 0.46p 0.93p
Consolidated income statement
For the year ended 31 August 2006 27 Formation Group PLC • 2006 Annual Report and Accounts
2006 2005
£’000 £’000
Exchange (loss)/gain on foreign currency translation of foreign operations (17) 8
Profit for the year attributable to equity holders of the parent 543 1,069
Total recognised income and expenses for the year attributable to equity holders of the parent 526 1,077
Consolidated statement of recognised income and expenses
For the year ended 31 August 2006 28 Formation Group PLC • 2006 Annual Report and Accounts
2006 2005
£’000 £’000
Opening shareholders’ equity 14,691 13,676
Dividends paid (109) (98)
Profit for the period attributable to equity holders of the parent 543 1,069
Issue of new share capital 791 –
Purchase of treasury shares (138) –
Other reserves movement due to share options charge 47 36
Exchange (loss)/gain on foreign currency translation recognised directly in equity (17) 8
Closing shareholders’ equity 15,808 14,691
Statement of changes in shareholders’ equity
For the year ended 31 August 2006 29 Formation Group PLC • 2006 Annual Report and Accounts
Notes 2006 2005
£’000 £’000
Non-current assets
Goodwill 13 15,917 17,275
Other intangible assets 12 42 51
Property, plant and equipment 14 349 425
Deferred tax asset 21 124 27
16,432 17,778
Current assets
Trade and other receivables 15 6,782 9,446
Cash and cash equivalents 16 2,187 1,674
8,969 11,120
Total assets 25,401 28,898
Current liabilities
Trade and other payables 17 (8,419) (11,407)
Tax liabilities (753) (726)
Obligations under finance leases 19 (4) (12)
Bank overdrafts and loans 18 (44) (400)
(9,220) (12,545)
Net current liabilities (251) (1,425)
Non-current liabilities
Trade and other payables 17 (343) (820)
Obligations under finance leases 19 (30) (42)
Bank loans and overdrafts 18 – (800)
(373) (1,662)
Total liabilities (9,593) (14,207)
Net assets 15,808 14,691
Equity
Share capital 22 1,264 1,149
Share premium account 23 694 18
Treasury shares 23 (138) –
Capital redemption reserve 23 61 61
Currency and other reserves 23 3,839 3,809
Profit and loss account 23 10,088 9,654
Total equity 15,808 14,691
The financial statements were approved by the Board of Directors on 16 November 2006 and signed on its behalf by:
Mark Page 
Director
Consolidated balance sheet 
31 August 2006 30 Formation Group PLC • 2006 Annual Report and Accounts
Notes 2006 2005
£’000 £’000
Cash generated by operations 26 1,017 2,167
Income taxes paid (395) (129)
Interest paid (108) (56)
Net cash inflow from operating activities 514 1,982
Investing activities
Interest received 14 12
Proceeds on disposal of property, plant and equipment 18 62
Purchases of property, plant and equipment (170) (153)
Purchases of trade marks and rights (2) (2)
Deferred consideration paid (356) (3,031)
Acquisition of subsidiaries (242) (468)
Cash acquired with subsidiaries 135 342
Acquisition expenses (107) –
Proceeds on disposal of subsidiary 1,366 –
Cash disposed of with subsidiary (8) –
Net cash generated by/(used in) investing activities 648 (3,238)
Financing activities
Dividends paid (109) (98)
Proceeds on issue of shares 791 –
Purchase of own shares (138) –
Repayments of obligations under finance leases (20) (12)
New bank loans raised – 1,200
Repayment of bank loan (1,200) –
Net cash (used in)/generated by financing activities (676) 1,090
Net increase/(decrease) in cash and cash equivalents 486 (166)
Cash and cash equivalents at the beginning of the year 1,674 1,829
Effect of foreign exchange rate changes (17) 11
Cash and cash equivalents at the end of the year 2,143 1,674
Consolidated cash flow statement
For the year ended 31 August 2006 31 Formation Group PLC • 2006 Annual Report and Accounts
General information
Formation Group PLC is a Company incorporated in the United Kingdom under The Companies Act 1985. The address and
registered office is 9 – 13 Manchester Road, Wilmslow, Cheshire, SK9 1BQ. The nature of the Group’s operations and its principal
activities are set out in the Directors’ report on page 14.
The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in
which the Group operates. Foreign operations are included in accordance with the policies set out in note 1.
1. Significant accounting policies
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the European Union (EU), including International Accounting Standards (IAS) and interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC). Results for the comparative period have been restated under
IFRS as adopted for use in the EU. Practice is continuing to evolve on the application and interpretation of IFRS. Further standards
may be issued by the International Accounting Standards Board (IASB) and standards currently in issue and endorsed by the EU
may be subject to interpretations issued by the IFRIC.
IFRS, as adopted by the EU, differs in certain respects from IFRS as issued by the IASB. However, the consolidated financial
statements for the periods presented would be no different had the Group applied IFRS as issued by the IASB. References to
IFRS hereafter should be construed as references to IFRS as adopted by the EU.
The preparation of financial statements, in conformity with generally accepted accounting principles under IFRS, requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are
based on management’s best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.
The disclosures required by IFRS 1 ‘First-time adoption of International Financial Reporting Standards’ concerning the transition
from United Kingdom Generally Accepted Accounting Practice (UK GAAP) to IFRS are given in note 2 of the consolidated financial
statements.
The financial statements have been prepared on a historical cost basis.
Basis of consolidation
The Group’s financial statements consolidate the results of Formation Group PLC and entities controlled by the Company (its
subsidiaries) made up to the 31 August each year. Control is achieved where the Company has the power to govern the financial
and operating policies of an investee entity as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with
those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments
issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The
acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 ‘Business
Combinations’ are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are
classified as held for resale in accordance with IFRS 5 ‘Non-Current Assets Held for Sale and Discontinued Operations’, which are
recognised and measured at fair value less costs to sell.
Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the
consideration given over the fair value of the identifiable assets and liabilities acquired, is recognised as an asset. Goodwill is
reviewed for impairment at least annually and any impairment will be recognised in the income statement and is not subsequently
reversed. As such it is stated at cost less provision for impairment in value.
Intangible assets
Trademarks are included at cost and amortised in equal annual instalments over a period of ten years which is their estimated
useful economic life.  Provision is made for any impairment.
Other rights are image rights which are included at cost and written off in equal instalments over their useful economic life.
Provision is made for any impairment.
Notes to the consolidated financial statements
For the year ended 31 August 2006 32 Formation Group PLC • 2006 Annual Report and Accounts
1. Significant accounting policies (continued)
Plant, property and equipment
Plant, property and equipment are stated at cost, net of depreciation and any provision for impairment.  Depreciation is provided
on all plant, property and equipment at rates calculated to write off the cost or valuation, less estimated residual value, of each
asset on a straight-line basis over its expected useful life, as follows:
Freehold land and buildings 20 years
Short leasehold improvements Term of lease
Fixtures and fittings 5 years
Office equipment Between 3 and 5 years
Plant & equipment Between 3 and 10 years
Motor vehicles 4 years
Residual value is calculated on prices prevailing at the date of acquisition.
The gains or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in income.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease.
Taxation
The tax expense represents the sum of the corporation tax currently payable and the deferred tax charge. The corporation tax
currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible.  The Group’s liability for current tax is calculated using the rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on interests in subsidiaries and associates, and
interests in joint ventures where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse based on tax rates and laws that have been enacted by the balance sheet date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and where they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and that these benefits
can be measured reliably. It is measured at the fair value of the consideration received or receivable for goods and services
provided, net of discounts, value added tax and excludes intra-group transactions.
Revenue for football management services is recognised in accordance with the terms and conditions of the contract.
Revenue derived from image rights held by the Group are recognised on a straight line basis over the terms of the contract.
Revenue for sports marketing services represents the commission earned when the service is provided.
Revenue for corporate hospitality events is recognised when the event takes place.
Notes to the consolidated financial statements 33 Formation Group PLC • 2006 Annual Report and Accounts
1. Significant accounting policies (continued)
Revenue recognition (continued)
Revenue is net of VAT and other sales related taxes. Invoices raised by the Group but not yet recognised as revenue, in line with
the profit recognition policy above, are credited to accruals and deferred income.  Similarly invoices received by the Group but not
yet recognised as costs, in line with the profit recognition policy above, are debited to prepayments and accrued income.
Employee benefits – retirement benefit costs
The Group operates a defined contribution scheme. The amount charged to the income statement in respect of pension costs
and other post-retirement benefits is the contributions payable in the year.  Differences between contributions payable in the year
and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Foreign currency
The individual financial statements of each Group company are presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial
position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on
the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in
profit or loss for the year.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are
translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average
exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates
at the date of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the
Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which the
operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions
before the date of transition to IFRS as sterling denominated assets and liabilities.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of
ownership to the lessee.  All other leases are classified as operating leases.
Assets held under finance leases and other similar contracts, which confer rights and obligations similar to those attached to
owned assets, are capitalised in the balance sheet and are depreciated over the shorter of the lease terms and their useful lives.
The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the income
statement over the period of the leases to produce a constant rate of charge on the balance of capital repayments outstanding.
Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives.
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on
such a basis.  Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line
basis over the lease term.
Finance costs
Finance costs of debt are recognised in the income statement over the term of such instruments at a constant rate on the carrying
amount.  
