CTEA.L Regulatory News (CTEA)

15 Jan 2008 15:48

Milestone Group PLC15 January 2008 Milestone Group PLC MILESTONE ACQUIRES THE FLEX AIM listed Milestone Group PLC ("Milestone", the "Group" or the "Company") announces the conclusion to its current review of strategy with the Group focusing on exploiting opportunities in the converging broadcasting and digital media sectors. Milestone has acquired 80 per cent of the issued share capital of The Flex (International) Limited ("The Flex") from Jamie Bloom for a nominal consideration of £100. Two of the directors of The Flex, Jamie Bloom and Deborah White, are being appointed to the Board of Milestone as non-executive directors with immediate effect. The Flex is an early-stage 'web TV' business in which Laurence Bloom, a significant shareholder in Milestone and the brother of Jamie Bloom, is a founder shareholder. Ryan Bloom, the son of Laurence Bloom, is the co-founder and managing director of The Flex. Milestone further announces it has entered into an 'arms length' loan arrangement with Jamie Bloom in order to provide a facility of £500,000 for the newly enlarged Group on normal commercial terms. The Flex was established in late 2006 with a view to sourcing original specialist video and audio content which it intends to distribute direct to consumers via the internet. It has spent much of the past year developing a web TV platform, to be branded "The Flex", which is due to launch beta trials in early 2008. Milestone's independent Non-executive Chairman, John Sanderson, said: "Milestone's original intention was always to become a supplier of media to whichever platforms emerge from the convergence of broadcasting and communications technologies. In my annual report statement last year, I explained that the Board was exploring opportunities to position the Company as a dedicated digital media group, in line with its decision to move away from its exposure to traditional media platforms. This process has taken longer than originally anticipated involving the examination of a number of proposals. Ultimately, the Board unanimously agreed that The Flex offered the mixture of potential risk and reward which we were looking for from an investment in a digital platform. "This deal has been made possible thanks to Jamie Bloom agreeing to make a majority shareholding in The Flex available to the Company for a nominal consideration. This is a good deal for Milestone shareholders. The Flex is a most interesting opportunity, led by visionary management, in a high growth sector. "Milestone now enters a new phase in its development as a broadcast service provider. Whilst the internet is now an established and popular platform for the distribution of both video and audio the key focus for The Flex will be to generate user demand for its own creative content and to monetise this for the benefit of the Group. The key selling point of The Flex is that it will be able to offer new talent the benefit of professional production, management support, event services and promotion as well as an internet distribution platform. "I would particularly like to take this opportunity to welcome our two new Board members, Jamie Bloom and Deborah White. Both Jamie and Deborah each bring a wealth of business development and corporate finance experience to the Company and I am very much looking forward to working alongside them. "This acquisition brings to a conclusion the Board's current review of strategy.The Board will continue to explore appropriate opportunities in the future to develop the Group by organic growth and targeted acquisition." The Flex initially intends to offer programming which targets a core youth audience such as lifestyle, football, extreme sports, fashion, talent and new music. One of the aims of the platform will be to provide a social 'marketplace'enabling upcoming musicians, actors, models, fashion designers and film makers to 'showpiece' and 'trade' their creative abilities. Content produced for The Flex will be available to anyone in the world with a suitable internet connection. Although currently UK based and particularly targeted at a UK audience, The Flex ultimately aims to expand to provide a global platform. * FINANCIAL SUMMARY * The Flex management team have been primarily focused in 2007 on developing thebusiness plan and working towards launch. To date, The Flex has incurred costsof approximately £150,000 associated with the development of the platform. Thishas been funded by capital injections by The Flex shareholders and is treated asa loss in the (unaudited) management accounts. The Flex currently has net assetsdue to capital injections although it is anticipated further funding supportwill be required in 2008. The Flex gross assets, in the unaudited managementaccounts at 20 December 2007, were approximately £190,000. The Board intends to make further notifications to the London Stock Exchange asThe Flex progresses during the course of the coming year. * TERMS OF TRANSACTION * The Company has entered into an agreement dated 15 January 2008 to acquire6,400,000 A ordinary shares of £0.01 each in The Flex from Jamie Bloom for thenominal consideration of £100. This holding represents 80 per cent of the total issued share capital of The Flex. The nominal consideration of £100 reflects thecurrent concept (pre-revenue) status of The Flex and Jamie Bloom's view thatthe new business will benefit going forward from being part of a listed entity. * LOAN ARRANGEMENT * The Company has entered into a loan arrangement with Jamie Bloom dated 15January 2008 in order to enable The Flex to launch its new platform and toprovide working capital for the enlarged Group. The facility of £500,000 isunsecured and can be drawn down by request of the Company over the coming 18months. Any use of the facility will bear interest at a rate of 3 per cent perannum above the Bank of England base rate. No other charges are payable inconnection with the facility including no penalties for early repayment. Allloans and interest accrued under the facility become repayable in full inDecember 2010. * RELATED PARTY TRANSACTION * Laurence Bloom, the brother of Jamie Bloom, is currently the largest single shareholder in Milestone with a beneficial interest in 28.06 per cent of the Company's total issued share capital. Laurence Bloom and