Formation Group

Recent disposal of its sports marketing operations, after its August year-end, has fundamentally transformed Formation, famed for looking after the interests of superstar footballer Wayne Rooney.

Chief executive Neil Rodford said the sports marketing operation was sold for up to £11.27m following an offer from far larger European rival Sportfive. ‘Our decision reflected the offer itself, as well as the maturity of that sector’, he explained, ‘and we’ll use the proceeds to grow our wealth management division’.

Here Kingsbridge Asset Management provides high earning athletes and entertainers with financial planning, insurance protection and management advice. It also works for sports organisations and clubs, for whom it brokers financial solutions, and achieved profits of £543,000 (£526,000) on improved turnover of £3.6m (£3.3m) last year.

Meanwhile the representation business, which has more than 107 footballers on its books, should only benefit from increased regulation and compliance arising from the industry enquiry being undertaken by Lord Stevens.

For investors, the key metrics were last year’s continuing figures, which showed strong pre-tax profits growth – up 20% to £1.5m – and a 13% sales rise to £15.1m, along with an 11% dividend spike to 0.1p. ‘We‘re pleased with the numbers’, commented Rodford, ‘and with the significant like-for-like growth we’ve seen’. He also flagged up year-end ‘committed’ future gross profits of £2.8m – down from £5.2m due to disposals – of which a healthy £1.5m will be recognised in the current year.

Formation sits on a healthy cash pile – a net £7m sat on the balance sheet at the end of October – and is homing in on high margin work, with the aim of growing organically and by acquisitions. In a volatile sector, Formation could prove one of the winners and the shares are worth holding.