CTEA.L Regulatory News (CTEA)

31 Mar 2008 17:41

Milestone Group PLC31 March 2008 MILESTONE GROUP PLC RESULTS FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2007 Milestone Group PLC ("Milestone" or the "Group"), the AIM listed media group,announces results for the year ended 30 September 2007. * HIGHLIGHTS * • Group loss for the year on continuing activities reduced to £1.0m (2006: £1.3m) • Post balance sheet acquisition of The Flex and agreement of £0.5m loan facility • Appointment of Deborah White as Chief Executive and Ian Lodwick as Finance Director Milestone Chairman, John Sanderson, said: "I am delighted to report that Deborah White has agreed to step up to the roleof Chief Executive with immediate effect. Having built her own financialservices company from scratch, Deborah has an exceptional track record inestablishing and leading businesses. It has been a privilege to work withDeborah since she joined the Board in January, an experience which enables me tobe confident she has the discipline, tenacity and inspiration to drive the Groupforward. "I am also pleased to announce the appointment of Ian Lodwick as the new GroupFinance Director with immediate effect. Ian has considerable experience workingwith developing media companies, including previously acting as the financedirector of Viavision Limited, the satellite TV operator, which he helped tosuccessfully build and sell." Milestone further announces today that Non-Executive Director, Jamie Bloom, hasresigned due to ill health. The ongoing Board of Directors comprises of JohnSanderson, Deborah White and Ian Lodwick. * FOR FURTHER INFORMATION * Milestone:John Sanderson, Non-Executive Chairman Tel: 07850 313 214 / 020 7580 2444Deborah White, Chief Executive Tel: 07768 694 671 / 020 7648 1043Ian Lodwick, Finance Director Tel: 07850 190 958 Arden Partners:Richard Day / Adrian Trimmings: Tel: 020 7398 1632 / 020 7398 1640 * BELOW * Regulatory InformationChairman's statementConsolidated profit and loss accountConsolidated balance sheetCompany balance sheetConsolidated cash flow statementNotes forming part of the financial statementsNotice of annual general meeting * REGULATORY INFORMATION * This announcement contains certain information required to be disclosed inrespect of Ian Lodwick's appointment in accordance with Rule 17 and Schedule Twoparagraph (g) of the AIM Rules. *Full name*Ian David Lodwick *Date of birth*15 June 1957 *Current interest in shares in the Company*None *Current directorships / partnerships*None *Past directorships / partnerships (in the previous 5 years)*Game In TV Limited Save as disclosed in this announcement, Ian Lodwick has confirmed that there areno other disclosures required pursuant to Schedule Two paragraph (g) of the AIMRules. * FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 * The financial information set out below does not constitute the company'sstatutory accounts for the years ended 30 September 2007 or 2006, but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theRegistrar of Companies and those for 2007 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under s. 237(2) or(3) Companies Act 1985. However, the 2007 accounts contain a statement regardinga fundamental uncertainty in respect to the ability of the Group to draw-downthe facility that has been used to support the going concern basis ofpreparation (see note 1 - accounting policies). * CHAIRMAN'S STATEMENT * *Review of the year* In line with the Board's strategy, the Group slimmed down its operations in 2006/07 in order to minimise expenditure whilst the strategic review was ongoing.The Group's loss for the year on continuing activities was reduced to £1.0m(2006: £1.3m) on a turnover of £0.05m (2006: £0.1m). Having previously disposed of the Group's traditional media assets in publishingand radio, the operating loss for the ongoing television division was marginallyreduced to (£0.1m) (2006: £0.2m) on a turnover of £0.05m (2006: (£0.1munderlying operating loss). *Strategic Review* The Board undertook a wide ranging investigation of acquisition opportunitiesduring the year, a process which took longer than originally anticipated.Subsequent to the year-end, in January 2008, this review culminated in theacquisition of an 80 per cent interest in The Flex (International) Limited ("TheFlex"). Milestone Group PLC ("Milestone" or the "Group") intends to use The Flex todevelop a digital media portal capable of providing support to a portfolio ofassets, subject to raising adequate additional finance. Whilst a furthertransaction is not a priority, the Board intends to continue to explorepotential new business opportunities where these are regarded as complementaryto the Group. This process will be overseen by the Group's new executivedirectors, Deborah White and Ian Lodwick. *Post Balance Sheet