Debt
Debt is initially stated at the amount of the net proceeds after deduction of issue costs.  The carrying amount is increased by the
finance cost in respect of the accounting period and reduced by payments made in the period.
Share-based payments
The Group issues equity-settled share-based payments to certain employees (including Directors). The fair value of these
payments is calculated by the Group using the Black Scholes option pricing model. The expense is recognised on a straight line
basis over the period from the date of award to the date of vesting, based on the Group’s best estimate of shares that will
eventually vest.
Notes to the consolidated financial statements 34 Formation Group PLC • 2006 Annual Report and Accounts
1. Significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables measured at initial recognition at fair value, and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the profit or loss
when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows discounted at the effective interest rate
computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the
consolidated income statement using the effective interest rate method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Due to the relatively stable nature the foreign currencies used by the Group, the use of forward exchange contracts is not
considered necessary.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide principles
in the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative
financial instruments for speculative purposes. Changes in the fair value of derivative financial instruments, if any, are recognised
in the income statement as they arise.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group
will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to
settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
Operating profit
Operating profit from operations is stated excluding the results of discontinued operations, investment income, finance costs and
taxation.
Critical accounting policies and key sources of uncertainty
Estimates and accounting judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The preparation of financial
statements under IFRS requires management to make assumptions and estimates about future events. The resulting accounting
estimates will, by definition, differ from the actual results. The assumptions and estimates that have a significant risk of causing a
material adjustment within the next financial year are:
• Impairment of Goodwill – Determining whether goodwill is impaired requires an estimation of the value in use of the cash-
generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.
Standards and interpretations
At the date of the authorisation of these financial statements, the following standards and interpretations, which have not been
applied in these financial statements, were in issue but not yet effective. The Directors anticipate the adoption of these standards
and interpretations will have no material impact on the Group’s financial statements. The Directors anticipate that the Group will
adopt these standards and interpretations on their effective dates.
Notes to the consolidated financial statements 35 Formation Group PLC • 2006 Annual Report and Accounts
1. Significant accounting policies (continued)
Standards and interpretations (continued)
• IAS 1 Amendment ‘Capital disclosures’, is effective for periods commencing on or after 1 January 2007;
• IAS 39 Amendment ‘Cashflow hedge accounting of forecast intragroup transactions’, issued in April 2005, is effective for
periods commencing on or after 1 January 2006;
• IAS 39 Amendment ‘The fair value option’, issued in June 2005, is effective for periods commencing on or after 1 January 2006;
• IAS 39 Amendment ‘Financial guarantee contracts’, issued in August 2005, is effective for periods commencing on or after 1
January 2006;
• IAS 21 Amendment ‘The effects of changes in foreign exchange rates – net investment in a foreign operation’, issued in
December 2005, is effective for periods commencing on or after 1 April 2006;
• IFRS 7 ‘Financial instruments: disclosures’, issued in August 2005, is effective for periods commencing on or after 1 January
2007 and introduces new disclosures to improve the information about financial instruments;
• IFRIC 4 ‘Determining whether an arrangement contains a lease’, issued in December 2004, is effective for periods commencing
on or after 1 January 2006 and requires the determination of whether an arrangement is or contains a lease to be based on the
substance of the arrangement;
• IFRIC 8 ‘Scope of IFRS 2’, issued in January 2006, is effective for periods commencing on or after 1 May 2006; and
• IFRIC 9 ‘Reassessment of embedded derivatives’, issued in March 2006, is effective for periods commencing on or after 1 June 2006.
Interpretations in issue but not considered relevant to the activities of the Group are as follows:
• IFRIC 1 ‘Changes in existing decommissioning, restoration and similar liabilities’;
• IFRIC 2 ‘Members shares in cooperative entities and similar instruments’;
• IFRIC 5 ‘Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds’;
• IFRIC 6 ‘Liabilities arising from participating in a specific market – waste electrical and electronic equipment’; and
• IFRIC 7 ‘Applying the restatement approach under IAS 29 ‘Financial reporting in hyperinflationary economies’’.
2. Explanation of the transition to International Financial Reporting Standards (IFRS)
This is the first year that the Group has presented its financial statements under IFRS. The following disclosures are required in the
year of transition. The Group has adopted IFRS from 1 September 2004, the date of transition. The Group is required to define its
accounting policies under IFRS and then apply these policies retrospectively in determining the opening balance sheet under
IFRS at the date of transition, these are set out in note 1.
IFRS transitional arrangements and early adoption
The rules for the first-time adoption of IFRS are set out in IFRS 1 ‘First-time adoption of International Financial Reporting
Standards’. IFRS 1 requires that IFRS be applied retrospectively unless a specific exemption is applied. In preparing these
consolidated financial statements, the Group has opted to take the following exemptions permitted under IFRS 1:
• IFRS 3 ‘Business combinations’: Business combinations that took place before the transition date have not been restated and
therefore all goodwill written-off to reserves or amortised prior to the date of transition remains written-off to reserves and will not
be taken into account either for subsequent impairment reviews or on disposal of the subsidiary.
• IAS 16 ‘Property, plant and equipment’: To treat the property valuations as undertaken at 31 August 2004 as deemed cost at 1
September 2004; the related asset values therefore are unchanged on transition to IFRS.
• IFRS 2 ‘Share based payments’: The provisions of the standard has only been applied to options issued after 7 November 2002
which had not vested at 1 January 2005.
Differences between IFRS and UK GAAP and explanation of adjustments
The changes in principal accounting policies which have arisen from the adoption of IFRS are:
Share option charge – IFRS 2, Share-based payments
This charge to the income statement is for share-based payments in accordance with IFRS 2. The charge is based on the fair
value of the option at the date of grant recognised over the vesting period of the option. The fair value has been measured using
the Black-Scholes method. 
Employee benefits – IAS 19, Employee benefits
The cost of holidays accrued to staff but not taken has been included in the income statement.
Dividend recognition – IAS 10, Events after the balance sheet date
Under IFRS dividends are not recognised as liabilities until approved and so proposed dividends under UK GAAP have been
removed from the accounts.
Goodwill amortisation – IFRS 3, Business combinations
In accordance with IFRS goodwill is no longer amortised but is subject to regular impairment reviews. An adjustment has been
made to remove the goodwill amortisation charge under UK GAAP .
Notes to the consolidated financial statements 36 Formation Group PLC • 2006 Annual Report and Accounts
2. Explanation of the transition to International Financial Reporting Standards (IFRS) (continued)
Cumulative translation differences – IAS 21, The effects of changes in foreign exchange rates
Under IFRS, exchange rate differences arising on consolidation from the translation of overseas subsidiary companies are
required to be recognised in a separate equity reserve.
Reclassification of finance lease receivable – IAS 17, Leases
The Group leases certain assets to customers which were previously treated as operating leases and held within property, plant
and equipment and the income associated with the assets treated as rental income. Under IFRS these are treated as finance
leases and the asset de-recognised from property, plant and equipment and recognised as a finance lease receivable.
Derecognition of financial liabilities – IAS 39, Financial instruments: recognition and measurement
A financial liability is derecognised under IFRS when, and only when, it is extinguished. This liability has not been legally
discharged and therefore has been restated.
Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the Group’s net income and equity are
included below.