Jamie Bloom, their family and associates are minority shareholders in The Flex, a company in which Milestone has acquired a majority shareholding as set out above. The Flex employs Ryan Bloom, the son of Laurence Bloom, as its managing director and also currently rents office space in London's Victoria ultimately owned by Laurence Bloom. In addition Jamie Bloom has entered into a loan arrangement with Milestone, the details of which are set out above. The Directors believe that the acquisition of the majority shareholding in TheFlex and the terms of the loan facility to the Company from Jamie Bloom havebeen made at arms' length and on normal commercial terms. Having consulted withthe Company's nominated adviser, Arden Partners PLC, the Directors consider thatall of these arrangements are fair and reasonable so far as shareholders inMilestone are concerned. * JAMIE BLOOM * Jamie Bloom has 30 years experience in the leisure and entertainment industry. From 1999 to 2002 Jamie served as Managing Director of the Bellhaven Group, where he was responsible for the launch of its hotel and conference centre. Jamie's previous experience spans the successful launch of Soho's Cafe de Paris nightclub (sold for £4m in 2002) to the establishment of a chain of American themed restaurants. Jamie started his entrepreneurial career at the Downtown Group in 1965 which he developed into a chain of 40 retail outlets including Kensington and Carnaby indoor markets. * DEBORAH WHITE * Deborah White is an independent financial adviser with significant experience incapital raising, new launches and business development. Deborah is currently anexecutive director of Silver Planet Life Investment Taxation Solutions, aspecialised financial advisory group dealing with high level investment adviceand capital raising. From 1999 to 2006 Deborah was responsible for buildingInter-Alliance City Limited from scratch to an annual turnover in excess of £3multimately leading to the creation of the major Millfield Group advisorypractice. Deborah has spent the past year engaged as a financial consultant toThe Flex in which she is also a director and shareholder. * MANAGEMENT * In addition to Jamie Bloom and Deborah White, the Board of Milestone continuesto comprise of John Sanderson, Non-executive Chairman; Brian Chester, part timeFinance Director and Andy Craig, Non-executive Director. The currentarrangements are designed to ensure continuity of management. The Board intendsto review its structure and corporate governance as The Flex continues todevelop. * ONGOING LOCAL TV BUSINESS * Milestone continues to operate its ongoing local television division. Milestonerecently joined forces with other interested groups to launch "United for LocalTelevision", a new campaign group which is lobbying for local televisionchannels to be granted guaranteed access to the Freeview platform, rather thanhaving to bid for terrestrial carriage against other services as is currentlyproposed by Ofcom (the UK communications regulator). Ofcom has recently announced that existing analogue local television operators,such as Milestone, may be able to vary their licences to provide digitalterrestrial transmissions on a trial basis in the run up to digital switchover.Whilst awaiting further details, Milestone cautiously welcomes thisannouncement. In the meantime, the Company is operating its existing localtelevision channels in Oxford and Southampton on a skeleton staffing and lowturnover. It is intended in the coming months to exploit synergies between The Flex andMilestone's existing television operation with The Flex utilising the Company'sOxford based production facilities and supplying some new broadcast content. * MARKET BACKGROUND * Research published by Ofcom in December 2007 suggests the UK now has a higher share of internet advertising spend than any of the eight major countries it has surveyed, standing at 14.4 per cent of total advertising. In addition, a greater proportion of UK internet users (39 per cent) visit social networking sites than in any other key European country surveyed. * OUTLOOK * The Board prudently anticipates modest revenues following the beta launch of The Flex in the first quarter of 2008. The main sources of revenue in the mediumterm are anticipated to be site advertising, sales of audio and video files, merchandising and the licensing of content to third party distributors. The Board will continuously review the progress of The Flex and to what extent any additional fundraising may enhance value for the Company's shareholders by enabling a faster roll-out of the new platform. FOR FURTHER INFORMATION: Milestone Group PLCBrian Chester Tel: 07776 302 274 Arden Partners PLC Tel: 0207 398 1632Richard Day / Adrian Trimmings * REGULATORY INFORMATION * This announcement contains certain information required to be disclosed in respect of Jamie Bloom and Deborah White's appointments in accordance with Rule 17 and Schedule Two paragraph (g) of the AIM Rules. *Full name*James Howard Bloom *Date of birth*1 March 1950 *Current interest in shares in the Company*None but 7,746,698 (28.06 per cent) held by Laurence Bloom (the brother of James Bloom) through J M Finn Nominees Limited *Current directorships / partnerships*Mainline Properties Limited, Varmeer Properties Limited, Millennium Merchandising Limited, The Flex (International) Limited *Past directorships / partnerships (in the previous 5 years)*Bellhaven Limited, Dunraven Limited, Digiworx Entertainment Limited, Network Corporate Holdings PLC, Network Directors Limited Save as disclosed in this announcement, Jamie Bloom has confirmed that there are no other disclosures required pursuant to Schedule Two paragraph (g) of the AIM Rules. *Full name*Deborah Jane White *Date of birth*17 July 1965 *Current interest in shares in the Company*None *Current directorships / partnerships*Silver Planet Life Investment Taxation Solutions Limited, Silver Planet (City ofLondon) Limited, The Flex (International) Limited *Past directorships / partnerships (in the previous 5 years)*Inter-Alliance City Limited Save as disclosed in this announcement, Deborah White has confirmed that there are no other disclosures required pursuant to Schedule Two paragraph (g) of the AIM Rules. This information is provided by RNS The company news service from the London Stock Exchange