Events* 1. Local Television on Freeview For the past three years, Milestone has been lobbying for its existing analoguelocal television licences (currently operating in Oxford and Southampton) to beconverted to digital licences. In December 2007, Ofcom announced that it wouldallow existing local television licences to be converted from analogue todigital transmissions upon request. Milestone holds more terrestrial local television licences than any othercompany in the UK. Ofcom's decision now allows Milestone to launch localtelevision channels on the Freeview (digital terrestrial) platform in all theareas in which it has been granted these licences: Oxford, Southampton, Readingand Portsmouth. The Board is exploring the opportunity to scale-up its television operations andre-launch services on Freeview. Milestone is confident there is considerabledemand from viewers and advertisers for local television. However, given thatMilestone's local television licences are due to expire in 2011 and 2012, itonly leaves the Group three years in which to gain a commercial return on anynew investment. Significant questions remain about the opportunity for local television todevelop in the UK following Ofcom's decision to withdraw the existing localtelevision licensing regime when current licences expire. Milestone is playingan active role in "United for Local Television", a new umbrella group which hasbeen formed to lobby for adequate provision to be made to expand localtelevision on Freeview. As of 31 March 2008, over 130 MPs had signed an EarlyDay Motion in Parliament calling on the Government to introduce a local Freeviewchannel in every part of the UK. It is understood that the Government intends toreview its policy towards local television further in the coming months andMilestone intends to continue to play a leading role in these discussions. In the second half of this financial year, the Board intends to review theopportunity to launch local television channels on Freeview in the areas whereit holds licences. The Southampton service is currently temporarily off-airwhilst contractual arrangements with the transmission site owner are formalised.The Board does not anticipate this impacting on any future re-launch onFreeview. 2. Acquisition of The Flex On 15 January 2008, Milestone acquired an 80 per cent interest in The Flex for anominal consideration. The Flex concept has been in development for over a year. Following discussionswith Milestone, the company's founders (who are also shareholders in Milestone)felt the business would benefit from the oversight of a Board with experience inmanaging and nurturing young media enterprises. The aim of The Flex is to aid individuals to maximise the commercialexploitation of their own skills, talents and interests in a convergedcommunications environment. The Flex plans to enable young talent to monetisetheir creative abilities by providing them with a platform upon which they cansell their own copyright. The intention is that The Flex will provide a platform for amateur andsemi-professional artists to promote and sell creative content such as music,merchandise, art and film. Aspiring artists and talented individuals will beable to place their content and merchandise on The Flex website where it will bemade available for direct sale to users. The Flex remains an early-stage, pre-launch, business and the Board intends tofully review its cost-base and business model. The Board does not intend to makea significant investment in The Flex until completing this review. One optionunder review is not necessarily to launch the full Flex platform as a standaloneproposition but to seek to 'bolt on' elements of its business model andtechnology to new ventures under consideration. The Board is also exploring theobvious synergies between The Flex and its existing local television operations. *Board Changes* There have been a number of changes to the Board's structure during thefinancial year and subsequent to the year-end. The Board's two executive directors, Andy Craig (Chief Executive) and BrianChester (Finance Director), agreed to allow their full-time service agreementsto be terminated in May 2007. Both continued to serve on the Board until March2008 (Andy as a Non-Executive and Brian as part-time Finance Director). The services of both Andy and Brian were retained as Board Directors to help seethrough the Group's review of strategy to its current stages. A large number ofpossible ventures were explored and I am grateful to both Andy and Brian fortheir efforts in seeking to identify appropriate new opportunities for theGroup, culminating in the acquisition of The Flex. Following the end of the financial year, in November 2007, Mark Levine resignedas a Non-Executive Director in order to focus on his international businesscommitments. In