a Reconciliation of consolidated balance sheet and equity at 1 September 2004
Accounting policy changes under IFRS
Share Cumulative
option Employee Dividend translation
UK GAAP charge benefits recognition differences IFRS
£’000 £’000 £’000 £’000 £’000 £’000
Non-current assets
Goodwill 16,336 16,336
Other intangible assets 60 60
Property, plant and equipment 504 504
Deferred tax asset 18 7 17 42
16,918 7 17 – – 16,942
Current assets
Trade and other receivables 6,240 6,240
Cash and cash equivalents 1,829 1,829
8,069 – – – – 8,069
Total assets 24,987 7 17 – – 25,011
Current liabilities
Trade and other payables (8,735) (57) 98 (8,694)
Tax liabilities (404) (404)
Obligations under finance leases (12) (12)
(9,151) – (57) 98 – (9,110)
Net current liabilities (1,082) – (57) 98 – (1,041)
Non-current liabilities
Trade and other payables (2,171) (2,171)
Obligations under finance leases (54) (54)
(2,225) – – – – (2,225)
Total liabilities (11,376) – (57) 98 – (11,335)
Net assets 13,611 7 (40) 98 – 13,676
Equity
Called-up share capital 1,149 1,149
Share premium account 18 18
Capital redemption reserve 61 61
Currency and other reserves 3,689 24 52 3,765
Profit and loss account 8,694 (17) (40) 98 (52) 8,683
Total equity 13,611 7 (40) 98 – 13,676
Notes to the consolidated financial statements 37 Formation Group PLC • 2006 Annual Report and Accounts
2. Explanation of the transition to International Financial Reporting Standards (IFRS) (continued)
b Reconciliation of consolidated balance sheet and equity at 31 August 2005
Accounting policy changes under IFRS
Share Cumulative Reclassification Restatement
UK option Employee Goodwill Dividend translation of finance of financial
GAAP charge benefits amortisation recognition differences lease receivable liability IFRS
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Non-current assets
Goodwill 16,350 925 17,275
Other intangible assets 51 51
Property, plant and equipment 459 (34) 425
Deferred tax asset (36) 17 21 25 27
16,824 17 21 925 – – (34) 25 17,778
Current assets
Trade and other receivables 9,412 34 9,446
Cash and cash equivalents 1,674 1,674
11,086 - - - – – 34 - 11,120
Total assets 27,910 17 21 925 – – – 25 28,898
Current liabilities
Trade and other payables (11,365) (69) 109 (82) (11,407)
Tax liabilities (726) (726)
Obligations under finance leases (12) (12)
Bank overdrafts and loans (400) (400)
(12,503) – (69) – 109 – – (82) (12,545)
Non-current liabilities
Trade and other payables (820) (820)
Obligations under finance leases (42) (42)
Bank overdrafts and loans (800) (800)
(1,662) – – – – – – – (1,662)
Total liabilities (14,165) – (69) – 109 – – (82) (14,207)
Net assets 13,745 17 (48) 925 109 – – (57) 14,691
Equity
Called-up share capital 1,149 1,149
Share premium account 18 18
Capital redemption reserve 61 61
Currency and other reserves 3,689 60 60 3,809
Profit and loss account 8,828 (43) (48) 925 109 (60) (57) 9,654
Total equity 13,745 17 (48) 925 109 – – (57) 14,691
Notes to the consolidated financial statements 38 Formation Group PLC • 2006 Annual Report and Accounts
2. Explanation of the transition to International Financial Reporting Standards (IFRS) (continued)
c Reconciliation of Group income for the year ended 31 August 2005
Accounting policy changes under IFRS
Share Reclassification Reclassification
UK option Employee Goodwill Dividend of financial of discontinued
GAAP charge benefits amortisation recognition liability operations IFRS
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Revenue – continuing operations 14,903 (1,553) 13,350
Cost of sales (4,794) (82) 348 (4,528)
Gross profit 10,109 – – – – (82) (1,205) 8,822
Administrative expenses (9,322) (36) (12) 925 928 (7,517)
Operating profit from 
continuing operations 787 (36) (12) 925 – (82) (277) 1,305
Investment income 12 (5) 7
Finance costs (56) – (56)
Profit before taxation from 
continuing operations 743 (36) (12) 925 – (82) (282) 1,256
T axation (508) 10 4 25 82 (387)
Profit for the year from 
continuing operations 235 (26) (8) 925 – (57) (200) 869
Profit for the year from 
discontinued operations 200 200
Profit for the year attributable to 
equity holders of the parent 235 (26) (8) 925 – (57) – 1,069
Dividends (109) 11 (98)
Retained profit 126 (26) (8) 925 11 (57) – 971
Earnings per share
Basic 0.20p 0.93p
Diluted 0.20p 0.93p
Notes to the consolidated financial statements 39 Formation Group PLC • 2006 Annual Report and Accounts
3. Segment information
For management purposes, the Group is currently organised into three operating divisions; Sports Marketing, Representation and
Wealth Management and Professional Services. These divisions are the basis on which the Group reports its primary segment
information. The Group was also previously involved in the European representation sector through Proactive Scandinavia, this
operation was discontinued with effect from 31 May 2006, see note 25. Segment information about these businesses is presented
below:
Wealth
management
and
Sports professional Discontinued
2006 marketing services Representation operations Eliminations Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Revenue
External sales 8,325 3,635 3,803 (672) – 15,091
Inter-segment sales – – 167 – (167) –
Total revenue 8,325 3,635 3,970 (672) (167) 15,091
Segment operating profit 1,261 543 757 238 – 2,799
Unallocated corporate expenses (1,192)
Operating profit 1,607
Investment income 9
Finance costs (108)
Profit before taxation 1,508
T axation (431)
Profit for the year from continuing operations 1,077
Loss for the year from discontinued operations (534)
Profit for the year attributable to equity shareholders 543
Wealth
management
and
Sports professional Discontinued
2005 marketing services Representation operations Eliminations Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Revenue
External sales 6,734 3,259 4,910 (1,553) – 13,350
Inter-segment sales – – 119 – (119) –
Total revenue 6,734 3,259 5,029 (1,553) (119) 13,350
Segment operating profit 1,213 526 1,338 (277) – 2,800
Unallocated corporate expenses (1,495)
Operating profit 1,305
Investment income 7
Finance costs (56)
Profit before taxation 1,256
T axation (387)
Profit for the year from continuing operations 869
Profit for the year from discontinued operations 200
Profit for the year attributable to equity shareholders 1,069
Notes to the consolidated financial statements 40 Formation Group PLC • 2006 Annual Report and Accounts
3. Segment information (continued)
Wealth
management
and
Other information Sports professional Discontinued
2006 marketing services Representation operations Central costs Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Capital additions 277 41 17 15 31 381
Depreciation and amortisation 57 18 63 21 20 179
Wealth
management
and
Sports professional Discontinued
marketing services Representation operations Eliminations Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Assets
Segment assets 13,839 6,453 12,996 – (8,169) 25,119
Unallocated corporate assets 282
Consolidated total assets 25,401
Liabilities
Segment liabilities (10,372) (1,278) (4,949) – 8,169 (8,430)
Unallocated corporate liabilities (1,163)
Consolidated total liabilities (9,593)
Wealth
management
and
Other information Sports professional Discontinued
2005 marketing services Representation operations Central costs Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Capital additions 694 28 364 35 4 1,125
Depreciation and amortisation 66 9 66 28 19 188
Wealth
management
and
Sports professional Discontinued
marketing services Representation operations Eliminations Consolidated
£’000 £’000 £’000 £’000 £’000 £’000
Assets
Segment assets 12,998 6,392 14,015 2,282 (7,501) 28,186
Unallocated corporate assets 712
Consolidated total assets 28,898
Liabilities
Segment liabilities (9,669) (1,774) (6,772) (223) 7,501 (10,937)
Unallocated corporate liabilities (3,270)
Consolidated total liabilities (14,207)
Intra-segment sales are charged at prevailing market prices.
Notes to the consolidated financial statements 41 Formation Group PLC • 2006 Annual Report and Accounts
3. Segment information (continued)
Discontinued operations
Discontinued operations had the following effect on the segment results of representation, analysed into continuing and
discontinued components.
Discontinued Continuing Representation Discontinued Continuing Representation
2006 2006 2006 2005 2005 2005
£’000 £’000 £’000 £’000 £’000 £’000
Revenue
External sales 672 3,131 3,803 1,553 3,357 4,910
Inter-segment sales – 167 167 – 119 119
Total revenue 672 3,298 3,970 1,553 3,476 5,029
Segmental operating profit (238) 995 757 277 1,061 1,338
The segment result from discontinued operations stated above is equal to the profit before tax and investment income from
discontinued operations disclosed in note 9, which provides reconciliation to the net loss from discontinued operations.
Geographical segments
The Group’s principal operations are located in the United Kingdom, Scandinavia and the United States of America. The Group’s
Wealth Management division is located in the United Kingdom. Representation is located in the United Kingdom and the United
States of America and the Group’s Sports Marketing division is based in the United Kingdom and Scandinavia. Revenue from the
Group’s discontinued operations was derived from Scandinavia (2006: £672,000, 2005: £1,553,000). The following table provides
an analysis of the Group’s sales from continuing operations by geographical market irrespective of the origin of the services:
2006 2005
£’000 £’000
Revenue by geographical market
United Kingdom 13,847 10,082
Rest of Europe 721 2,689
Rest of the World 523 579
15,091 13,350
The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and
intangible assets, analysed by the geographical area in which the assets are located:
Additions to property,
Carrying amount of plant, equipment and
segment assets intangible assets
2006 2005 2006 2005
£’000 £’000 £’000 £’000
United Kingdom 14,666 11,623 342 1,010
Rest of Europe 513 2,730 37 106
Rest of the World 629 338 2 9
15,808 14,691 381 1,125
Notes to the consolidated financial statements 42 Formation Group PLC • 2006 Annual Report and Accounts
4. Investment income and finance costs
Investment income
2006 2005
£’000 £’000
Bank interest receivable 9 5
Other – 2
9 7
Finance costs
2006 2005
£’000 £’000
Bank loan and overdraft 99 50
Interest on obligations under finance leases 6 4
Other 3 2
108 56
5. Profit for the year attributable to equity holders of parent
Profit for the year attributable to equity holders of parent is stated after charging/(crediting):
Continuing Discontinued
Operations Operations Total
2006 2005 2006 2005 2006 2005
£’000 £’000 £’000 £’000 £’000 £’000
Net foreign exchange (gains)/loss (22) 6 (1) – (23) 6
Depreciation of property, plant and equipment 147 150 21 28 168 178
Profit on disposal of property, plant and equipment – (18) – 1 – (17)
Amortisation of trademarks and image rights 11 10 – – 11 10
Employee costs 5,239 4,570 471 574 5,710 5,144
Auditors’ remuneration (see below) 134 137 4 10 138 147
A more detailed analysis of auditors’ remuneration on a worldwide basis is provided below:
2006 2005
£’000 £’000
Audit fees 86 81
Tax advisory 28 15
Tax compliance 24 51
138 147
Included in the above is £31,000 (2005: £20,000) relating to auditors’ remuneration for audit services provided to the Company.
Notes to the consolidated financial statements 43 Formation Group PLC • 2006 Annual Report and Accounts
6. Employee costs 
The average monthly number of employees (including Executive Directors) was:
2006 2005
Number Number
Representation 22 23
Sports Marketing 25 21
Wealth Management and Professional Services 29 25
Administration 18 20
94 89
2006 2005
£’000 £’000
Their aggregate remuneration comprised:
Wages and salaries 5,096 4,558
Social security costs 494 489
Other pension costs (see note 28) 120 97
5,710 5,144
7. Directors’ remuneration, interests and transactions
Aggregate remuneration
The total amounts for Directors’ remuneration and other benefits were as follows:
2006 2005
£’000 £’000
Emoluments 892 737
Money purchase pension contributions 61 31
953 768
Directors’ emoluments
Fees/basic Taxable 2006 2005
Name of Director salary Bonuses benefits Total Total
£’000 £’000 £’000 £’000 £’000
Executive
N. Rodford 135 – 8 143 190
M. Page 86 15 1 102 105
D. McKee 215 – – 215 133
J. Foxcroft 264 – – 264 187
M. Kennedy 100 – – 100 62
Non-Executive
J.E. Lawrence 35 – – 35 35
L.A. Turnbull – – – – –
J.E. Smith 33 – – 33 25
Aggregate emoluments 868 15 9 892 737
Fees to third parties 25 25
Fees to third parties comprise amounts paid to Grantsearch under an agreement to provide the Group with the services of Mr I.A.
Craig.  
Notes to the consolidated financial statements 44 Formation Group PLC • 2006 Annual Report and Accounts
7. Directors’ remuneration, interests and transactions (continued)
Directors’ share options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the
Company granted to or held by the Directors.  Details of the options are as follows, none of which have been exercised during the
year:
At At
1 September Options 31 August Date from
Name of Director Scheme 2005 Surrendered 2006 Exercise which Expiry
Number Number Number price exercisable Date
N. Rodford Unapproved 1,000,000 – 1,000,000 7.13p 12/12/06 11/12/13
M. Page EMI 500,000 – 500,000 7.13p 12/12/06 11/12/13
J. Foxcroft EMI 400,000 (400,000) – – – –
M. Kennedy Unapproved 1,000,000 – 1,000,000 8.13p 2/2/08 1/2/15
J.E. Lawrence NED 500,000 – 500,000 7.13p 12/12/06 11/12/13
I.A. Craig NED 500,000 – 500,000 7.13p 12/12/06 11/12/13
J.E. Smith NED 500,000 – 500,000 7.25p 1/6/07 31/5/14
The market price of the ordinary shares at 31 August 2006 was 16.5p and the range during the year was 5.25p to 18.25p. Share
options are issued to senior executives of the Group and have performance targets relating to the Group’s operating profit for
each of the three years following the grant of the options. The Remuneration Committee believed that the use of the operating
profit represents the most appropriate measure of the Group’s financial performance.
Certain Executive Directors are permitted under their service contracts to receive contributions from the Company to their personal
pension schemes.  Contributions payable by the Company in respect of such Directors were as follows:
2006 2005
£’000 £’000
N. Rodford 53 13
D. McKee – 10
M. Page 8 8
61 31
Directors’ interests
The Directors who held office at 31 August 2006 had the following beneficial interests in the 1p ordinary shares of the Company:
31 August 2005
31 August or date of
2006 appointment
Number Number
N. Rodford 1,075,454 1,066,124
M. Page 332,493 319,493
D. McKee 11,986,667 15,736,667
J. Foxcroft 140,000 140,000
M. Kennedy 50,000 50,000
J.E. Lawrence 765,000 765,000
I.A. Craig 350,000 350,000
L.A. Turnbull 364,000 364,000
The Directors had no other interests, beneficial or otherwise, in the shares and debentures of any Group undertaking.
Notes to the consolidated financial statements 45 Formation Group PLC • 2006 Annual Report and Accounts
8. Tax on profit on ordinary activities
The tax charge comprises:
Continuing Discontinued
Operations Operations Total
2006 2005 2006 2005 2006 2005
£’000 £’000 £’000 £’000 £’000 £’000
Current tax 479 375 (65) 82 414 457
Deferred tax (note 21) (48) 12 – – (48) 12
431 387 (65) 82 366 469
UK corporation tax is calculated at 30% (2005: 30%) of the estimated assessable profits for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The tax on Discontinued Operations related to
profits/losses arising in the Scandinavian representation division, which was disposed of during the year. No tax charge or credit
arose on the disposal of the relevant subsidiary.
The tax charge for the year can be reconciled to the profit per the consolidated income statement as follows:
2006 2005
Profit before tax £’000 £’000
Continuing operations 1,508 1,256
Discontinued operations (234) 282
1,274 1,538
Tax after UK corporation tax rate of 30% (2005:30%) 382 461
Tax effect of expenses not deductible for tax purposes 35 29
Effect of different tax rates of subsidiaries in overseas jurisdictions – (9)
Prior period adjustment (51) (12)
Tax charge for the year 366 469
Notes to the consolidated financial statements 46 Formation Group PLC • 2006 Annual Report and Accounts
9. Discontinued operations
On 10 July 2006, the Group sold its holding in Proactive Scandinavia which carried out all of the Group’s representation activities
in Scandinavia. The disposal was effected due to the future development potential of Proactive Scandinavia within Formation. 
The results of this company were previously included in the Representation division.
Results of discontinued operations
The results of the discontinued operations which have been included in the consolidated income statement, were as follows:
2006 2005
£’000 £’000
Revenue 672 1,553
Expenses (910) (1,276)
Investment income 4 5
(Loss)/profit before tax (234) 282
Attributable tax expenses 65 (82)
(Loss)/profit on discontinued operations (169) 200
Loss on disposal of discontinued operations (365) –
Attributable tax expenses – –
Loss on disposal of discontinued operations (365) –
Net (loss)/profit attributable to discontinued operations (534) 200
During the year, Proactive Scandinavia had a net outflow of £16,000 (2005: £30,000) to the Group’s net operating cash flows, paid
£11,000 (2005: £22,000) in respect of investing activities and paid £61,000 (2005: £nil) in respect of financing activities.
A loss of £365,000 arose on the disposal of Proactive Scandinavia, being the proceeds of the disposal less the carrying amount
of the subsidiary’s net assets and attributable goodwill.
The effect of discontinued operations on segment results is disclosed in note 3.
10. Earnings per share
The calculation of basic and diluted earnings per share is based on the following profits and numbers of shares:
2006 2005
£’000 £’000
Basic and diluted earnings – continuing operations 1,077 869
Basic and diluted earnings – discontinued operations (534) 200
Basic and diluted earnings – continuing and discontinued operations 543 1,069
2006 2005
Number of Number of
shares shares
’000 ’000
Weighted average number of shares:
For basic and diluted earnings per share 118,462 114,874
Earnings per share is calculated by dividing the profit for the year attributable to equity shareholders by the weighted average
number of shares in issue during the year.   
Notes to the consolidated financial statements 47 Formation Group PLC • 2006 Annual Report and Accounts
11. Dividends
Amounts recognised as distributions to equity holders in the period:
2006 2005
£’000 £’000
Final dividend paid for the year ended 31 August 2005 of 0.095p per
ordinary share (2004 – 0.085p) 109 98
Proposed final dividend for the year end 31 August 2006 of 0.105p per 
ordinary share (2005 – 0.095p) 133 109
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as
a liability in these financial statements.
12. Other intangible assets
Other 
Group Trademarks rights Total
£’000 £’000 £’000
Cost
At 1 September 2004 13 65 78
Additions 2– 2
At 31 August 2005 15 65 80
Additions 2 –2
At 31 August 2006 17 65 82
Depreciation
At 1 September 2004 3 15 18
Charge for the year 19 10
Adjustment to fair value of previously acquired assets 1 – 1
At 31 August 2005 5 24 29
Charge for the year 29 11
At 31 August 2006 73340
Net book value
At 31 August 2006 10 32 42
At 31 August 2005 10 41 51
At 1 September 2004 10 50 60
Trademarks are amortised over their estimated useful lives, which on average is 10 years. Other rights relate principally to player
image rights and are amortised over their estimated useful lives of 8 years. 
Notes to the consolidated financial statements 48 Formation Group PLC • 2006 Annual Report and Accounts
13. Goodwill
Goodwill
£’000
At 1 September 2004 16,336
Recognised on acquisition of subsidiaries 970
Changes in contingent consideration payable (77)
Adjustment to fair value of previously acquired assets 46
At 31 August 2005 17,275
Recognised on acquisition of a subsidiary 209
Derecognised on disposal of a subsidiary (1,551)
Changes in contingent consideration payable (45)
Additional acquisition costs 18
Adjustment to fair value of previously acquired assets 11
At 31 August 2006 15,917
During the year ended 31 August 2006, goodwill arising on acquisition relates to the acquisition of Bermitz Sports Advertising
Limited (see note 24) and the goodwill on disposal relates to the disposal of Proactive Scandinavia A/S (see note 25).
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGU’s) that are expected to
benefit from that business combination. The carrying amount of goodwill has been allocated as follows:
2006 2005
£’000 £’000
Sports Marketing 3,138 2,956
Wealth Management and Professional Services 4,905 4,905
Representation 7,874 9,414
15,917 17,275
The Group tests goodwill annually for impairment, or more frequently if there are incidents in that goodwill might be impaired.
The recoverable amounts of the CGU’s are determined from value in use calculations. The key assumptions to the value in use
calculations are those regarding the discount rates, growth rates and expected changes to the selling prices and direct costs.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and
the risks specific to the CGU’s. The growth rates are based on the Directors’ growth forecasts. Changes in selling prices and
direct costs are based on past practises and expectations of future changes in the market.