January 2008, the Board welcomed Jamie Bloom and Deborah Whiteas Non-Executive Directors following the Group's acquisition of The Flex.Unfortunately, Jamie Bloom has been suffering from poor health in recent weeksand the Board accepted his resignation on 31 March 2008. We all wish him welland a speedy recovery. I am delighted to report that Deborah White has agreed to step up to the role ofChief Executive from 31 March 2008. Having built her own financial servicescompany from scratch, Deborah has an exceptional track record in establishingand leading businesses. It has been a privilege to work with Deborah since shejoined the Board in January, an experience which enables me to be confident shehas the discipline, tenacity and inspiration to drive the Group forward. Deborahwill initially work in a part-time capacity, becoming full time as soon asresources allow. I am also pleased to announce the appointment of Ian Lodwick as the new GroupFinance Director from 31 March 2008. Ian will initially be working for the Groupin a part-time, flexible, capacity, alongside his existing consultancy business.Ian has considerable experience working with developing media companies,including previously acting as the finance director of Viavision Limited, thesatellite TV operator, which he helped to successfully build and sell. Mostrecently Ian has been acting as a financial consultant to a number of companies,including assisting Milestone in recent weeks following the resignation of BrianChester. I would like to again place on record my gratitude to all of my colleagues whohave demonstrated their loyalty and commitment to Milestone as it develops itsnew strategy. I wish my former colleagues all the best in their new projects andlook forward to working closely with my new colleagues to develop Milestone'sbusiness. *Finance* The Group has a loan facility of £500,000 in place with Jamie Bloom, on 'armslength' terms, which should enable it to continue to trade for the foreseeablefuture. Whilst this facility is regarded as legally binding, the Board issympathetic to Jamie Bloom's current personal health problems and have not beenable to draw down on this facility. The Board intends to use all reasonableendeavours to resolve this issue amicably but, if necessary, intends to take totake appropriate action to ensure the facility is honoured. The Board is in the process of considering further potential funding options toenable a more aggressive expansion of the Group and its businesses. As part ofthis process, a resolution is being tabled at the Annual General Meeting, to beheld on 30 April 2008, giving the Board the authority to allot new shares to avalue representing approximately 20 per cent of the issued share capital of theCompany. *Outlook* In the short term, the Group's new management intends to operate the existingbusinesses on a modest cost-base. The Board anticipates that further investmentwill be required if revenues and earnings are to be significantly enhanced. TheBoard is reviewing funding options and intends to explore growth opportunities,both organic and via acquisition. The Board particularly intends to assesspotential opportunities in the media, entertainment, leisure and relatedsectors. John SandersonNon-Executive Chairman31 March 2008 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 SEPTEMBER 2007 __________________________________________________________________________________________ Note 2007 2006 £ £TurnoverContinuing operations 2 51,328 137,719Discontinued operations - 2,825,183 Cost of sales 3 50,059 2,422,238 ________ _________ Gross Profit 1,269 540,664 Distribution costs - 55,295Administrative expenses: 3,4,5 Redundancy costs 7 179,054 -Impairment of goodwill 7 - 471,538Other administrative expenses 886,651 2,842,288 1,065,705 3,313,826 _________ _________ (1,064,436) (2,828,457) Other operating income 3,6 87,530 19,888 _________ _________Group operating lossContinuing operations 7 (976,906) (1,260,482)Discontinued operations - (1,548,087) Loss on disposal of discontinued operations - (1,227,652) _________ _________ Loss on ordinary activities before interest (976,906) (4,036,221) _________ _________ Interest receivable 8 27,421 8,295Interest payable 9 (2,361) (68,933) _________ _________ Loss on ordinary activities before taxation (951,846) (4,096,859) Taxation on loss from ordinary activities 10 - 8,885 ________ _________ Loss on ordinary activities after taxation (951,846) (4,087,974)Minority interest - 47,717 _________ _________ Loss for the financial year 20 (951,846) (4,040,257) _________ _________Basic and diluted loss per sharefrom continuing operations 11 (3.4)p (4.4)p _________ _________ All recognised gains and losses are included in the profit and loss account. CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2007 __________________________________________________________________________________________ Note 2007 2007 2006 2006 £ £ £ £Fixed assetsTangible assets 13 7,664 7,535 _______ _______ 7,664 7,535Current assetsDebtors 15 81,942 163,743Cash at bank and in hand 102,443 1,221,181 _________ ________ 184,385 1,384,924Creditors: amounts falling duewithin one year 16 265,544 511,045 _________ ________Net current (liabilities)/assets (81,159) 873,879 ________ ________ Total assets less current liabilities (73,495) 881,414 Creditors: amounts falling dueafter more than one year 17 - 3,063 ________ ________ (73,495) 878,351 ________ ________ Capital and reservesCalled up share capital 19 2,760,510 2,760,510Share premium account 20 7,692,985 7,692,985Merger reserve 20 11,119,585 11,119,585Profit and loss account 20 (21,646,575) (20,694,729) _________ _________ Shareholders' funds 21 (73,495) 878,351 _________ _________ The financial statements were approved by the board of directors and authorisedfor issue on 31 March 2008. COMPANY BALANCE SHEET AT 30 SEPTEMBER 2007 __________________________________________________________________________________________ Note 2007 2007 2006 2006 £ £ £ £Fixed assetsTangible assets 13 7,151 4,158 ________ ________ 7,151 4,158Current assetsDebtors 15 39,218 111,459 Cash at bank and in hand 102,443 1,220,961 _________ _________ 141,661 1,332,420Creditors: amounts falling duewithin one year 16 212,761 403,806 _________ ________ Net current assets (71,100) 928,614 ________ ________ Total assets less current liabilities (63,949) 932,772 ________ ________ Capital and reservesCalled up share capital 19 2,760,510 2,760,510Share premium account 20 7,692,985 7,692,985Profit and loss account 20 (10,517,444) (9,520,723) _________ ________ Shareholders' funds 21 (63,949) 932,772 _________ ________ The financial statements were approved by the board of directors and authorisedfor issue on 31 March 2008. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2007 __________________________________________________________________________________________ Note 2007 2007 2006 2006 £ £ £ £ Net cash outflow from operating activities (999,944) (1,338,318) 25 Returns on investments andservicing of financeInterest received 27,421 8,295Interest paid (2,361) (68,933) _______ ________ Net cash outflow from returns oninvestments and servicing of finance 25,060 (60,638) Taxation - 8,885 Capital expenditurePayments to acquire tangible fixed assets (7,882) (1,744)Receipts from sale of tangible fixed assets 1,193 500 _______ ________ Net cash outflow from capital expenditure (6,689) (1,244) Acquisitions and disposalsSale of business operations - 3,394,066Cash disposed of with business operations - (210,887)Costs of disposal of business operations - (333,662) _______ ________Net cash inflow fromacquisitions and disposals - 2,849,517 ________ ________ Cash (outflow)/inflow before financing (981,573) 1,458,202 FinancingNew loans advanced - 211,400Loan repayments (3,063) (213,737)Capital element of finance leases repaid - (11,882)Repayment of invoice discounting agreements - (283,321) _______ ________ Cash outflow from financing (3,063) (297,540) ________ ________ (Decrease)/increase in cash in the year 26,27 (984,636) 1,160,662 ________ ________ The notes that follow form part of these financial statements. NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 __________________________________________________________________________________________ 1 * Accounting policies * The financial statements have been prepared under the historical costconvention, and are in accordance with applicable United Kingdom accountingstandards. In preparing these financial statements the Group has adopted for thefirst time FRS 20 'Share-based payment'. As a consequence of all share optionsin the Milestone Group PLC Approved Share Option Scheme being waived on 18 May2007 as part of the members employment termination agreements with the companythe directors have decided not to apply the provisions of the standard. TheDirectors calculations indicated that the charges would not have beensignificant. This decision had no material effect on the distributable reservesof the company and its subsidiaries and has not resulted in any changes to thecurrent or comparative period financial information. The Group incurred a loss for the year of £951,846 and had net liabilities of£73,495. The Group is reliant on the loan facility with Jamie Bloom, which theGroup regards as legally binding, in order to continue to trade as a goingconcern. At the time of approving these financial statements, Jamie Bloom hasbeen unable to provide liquid funds in order for the Group to draw down on thisfacility. Whilst the Board is sympathetic to Jamie Bloom's current personalhealth problems, it intends to use all reasonable