Notes to the consolidated financial statements 49 Formation Group PLC • 2006 Annual Report and Accounts
14. Property, plant and equipment
Fixtures,
Short fittings and
leasehold office Plant and Motor
improvements equipment equipment vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost 
At 1 September 2004 192 357 71 140 760
Exchange differences – 3 – – 3
Additions 5 96 28 24 153
Disposals – (21) (45) (52) (118)
Adjustment to fair value of acquired assets – (21) (6) – (27)
Acquisition of subsidiary undertakings – 5 11 – 16
At 31 August 2005 197 419 59 112 787
Exchange differences – – (1) – (1)
Additions 17 96 – 57 170
Disposals – (4) – (41) (45)
Disposal of subsidiary – (142) – – (142)
At 31 August 2006 214 369 58 128 769
Accumulated Depreciation
At 1 September 2004 40 180 4 32 256
Exchange differences – 1 – – 1
Disposals – (10) (18) (45) (73)
Charge for the year 17 98 23 40 178
At 31 August 2005 57 269 9 27 362
Disposals – (4) – (23) (27)
Disposal of subsidiary – (94) – – (94)
Fair value adjustment – 11 – – 11
Charge for the year 19 89 12 48 168
At 31 August 2006 76 271 21 52 420
Net book value
At 31 August 2006 138 98 37 76 349
At 31 August 2005 140 150 50 85 425
At 1 September 2004 152 177 67 108 504
The carrying value of the Group’s motor vehicles includes an amount of £18,000 (2005 - £41,000) in respect of assets held under
finance leases.
Notes to the consolidated financial statements 50 Formation Group PLC • 2006 Annual Report and Accounts
15. Trade and other receivables
2006 2005
£’000 £’000
Trade receivables 4,692 7,022
Other debtors 74 106
Prepayments and accrued income 2,016 2,318
6,782 9,446
The Group’s principal financial assets are bank balances and trade receivables.  The Group’s credit risk is primarily attributable to
its trade receivables. The amounts shown in the balance sheet are net of allowances for doubtful receivables, which totals
£130,167 at 31 August 2006 (2005 - £216,066). Allowances are estimates by management based on past default experience and
their assessment of the current economic environment. The Group has no significant concentration of credit risk, with exposure
spread over a large number of customers in a number of different segments.
The average credit period taken on sales ranges from 35 days to 188 days due to the differing nature of trade receivables in the
Group’s geographical segments. Trade receivables do not carry interest.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international
credit rating agencies.
16. Cash and bank deposits
2006 2005
£’000 £’000
Cash in hand and at bank 2,187 1,674
The effective interest rate on short term deposits for the year ended 31 August 2006 is 4.78%. No funds were placed  on deposit
in year ended 31 August 2005.
17. Trade and other payables
2006 2005
£’000 £’000
Current:
Trade creditors 2,371 3,966
VAT 330 832
Other taxation and social security 126 131
Contingent and deferred acquisition consideration 216 240
Other creditors 556 804
Accruals and deferred income 4,820 5,434
8,419 11,407
Non current:
Contingent and deferred acquisition consideration 135 363
Other creditors 208 457
343 820
Trade creditors and accruals principally comprise amounts outstanding from trade purchases and ongoing costs. The average
credit period taken for trade purchases is 57 days (2005 – 94 days). The Directors consider that the carrying amount of trade
payables approximates to their fair value.
Notes to the consolidated financial statements 51 Formation Group PLC • 2006 Annual Report and Accounts
18. Bank overdrafts and loans
2006 2005
£’000 £’000
Current:
Bank overdrafts 44 –
Bank loan – 400
44 400
Non-current:
Bank loan – 800
The borrowings are repayable as follows:
2006 2005
£’000 £’000
On demand or within one year 44 400
In the second year – 400
In the third to fifth years inclusive – 400
44 1,200
Less: amount due for settlement within 12 months (shown under current liabilities) (44) (400)
Amount due for settlement after 12 months – 800
The weighted average interest rates paid were as follows:
2006 2005
% %
Bank overdrafts 6.02 6.23
Bank loans 6.27 6.48
Bank loans of £nil (2005 - £1,200,000) were arranged at fixed interest rates and expose the Group to fair value interest risk.  
The Directors estimate the fair value of the Group’s borrowings as follows:
2006 2005
£’000 £’000
Bank overdrafts 44 –
Bank loans – 1,162
44 1,162
The other principal features of the Group’s borrowings are as follows:
i) Bank overdrafts are repayable on demand and have been secured by debentures from Formation Group PLC and certain of
the Group’s subsidiary companies as well as an inter company cross guarantee between these companies.  The average
effective interest rate on bank overdrafts approximates 6.02% (2005 – 6.23%) per annum and are determined based on 1.5%
plus prime rate;
ii) The Group has a £2,500,000 rolling credit facility which was taken out on 5 May 2006. There were no drawings on this facility
at the year end. This facility replaced the Group’s loan facility (2005 - £1,200,000). This facility is reduced from 1 September
2007 and ceases on 31 August 2009. The facility has been secured by debentures from Formation Group PLC and certain of
the Group’s subsidiary companies as well as an inter company cross guarantee between these companies and carried an
interest rate at 1.75% above LIBOR.
Notes to the consolidated financial statements 52 Formation Group PLC • 2006 Annual Report and Accounts
18. Bank overdrafts and loans (continued)
At 31 August 2006, the Group had available £3,000,000 (2005 - £1,400,000) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.
Analysis of borrowings by currency:
Total Danish Kroner Sterling
£’000 £’000 £’000
31 August 2006
Bank overdrafts 44 44 –
Bank loan – ––
44 44 –
31 August 2005
Bank overdrafts – ––
Bank Loans 1,200 – 1,200
1,200 – 1,200
19. Finance leases
Amounts payable under finance leases are as follows: 
2006 2005
£’000 £’000
Within one year 4 12
Between one and two years 4 12
Between two and five years 26 30
34 54
Present value of
Minimum lease payments lease payments
2006 2005 2006 2005
£’000 £’000 £’000 £’000
Within one year 7 17 4 12
In the second to fifth year 34 52 30 42
After five years – – – –
41 69 34 54
Less: Future finance charge (7) (15) N/A N/A
Present value of lease obligation 34 54 34 54
Less: Amounts due for settlement within 12 months (4) (12)
Amounts due for settlement after 12 months 30 42
The Group has one finance lease at the year end which expires in March 2008. For the year ended 31 August 2006, the average
effective borrowing rate was 7.65% (2005: 7.65%). Interest rates are fixed at the contract date.
All leases are on a fixed repayment basis and no amounts have been entered into for contingent rental payments. All lease
obligations are denominated in sterling and the value of the Group’s lease obligations under finance leases are secured by the
lessor’s rights over the leased assets.
Notes to the consolidated financial statements 53 Formation Group PLC • 2006 Annual Report and Accounts
20. Derivatives and other financial instruments
The primary risk faced by the Group is exchange rate risk. The Board has reviewed and agreed policies for management of this
risk, as summarised below. All of the Group’s activities involve analysis, acceptance and management of some degree of risk or
combination of risks. The most important types of financial statement risk are credit risk, liquidity risk and interest rate risk.
The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls
and to monitor the risks and limits continually by means of reliable up-to-date systems. The Group modifies and enhances its risk
management policies and systems to reflect changes in markets and products. The Audit Committee, under authority delegated
by the Board, formulates high level Group risk management policy and monitors risk management to allow it to review the
effectiveness of the Group’s risk management policies.
Credit risk management
Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a
contract. The Group has dedicated standards, policies and procedures to control and monitor all such risks. Although the Group
is potentially exposed to credit loss in the event of non-performance by counterparties, such credit risk is controlled through
reviews of counterparties and limiting the exposure to any single counterparty. The Group does not believe it is exposed to any
material concentrations of credit risk.
Treasury risk management
The Group maintains a centralised treasury function.  All transactions entered into by the Group’s treasury operations are required
to be in support of, or as a consequence of, underlying commercial transactions.  
Finance and interest rate risk
The interest on the Group’s borrowings is linked to Nat West’s base rate.
Liquidity risk
The Group has managed its cash in a manner designed to ensure maximum benefit is gained, whilst ensuring security of
investment sources.  The Group’s policy on investment of surplus funds limits the placing of deposits to institutions with strong
credit ratings.
Foreign exchange risk
The Group’s current activities are predominantly Sterling, Euro, US Dollar and Danish Kroner based and as a result the impact of
changes in foreign exchange rates has been limited and no hedging has been necessary.  The Group’s transactional currency
exposure, which arises from sales and purchases in currencies other than the Group’s base currency, has been limited and so
there has been no significant transactional exposure to hedge.  
Borrowings and cash
The carrying values of cash and short-term borrowings approximate to their fair value because of the short-term maturity 
21. Deferred taxation
The following are the major deferred taxation assets and liabilities recognised by the Group and movements thereon during the
current and prior reporting period.
Accelerated tax Share based Employee
depreciation payment benefits Other Total
£’000 £’000 £’000 £’000 £’000
At 1 September 2004 2 7 17 16 42
(Charge)/credit to income 16 10 4 (42) (12)
Acquisition of subsidiary (3) – – – (3)
At 1 September 2005 15 17 21 (26) 27
(Charge)/credit to income 6 15 (3) 30 48
Acquisition of subsidiary 2 – – – 2
Disposal of subsidiary (6) – – – (6)
Other movement – – – 53 53
At 31 August 2006 17 32 18 57 124
Notes to the consolidated financial statements 54 Formation Group PLC • 2006 Annual Report and Accounts
21. Deferred taxation (continued)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for financial reporting purposes.
2006 2005
£’000 £’000
Deferred tax liabilities (6) (99)
Deferred tax assets 130 126
124 27
22. Share capital
2006 2005
£’000 £’000
Authorised
170,000,000 ordinary shares of 1p each (2005 – 170,000,000) 1,700 1,700
Allotted and called-up
126,361,196 ordinary shares of 1p each (2005 – 114,873,815) 1,264 1,149
£’000
At 1 September 2004 1,149
At 31 August 2005 1,149
Issue of new equity (11,487,381 ordinary shares of 1p) 115
At 31 August 2006 1,264
The Company has one class of ordinary shares which carry no right to fixed income.
The Company operates three share option schemes in relation to Group employees. Options are exercisable 3 years from the
date of grant if stated performance criteria have been met. Options lapse if not exercised within ten years from the grant or if the
participant leaves the Group’s employment.
Options have been granted under the following schemes to subscribe for ordinary shares of the Company as follows:
Subscription Number of options
price per outstanding
Scheme Date of grant Exercise period share 2006 2005
Enterprise management incentive plan 16 May ’01 16 May ’04 to 15 May ’11 25.00p 112,000 192,000
Unapproved share option scheme 12 Dec ’03 12 Dec ’06 to 11 Dec ’13 7.13p 1,000,000 1,650,000
Enterprise management incentive plan 12 Dec ’03 12 Dec ’06 to 11 Dec ’13 7.13p 1,850,000 2,500,000
Non Executive plan 12 Dec ’03 12 Dec ’06 to 11 Dec ’13 7.13p 1,000,000 1,000,000
Non Executive plan 1 Jun ’04 1 Jun ’07 to 31 May ’14 7.25p 500,000 500,000
Enterprise management incentive plan 27 Jul ’04 27 Jul ’07 to 26 Jul ’14 8.25p – 650,000
Unapproved share option scheme 22 Nov ’04 22 Nov ’07 to 21 Nov ’14 7.25p 200,000 200,000
Unapproved share option scheme 9 Dec ’04 9 Dec ’07 to 8 Dec ’14 7.13p 400,000 400,000
Unapproved share option scheme 2 Feb ’05 2 Feb ’08 to 1 Feb ’15 7.25p 1,000,000 1,000,000
Enterprise management incentive plan 30 Aug ’05 30 Aug ’08 to 29 Aug ’14 8.00p – 400,000
6,062,000 8,492,000
Notes to the consolidated financial statements 55 Formation Group PLC • 2006 Annual Report and Accounts
22. Share capital (continued)
Movements in share options are summarised as follows:
2006 2006 2005 2005
Number Weighted Number Weighted
of average of average
options exercise price options exercise price
pence pence
Outstanding at the beginning of the period 8,492,000 7.79 7,892,000 7.66
Options issued during the period – n/a 2,000,000 7.82
Surrendered or expired during the year (2,430,000) 8.16 (1,400,000) 7.13
Outstanding at the end of the period 6,062,000 7.64 8,492,000 7.79
Exercisable at the end of the period – – – –
The options outstanding at 31 August 2006 has a weighted average exercise price of 7.64 pence and a weighted average
remaining contractual life of 7.6 years.
The inputs into the Black-Scholes model are as follows:
2006 2005
Weighted average share price pence 7.33 7.33
Weighed average excise price pence 7.33 7.33
Expected volatility % 37.65 37.65
Expected life years 3.55 3.55
Risk-free rate % 4.69 4.69
Expected dividend rate % 1.20 1.20
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 2 years. The
Group and Company recognised total expenses of £47,000 (2005: £36,000) related to equity settled share based payment
transactions.
23. Reserves
Own Share Capital Currency
shares premium redemption and other Profit and
held account reserve reserves loss account Total
£’000 £’000 £’000 £’000 £’000 £’000
At 1 September 2004 – 18 61 3,765 8,683 12,527
Gain on foreign currency translation – – – 8 – 8
Share options charge – – – 36 – 36
Profit for the year – – – – 971 971
At 1 September 2005 – 18 61 3,809 9,654 13,542
Loss on foreign currency translation – – – (17) – (17)
Share options charge – – – 47 – 47
Profit for the year – – – – 434 434
Acquisition of own share capital (138) – – – – (138)
Issue of new share capital – 676 – – – 676
At 31 August 2006 (138) 694 61 3,839 10,088 14,544
The own shares reserve represents 1,100,000 ordinary shares of 1p each in the share capital of the Company.
Notes to the consolidated financial statements 56 Formation Group PLC • 2006 Annual Report and Accounts
24. Acquisition of subsidiary 
Acquisition of Bermitz Sports Advertising Limited
On 4 August 2006 the Group acquired 100% of the issued share capital of Bermitz Sports Advertising Limited, an outdoor
advertising and corporate hospitality company business based in the UK. The initial consideration paid on completion was
£192,500, with an initial payment for the net assets of the business of £50,000. A further payment due for the net assets of the
business is estimated to be £46,000. The following table sets out the book and fair value of the identifiable assets and liabilities
acquired.
Book value Adjustments Fair value
£’000 £’000 £’000
Non-current assets
Deferred tax asset 2– 2
Current assets
Trade and other receivables 537 (108) 429
Cash 135 – 135
Total assets 674 (108) 566
Trade and other payables (453) – (453)
Corporation tax (15) – (15)
Total liabilities (468) – (468)
Net assets 206 (108) 98
Goodwill 209
307
Satisfied by:
Cash consideration 242
Expenses incurred 19
Deferred consideration 46
307
Net cash outflows in respect of the acquisition comprised:
£’000
Cash consideration (242)
Net cash acquired 135
(107)
Bermitz generated a profit after taxation of £45,000 in the year ended 31 July 2006 (year ended 31 July 2005 – £11,000). Following
the acquisition, the results of the company have been absorbed into Fox Sports Limited, as such it is impracticable to disclose the
amount of the company’s profit since the acquisition date.
Notes to the consolidated financial statements 57 Formation Group PLC • 2006 Annual Report and Accounts
25. Disposal of subsidiary
As referred to in note 9, on 10 July 2006, the Group disposed of its interest in Proactive Scandinavia.
The net assets of Proactive Scandinavia, at the date of disposal and at 31 August 2005 were as follows:
10 July 31 August
2006 2005
£’000 £’000
Property, plant and equipment 48 54
Trade receivables 369 581
Bank balances and cash 8 96
Deferred tax asset/(liability) 6 (60)
Current tax liability (56) (24)
Trade payables (155) (139)
Attributable goodwill 1,551 1,551
1,771 2,059
Fees and bonuses 594
Loss on disposal (365)
Total consideration 2,000
Satisfied by:
Cash 1,960
Deferred consideration 40
2,000
Net cash inflow arising on disposal:
Cash consideration 1,960
Fees and bonuses (594)
Cash and cash equivalents disposed of (8)
1,358
The deferred consideration will be settled in cash by the purchaser on or before 10 July 2007.
The impact of Proactive Scandinavia on the Group’s results in the current and prior periods is disclosed in note 9.
26. Reconciliation of profit from operations to net cash from operations
2006 2005
£’000 £’000
Profit from continuing operations 1,607 1,305
(Loss)/profit from discontinued operations (238) 277
Depreciation of property, plant and equipment 168 178
Amortisation of intangible assets 11 10
Share option charge 47 36
Profit on sale of tangible fixed assets – (17)
Operating cash flows before movements in working capital 1,595 1,789
Decrease/(increase) in receivables 2,776 (2,037)
(Decrease)/increase in payables (3,354) 2,415
Cash generated from operations 1,017 2,167
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at
bank and other short term highly liquid investments with a maturity of three months or less.
Notes to the consolidated financial statements 58 Formation Group PLC • 2006 Annual Report and Accounts
27. Operating lease arrangements
2006 2005
£’000 £’000
Minimum payments under operating leases recognised in income in the year 216 271
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non cancellable
operating leases, which fall due as follows:
Land and buildings Other
2006 2005 2006 2005
£’000 £’000 £’000 £’000
Group
Within one year 148 197 2 2
In the second to fifth years inclusive 474 589 6 –
After five years 617 733 – –
1,239 1,519 8 2
Leases of land and buildings are typically subject to rent reviews at specified intervals and provide for the lessee to pay all
insurance, maintenance and repair costs.
28. Pension arrangements
The Group makes pension contributions to the personal pension plans of certain full-time employees.  The pension cost charge
for the year amounted to £120,000 (2005 - £97,000).
29. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
During the year, Group companies entered into the following transactions with related parties who are not members of the Group:
The Group’s head office is occupied on a 15 year lease from 17 May 2001 from James Hay Pension Trustees Limited which owns
the property on trust for the personal pension plans of P . Stretford, K.B. Moran (both Directors of Proactive Sports Management
Limited) and J. Olsen.
The terms of the lease, which were set by an independent commercial valuer at arm’s length, are as follows:
- rental of £65,000 p.a. invoiced quarterly in advance;
- rent reviews every 5 years which are upwards only and no break clauses.