endeavours to resolve thisissue amicably but, if necessary, intends to take to take appropriate action toensure the facility is honoured. The material uncertainty in respect to the Directors ability to draw down on theloan facility may cast significant doubt over the Group's ability to continue asa going concern and therefore it may be unable to realise its assets anddischarge its liabilities in the normal course of business. The financialstatements do not include the adjustments that would result if the company wasunable to continue as a going concern. The company has taken advantage of the exemption allowed under Section 230 ofthe Companies Act 1985 from presenting its own profit and loss account in thesefinancial statements. The company's own loss for the year ended 30 September2007 is £996,721 (2006: £2,955,186 profit). The following principal accounting policies have been applied: Basis of consolidation The consolidated financial statements incorporate the results of Milestone GroupPLC and all of its subsidiary undertakings as at 30 September 2007 using theacquisition method of accounting. Under the acquisition method, the results ofsubsidiary undertakings are included from the date of acquisition. Investments Investments in subsidiaries are stated at cost (being the par value of sharesissued where merger relief applies) less impairment. Other investments held asfixed assets are stated at cost less any provision for impairment in value. Goodwill Goodwill arising on an acquisition of a subsidiary or associated undertaking isthe difference between the fair value of the consideration paid and the fairvalue of the assets and liabilities acquired. Positive goodwill is capitalised and amortised through the profit and lossaccount over the directors' estimate of its useful economic life. This has beenestimated as follows: *Publishing Division - 20 years*Radio Division - over the licence periodTelevision Division - over the licence period * The publishing and radio divisions were discontinued during the year ended 30September 2006. Impairment tests on the carrying value of goodwill are undertaken: • at the end of the first full financial year following acquisition; • in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Turnover Turnover represents sales to external customers at invoiced amount less valueadded tax. Turnover represents advertising and other income from the group's televisiondivision. Advertising income is recognised on the date of broadcast. In the yearto 30 September 2006 advertising income included revenues from publishing whichwere recognised on publication of the related advert. No revenues frompublishing were recognised in the year to 30 September 2007. Depreciation Depreciation is provided to write off the cost, less estimated residual values,of all tangible fixed assets, evenly over their expected useful lives. It iscalculated at the following rates: Leasehold improvements - 10-20 per cent per annum, or over the period of thelease or licence Fixtures, fittings, computer and office equipment & machinery - 10-50 per centper annum, or over the period of the licence Production and studio equipment - 20 per cent per annum Finance costs Finance costs are charged to profit over the term of the debt so that the amountcharged is at a constant rate on the carrying amount. Finance costs includeissue costs which are initially recognised as a reduction in the proceeds of theassociated capital instrument. Pension costs Contributions to the group's defined contribution pension scheme and thedirectors' personal pension scheme are charged to the profit and loss account inthe year in which they become payable. Taxation The charge for taxation is based on the result for the year and taken intoaccount taxation deferred. Current tax is measured at amounts expected to be paid using the tax rates andlaws that have been enacted or substantively enacted by the balance sheet date. Deferred tax balances are recognised in respect of all timingdifferences that have originated but not reversed by the balance sheet dateexcept that the recognition of deferred tax assets is limited to the extent thatthe company anticipates it will make sufficient taxable profits in the future toabsorb the reversal of the underlying timing differences. Deferred taxbalances are not discounted. Leased assets Where assets are financed by leasing agreements that give rights approximatingto ownership (finance leases), the assets are treated as if they had beenpurchased outright. The amount capitalised is the present value of the minimumlease payments payable over the term of the lease. The corresponding leasingcommitments are shown as amounts payable to the lessor. Depreciation on therelevant assets is charged to the profit and loss account, over the period ofthe lease. Lease