The charge for the year was £65,000 (2005 - £65,000) and no amount was due to James Hay Pension Trustees Limited at 31
August 2006 (2005 - £nil).
The office of Kingsbridge Asset Management Limited is occupied on a 15 year lease from 1 October 2003 from National Mutual
Pension Trustees Limited which owns the property on trust for the personal pension plans of D. McKee and K. McMenamin (both
employees of Kingsbridge Asset Management Limited).
The terms of the lease, which were set by an independent commercial valuer at arm’s length, are as follows:
- rental of £51,000 p.a. invoiced quarterly in advance;
- rent reviews every 3 years which are upwards only.
The charge for the year was £51,000 (2005 - £51,000) and no amount was due to National Mutual Pension Trustees Limited at 31
August 2006 (2005 - £nil).
Kingsbridge Asset Management Limited has established a joint venture company, CBG Sports Limited, with CBG Group PLC.
Laurie Turnbull, a Non-Executive Director of the Company, is Chairman of CBG Group PLC.
Notes to the consolidated financial statements 59 Formation Group PLC • 2006 Annual Report and Accounts
30. Subsequent Events
On 5 October 2006, the Group announced the sale of its Sports Marketing business for a maximum consideration of £11.273
million. This sale was approved at an Extraordinary General Meeting on 24 October 2006 and the disposal was completed on 31
October 2006.
Notes to the consolidated financial statements 60 Formation Group PLC • 2006 Annual Report and Accounts
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF FORMATION GROUP PLC
We have audited the individual Company financial statements of Formation Group PLC for the year ended 31 August 2006 which
comprise the balance sheet and the related notes 1 to 16. These individual Company financial statements have been prepared
under the accounting policies set out therein.
The corporate governance statement and the Directors’ remuneration report are included in the Group annual report of Formation
Group PLC for the year ended 31 August 2006. We have reported separately on the Group financial statements of Formation
Group PLC for the year ended 31 August 2006 and on the information in the Directors’ remuneration report that is described as
having been audited.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an auditors’ report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the annual report and the individual Company financial statements in accordance with
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out
in the statement of Directors’ responsibilities.
Our responsibility is to audit the individual Company financial statements in accordance with relevant United Kingdom legal and
regulatory requirements and International Standards on Auditing (UK and Ireland). 
We report to you our opinion as to whether the individual Company financial statements give a true and fair view, in accordance
with the relevant financial reporting framework, and whether the individual Company financial statements have been properly
prepared in accordance with the Companies Act 1985. We report to you whether in our opinion the information given in the
Directors’ report is consistent with the individual Company financial statements. We also report to you if, in our opinion, the
Company has not kept proper accounting records, if we have not received all the information and explanations we require for our
audit, or if information specified by law regarding Directors’ remuneration and other transactions is not disclosed.
We read the Directors’ report and the other information contained in the annual report for the above year as described in the
contents section and consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the individual Company financial statements. 
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the individual
Company financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors
in the preparation of the individual Company financial statements, and of whether the accounting policies are appropriate to the
Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance that the individual Company financial statements are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the individual Company financial statements.
Opinion
In our opinion:
• the individual Company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the Company's affairs as at 31 August 2006; 
• the individual Company financial statements have been properly prepared in accordance with the Companies Act 1985; and 
• the information given in the Directors’ report is consistent with the financial statements.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
Manchester
16 November 2006
Company financial statements 61 Formation Group PLC • 2006 Annual Report and Accounts
Notes 2006 2005
(restated)
£’000 £’000
Fixed assets
Intangible assets 4 5 5
Tangible assets 5 46 37
Investments 6 16,543 18,241
16,594 18,283
Current assets
Debtors 7 231 670
231 670
Creditors: Amounts falling due within one year 8 (6,804) (6,651)
Net current liabilities (6,573) (5,981)
Total assets less current liabilities 10,021 12,302
Creditors: Amounts falling due after one year 9 (28) (889)
Net assets 9,993 11,413
Shareholders’ equity
Share capital 11 1,264 1,149
Share premium account 12 694 18
Treasury shares 12 (138) –
Capital redemption reserve 12 61 61
Other reserves 12 3,796 3,749
Profit and loss account 12 4,316 6,436
Total shareholders’ equity 9,993 11,413
The financial statements were approved by the Board of Directors on 16 November 2006 and signed on its behalf by:
Mark Page
Director
Company balance sheet
31 August 2006 62 Formation Group PLC • 2006 Annual Report and Accounts
The accounts have been prepared in accordance with the Companies Act 1985 and United Kingdom Generally Accepted
Accounting Practice (“UK GAAP”), under the historical cost convention. As permitted by section 230 of the Companies Act 1985,
no separate profit and loss account has been presented in respect of the Company. Formation Group PLC reported a loss for the
financial year of £2,120,000 (2005: £1,932,000).
As permitted by FRS 1 “Cash Flow Statements (Revised)”, no cash flow statement has been prepared as the cash flows of the
Company are included in the consolidated financial statements of Formation Group PLC which are publicly available. The
consolidated financial statements of Formation Group PLC, which are presented separately, have been prepared in accordance
with International Financial Reporting Standards.
1. Principal accounting policies 
The principal accounting policies applied under UK GAAP are summarised below.  They have all been applied consistently
throughout both the current and prior years, with the exception of new Financial Reporting Standards which are described in 
note 2.
Intangible assets
Trademarks are included at cost and depreciated in equal annual instalments over a period of ten years which is their estimated
useful economic life.  Provision is made for any impairment.
Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.  Depreciation is provided on all
tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a
straight-line basis over its expected useful life, as follows:
Freehold land and buildings 20 years
Short leasehold improvements Term of lease
Fixtures and fittings 5 years
Office equipment Between 3 and 5 years
Plant & equipment Between 3 and 10 years
Motor vehicles 4 years
Residual value is calculated on prices prevailing at the date of acquisition.
Investments
Fixed asset investments are shown at cost less provision for impairment.  Current asset investments are stated at the lower of
cost and net realisable value.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have
occurred at the balance sheet date.  Timing differences are differences between the Company’s taxable profits and its results as
stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from
those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it
can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying
timing differences can be deducted.
Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at
the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future
has been entered into by the subsidiary or associate.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is measured on a non-discounted basis.
Pension costs and other post retirement benefits
The Company operates a defined contribution scheme. The amount charged to the profit and loss account in respect of pension
costs and other post-retirement benefits is the contributions payable in the year.  Differences between contributions payable in the
year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or, if hedged, at the forward
contract rate.  Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the
rates of exchange prevailing at that date or, if appropriate, at the forward contract rate.
Notes to the Company financial statements
For the year ended 31 August 2006 63 Formation Group PLC • 2006 Annual Report and Accounts
1. Principal accounting policies (continued)
Leases
Assets held under finance leases and other similar contracts, which confer rights and obligations similar to those attached to
owned assets, are capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful
lives.  The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the
profit and loss account over the period of the leases to produce a constant rate of charge on the balance of capital repayments
outstanding.  Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives.
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on
such a basis.  Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line
basis over the lease term, except where the period to the review date on which the rent is first expected to be adjusted to the
prevailing market rate is shorter than the full lease term, in which case the shorter period is used.
Finance costs
Finance costs of debt are recognised in the profit and loss account over the term of such instruments at a constant rate on the
carrying amount.  
Debt
Debt is initially stated at the amount of the net proceeds after deduction of issue costs.  The carrying amount is increased by the
finance cost in respect of the accounting period and reduced by payments made in the period.
Critical accounting policies and estimation uncertainties
None of the above accounting policies are considered to be critical to the financial statements of the Company. There are no
significant areas of estimation uncertainty.
Share-based payments
The Company issues equity-settled share-based payments to certain employees (including Directors). The fair value of these
payments is calculated by the Company using the Black Scholes option pricing model. The expense is recognised on a straight
line basis over the period from the date of award to the date of vesting, based on the Company’s best estimate of shares that will
eventually vest.
2. New accounting policies
The new accounting standards which have been adopted by the Company in the year, which had an impact on the Company’s
results, are as follows:
• FRS 20 “Share based payments”. The major effect of FRS 20 is to change the approach towards recognising liabilities for share
based payments. As a result of adopting FRS 20, the Company’s other reserves increased by £24,000, deferred tax assets
increased by £7,000 and retained earnings decreased by £17,000 as at 31 August 2004. During the year ended 31 August 2005
the Company’s loss increased by £26,000, deferred tax assets increased by a further £10,000 and the Company’s other
reserves increased by a further £36,000.
• FRS 21 “Events after the balance sheet date”. The major effect of FRS 21 is to change the approach to dividends declared after
the balance sheet date in respect of the year under review such that these dividends are no longer accrued for at the balance
sheet date. As a result of adopting FRS 21, the Company’s creditors due within one year at 31 August 2004 decreased by
£89,000. During the year ended 31 August 2005, dividends paid decreased by £20,000 and creditors due within one year also
decreased by £109,000.