payments are analysed between capital and interest components. Theinterest element of the payment is charged to the profit and loss account overthe period of the lease and is calculated so that it represents a constantproportion of the balances of capital repayments outstanding. The capitalelement reduces the amounts payable to the lessor. All other leases are treatedas operating leases. Their annual rentals are charged to the profit and lossaccount on a straight line basis over the term of the lease. Share based employee remuneration The Group has adopted FRS 20 'Share based payment' which is obligatory forperiods commencing on or after 1 January 2006. The Group has issued equitysettled share based payments in the form of share options to certain Directorsand employees. In accordance with the FRS, equity-settled share based payments are measured atfair value at the date of grant using an appropriate option pricing model. Thefair value determined at the date of grant is expensed to the profit and lossaccount on a straight line basis over the vesting period. At the balance sheetdate the cumulative change in respect of each award is adjusted to reflect theactual levels of options vesting or expected to vest. Prior to the adoption of FRS 20, the Group recognised the financial effect ofthe share based payments when shares and share options were awarded to employeesby making a charge to the profit and loss account based on the differencebetween the market value of the Company's shares at the date of grant and theoption exercise price in accordance with UITF Abstract 17 (revised 2003) 'Employee Share Schemes'. The credit entry for this charge was taken to theprofit and loss reserve and reported in the reconciliation of movements inshareholders' funds. National Insurance on Share Options To the extent that the share price at the balance sheet date is greater than theexercise price on options granted under unapproved schemes after 19 May 2000,provision for any National Insurance contribution has been made based on theprevailing rate of National Insurance. The provision is accrued over theperformance period attaching to the award. Impairment of fixed assets and goodwill The need for any fixed asset impairment write down is assessed by comparing thecarrying value of the asset against the higher of its realisable value and valuein use. Liquid resources For the purposes of the cash flow statement, liquid resources are defined ascurrent asset investments and short term deposits. 2 * Turnover, (loss)/profit and net assets * The turnover, pre tax (loss)/profit and net assets at the balance sheet date areattributable to the principal activities of the group. These categories havebeen analysed by class of business as set out below. The United Kingdom is theonly geographical market. Pre-tax Pre-tax (loss) (loss) Turnover /profit Turnover /profit 2007 2007 2006 2006 £ £ £ £ Analysis by class of business: *Publishing Division - - 2,267,481 (1,084,641)*Radio Division - - 557,702 (2,342,227)Television Division 51,328 (109,301) 137,719 183,348 _________ ________ _________ _________ 51,328 (109,301) 2,962,902 (3,243,520) Head office costs - (842,545) - (853,339) ________ ________ _________ ________ 51,328 (951,846) 2,962,902 (4,096,859) _________ ________ _________ _________ \* The publishing and radio divisions were discontinued during the year ended 30 September 2006. The underlining result of the Television Division for the year ended 30 September 2006 was a loss of £150,699before a consolidation adjustment of £334,047. Net assets Net assets 2007 2006 £ £Net (liabilities) / assets Television Division (9,545) (54,212)Head office (63,949) 932,563 _______ ________ (73,494) 878,351 _______ ________ 3 * Cost of sales, gross profit and other operating expenses * 2007 2007 2007 2006 2006 2006 Continuing Discontinued Continuing Discontinued Operations operations Total operations Operations Total £ £ £ £ £ £ Cost of sales 50,059 - 50,059 110,156 2,312,082 2,422,238 _______ _______ _______ ________ ________ ________ Gross profit 1,269 - 1,269 27,563 513,101 540,664 _______ _______ _______ ________ ________ ________ Distribution costs - - - - 55,295 55,295Impairment of Goodwill - - - - 471,538 471,538Other administrative Expenses 886,651 - 886,651 1,293,165 1,549,123 2,842,288Redundancy costs 179,054 - 179,054 - - -Other operatingincome (87,530) - (87,530) (5,120) (14,768) (19,888) _______ _______ _______ ________ ________ ________ 978,175 - 978,175 1,288,045 2,061,188 3,349,233 _______ _______ _______ ________ ________ ________ During the year ended 30 September 2006 the Group disposed of its interests inthe ordinary share capital of West Berkshire Radio Limited, Kestrel FM Limited,Rugby Broadcasting Limited, Passion Radio Oxford Limited and Tri MediaPublishing Limited. The results of those entities up to the date of disposalfor the year ended 30 September 2006 are shown under discontinued operations. 