Notes to the Company financial statements 64 Formation Group PLC • 2006 Annual Report and Accounts
3. Employee costs 
The average monthly number of employees (including Executive Directors) was:
2006 2005
Number Number
Sports Marketing 1 1
Wealth Management and Professional Services 2 1
Administration 4 5
7 7
2006 2005
£’000 £’000
Their aggregate remuneration comprised:
Wages and salaries 855 897
Social security costs 87 118
Other pension costs 21 23
963 1,038
4. Intangible fixed assets
Trademarks
£’000
Cost
At 1 September 2005 6
Additions 1
At 31 August 2006 7
Depreciation
At 1 September 2005 1
Charge for the year 1
At 31 August 2006 2
Net book value
At 31 August 2006 5
At 31 August 2005 5
Notes to the Company financial statements 65 Formation Group PLC • 2006 Annual Report and Accounts
5. Tangible fixed assets
Fixtures,
Short fittings and
leasehold office Motor
improvements equipment vehicles Total
£’000 £’000 £’000 £’000
Cost
At 1 September 2005 – 36 54 90
Additions 17 9 – 26
Transfer from other Group Company – 4 – 4
At 31 August 2006 17 49 54 120
Depreciation
At 1 September 2005 – 29 24 53
Charge for the year 1 8 12 21
At 31 August 2006 1 37 36 74
Net book value
At 31 August 2006 16 12 18 46
At 31 August  2005 – 7 30 37
The carrying value of the Company’s motor vehicles includes an amount of £18,000 (2005 - £30,000) in respect of assets held
under finance leases.
6. Fixed asset investments
2006 2005
£’000 £’000
Subsidiary undertakings 16,543 18,241
Principal Group investments
The Parent Company and the Group have investments in the following subsidiary undertakings, all of which are wholly owned,
which principally affected the profits or net assets of the Group.  To avoid a statement of excessive length, details of investments
which are not significant have been omitted.
Country of
incorporation or
principal business
Subsidiary undertakings address Principal activity
Proactive Sports Management Limited * England Representation
Fox Sports Limited (trading as Fox Advertising) * England Outdoor advertising and media
Kingsbridge Asset Management Limited * England Wealth management
Active Sports Marketing Limited * England Sports marketing and corporate hospitality
Proactive Sports Management USA Inc * USA Representation
Sponsormatic ApS * Denmark Outdoor advertising and media
Capital Sports Solutions Limited * England Financial brokerage
RC & A Sports Management Limited England Outdoor advertising and media
Bermitz Sports Advertising Limited England Outdoor advertising and media
* held directly by Formation Group PLC.
Notes to the Company financial statements 66 Formation Group PLC • 2006 Annual Report and Accounts
6. Fixed asset investments (continued)
Subsidiary undertakings
£’000
Cost
At 1 September 2005 32,608
Change in deferred consideration payable (34)
Disposal (2,030)
At 31 August 2006 30,544
Provision for impairment
At 1 September 2005 14,367
Disposal (366)
At 31 August 2006 14,001
Net book value
At 31 August 2006 16,543
At 31 August 2005 18,241
7. Debtors
2006 2005
(restated)
£’000 £’000
Amount owed by Group undertakings 4 527
VAT 31 53
Other debtors 40 –
Prepayments and accrued income 106 63
Deferred tax asset 50 27
231 670
8. Creditors: Amounts falling due within one year
2006 2005
(restated)
£’000 £’000
Bank loans and overdraft 653 726
Trade creditors 201 266
Amounts owed to Group undertakings 5,629 4,737
Other taxation and social security 27 32
Contingent and deferred acquisition consideration – 115
Amounts payable under finance leases 4 4
Accruals and deferred income 290 771
6,804 6,651
Bank overdrafts are repayable on demand and have been secured by debentures from Formation Group PLC and certain of the
Company’s subsidiary companies as well as an inter company cross guarantee between these companies.
Notes to the Company financial statements 67 Formation Group PLC • 2006 Annual Report and Accounts
9. Creditors: Amounts falling due after one year 
2006 2005
£’000 £’000
Bank loans – 800
Contingent and deferred acquisition consideration – 56
Amounts payable under finance leases 28 33
28 889
The Group has a £2,500,000 rolling credit facility which was taken out on 5 May 2006. There were no drawings on this facility at
the year end. This facility replaced the Group’s loan facility (2005 - £1,200,000). This facility is reduced from 1 September 2007
and ceases on 31 August 2009. The facility has been secured by debentures from Formation Group PLC and certain of the
Company’s subsidiary companies as well as an inter company cross guarantee between these companies.
10. Provisions for liabilities and charges
Deferred
taxation
(restated)
£’000
At 1 September 2005 27
Transfer to profit and loss account 23
At 31 August 2006 50
Deferred tax (liability)/asset provided is analysed as follows:
2006 2005
(restated)
£’000 £’000
Accelerated capital allowances 12 3
Other timing differences 7 7
Share options 31 17
50 27
11. Share capital
2006 2005
£’000 £’000
Authorised
170,000,000 ordinary shares of 1p each (2005 – 170,000,000) 1,700 1,700
Allotted and called-up
126,361,196 ordinary shares of 1p each (2005 – 114,873,815) 1,264 1,149
£’000
At 1 September 2005 1,149
Issue of new equity (11,487,381 ordinary shares of 1p) 115
At 31 August 2006 1,264
The Company has one class of ordinary shares which carries no right to fixed income.
Notes to the Company financial statements 68 Formation Group PLC • 2006 Annual Report and Accounts
11. Share capital (continued)
Options have been granted under the following schemes to subscribe for ordinary shares of the Company as follows:-
Number of Subscription
shares price per
Scheme under option share Exercise period
Unapproved share option scheme 1,000,000 7.13p 12 December 2006 to 11 December 2013
Enterprise management incentive plan 112,000 25.00p 16 May 2004 to 15 May 2011
Enterprise management incentive plan 1,850,000 7.13p 12 December 2006 to 11 December 2013
Non Executive plan 1,000,000 7.13p 12 December 2006 to 11 December 2013
Non Executive plan 500,000 7.25p 1 June 2007 to 31 May 2014
Unapproved share option scheme 200,000 7.25p 22 November 2007 to 21 November 2014
Unapproved share option scheme 400,000 7.13p 9 December 2007 to 8 December 2014
Unapproved share option scheme 1,000,000 7.25p 2 February 2008 to 1 February 2015
12. Reserves
Own Share Capital
shares premium redemption Other Profit and
held account reserve reserves loss account Total
£’000 £’000 £’000 £’000 £’000 £’000
At 1 September 2005 (as previously stated) – 18 61 3,689 6,370 10,138
Prior year adjustments – – – 60 66 126
At 1 September 2005 (restated) – 18 61 3,749 6,436 10,264
Loss for the year – – – – (2,120) (2,120)
Share option charge – – – 47 – 47
Acquisition of own share capital (138) ––– – (138)
Issue of new share capital – 676 – – – 676
At 31 August 2006 (138) 694 61 3,796 4,316 8,729
The own shares reserve represents 1,100,000 ordinary shares of 1p each in the share capital of the Company.
13. Financial commitments  
Annual commitments under non-cancellable operating leases are as follows:
Land and buildings Other
2006 2005 2006 2005
£’000 £’000 £’000 £’000
Expiry date
- between two and five years 25 25 – 6
- after five years 65 65 – –
90 90 – 6
Leases of land and buildings are typically subject to rent reviews at specified intervals and provide for the lessee to pay all
insurance, maintenance and repair costs.
Notes to the Company financial statements 69 Formation Group PLC • 2006 Annual Report and Accounts
14. Pension arrangements
The Company makes pension contributions to the personal pension plans of certain full-time employees.  The pension cost
charge for the year amounted to £61,000 (2005 - £23,000).
15. Related party transactions
The Company’s head office is occupied on a 15 year lease from 17 May 2001 from James Hay Pension Trustees Limited which
owns the property on trust for the personal pension plans of P . Stretford, K.B. Moran (both Directors of Proactive Sports
Management Limited) and J. Olsen.
The terms of the lease, which were set by an independent commercial valuer at arm’s length, are as follows:
- rental of £65,000 p.a. invoiced quarterly in advance;
- rent reviews every 5 years which are upwards only and no break clauses.
The charge for the year was £65,000 (2005 - £65,000) and no amount was due to James Hay Pension Trustees Limited at 31
August 2006 (2005 - £nil).
16. Subsequent Events
On 5 October 2006, the Group announced the sale of its Sports Marketing business for a maximum consideration of £11.273
million. This sale was approved at an Extraordinary General Meeting on 24 October 2006 and the disposal was completed on 31
October 2006. Details of the disposal are contained in note 30 to the consolidated financial statements.
Notes to the Company financial statements Formation Group PLC
9-13 Manchester Road
Wilmslow Cheshire SK9 1BQ
Tel: +44 (0) 1625 539832
www.formationgroupplc.com
Capital Sports Solutions Ltd 
9-13 Manchester Road 
Wilmslow 
Cheshire SK9 1BQ 
Tel: +44 (0) 1625 539991
website under construction
Kingsbridge Asset Management Ltd
19 Castle Gate
Nottingham NG1 7AQ
Tel: +44 (0) 115 852 3620
www.kingsbridge.co.uk
Proactive Sports Management Ltd
9-13 Manchester Road
Wilmslow Cheshire SK9 1BQ
Tel: +44 (0) 1625 536411
www.proactivesports.co.uk
Proactive Sports Management USA Inc.
3233 M Street, N.W. 
Washington, D.C. 20007
Tel: 001 202 333 3615
www.proactivesportsusa.com
Designed and Produced by Relevant! Manchester www.formationgroupplc.com