4 * Employees * The average number of employees of the Group and company during the year,including executive directors, was as follows: Group Company Group Company 2007 2007 2006 2006 Number Number Number Number Sales, operations and administration 1 - 70 5Management 3 2 2 6 _________ ________ _________ ________ 3 2 76 8 _________ ________ _________ ________ Staff costs for all employees, including executive directors, consist of: 2007 2006 £ £Wages and salaries 531,573 1,716,853 Social security costs 26,354 163,539Pension costs 22,266 21,000 _________ ________ 580,193 1,901,392 _________ ________ 5 * Directors' remuneration * 2007 2006 £ Directors' emoluments and fees 363,984 224,136Compensation for loss of office 109,120 -Benefits in kind 2,460 28,451 _________ ________ 475,564 252,587 _________ ________ Company contributions to money purchase pension schemes 22,266 21,000 _________ ________ In order to reduce the Group's long-term exposure to management costs, thecontracts of Andy Craig and Brian Chester were terminated on 18 May 2007 afterwhich Andy Craig became a Non-Executive Director and Brian Chester becamepart-time Finance Director. Under the terms of these compromise, consultancy anddirectorship arrangements the aggregate amounts payable to Andy Craig (andcompanies under his control) was £155,000 and to Brian Chester (and companiesunder his control) £121,000. There were two directors in the company's defined contribution pension schemeduring the year (2006 - 2). 6 * Other operating income * 2007 2006 £ £ Other operating income 7,838 14,768Rental income 79,692 5,120 ________ _______ 87,530 19,888 ________ _______ Other operating income relates to premium lines (telephone) and readers offers. 7 * Operating loss * 2007 2006 £ £This is arrived at after charging/(crediting): Depreciation charge and impairment of fixed assets 7,003 368,430Profit on disposal of fixed assets (11,442) (500)Amortisation of goodwill arising on consolidation - 231,745Hire of plant and machinery - operating leases 4,848 14,093Hire of other assets - operating leases 50,058 16,649Hire of land and buildings - operating leases 28,567 134,855Auditors' remuneration audit services (2007: company £37,000) (2006: company £53,908) 45,000 79,228 - taxation services 5,900 22,750 - other services - 29,574Impairment of goodwill - 471,538Redundancy costs 179,054 - _________ ________ The other services charge in the year ended 30 September 2006, reflected thelevel of work undertaken in respect to the five disposals and the reorganisationof the Group during the period. 8 * Interest receivable* 2007 2006 £ £ Bank interest 27,421 8,295 _______ _______ 9 * Interest payable and similar charges * 2007 2006 £ £ Bank loans and overdrafts 229 21,611Finance lease and hire purchase interest - 812Interest on overdue tax - 5,345Invoice discounting charges - 41,165Other 2,132 - ________ _______ 2,361 68,933 ________ _______ 10 * Taxation on loss from ordinary activities * 2007 2006 £ £UK corporation taxCurrent tax on losses of the year - (8,885) _________ _________ Taxation on loss from ordinary activities - (8,885) _________ _________ The tax assessed for the year is different than the standard rate ofcorporation tax in the UK. The differences are explained below: 2007 2006 £ £ Loss on ordinary activities before tax (951,846) (4,096,859) _________ _________ 2007 2006 £ £Loss on ordinary activities at the standard rateof corporation tax in the UK of 30% (2006 - 30%) (285,554) (1,229,057) Effects of:Expenses not deductible for tax purposes 7,308 584,848Depreciation for year in (arrears)/excess of capital allowances (1,272) 93,691Unutilised tax losses 279,580 526,106Income not taxable for tax purposes - 24,412 Other items (62) (8,885) ________ _________ Current tax credit for the year - (8,885) ________ _________ Factors that may affect future tax charges Deferred tax assets of approximately £2 million (Group) and £940,000 (company)(2006 - £1.8 million (Group) and £750,000 (company)) have not been recognised inthe financial statements as there is currently insufficient evidence that anydeferred tax assets would be recoverable. The Group has unutilised tax losses of approximately £6.8 million (2006 - £5.7million) available for relief against future profits, subject to agreement by HM Revenue & Customs. 11 * Loss per share * Basic loss per share has been calculated in accordance with FRS 22. Basic lossper share has been calculated by dividing the loss on ordinary activities aftertaxation by the weighted average number of ordinary shares in issue during theyear. The weighted average number of equity shares in issue was 27,605,095(2006 - 27,605,095) and the loss was £951,846 (2006 - £4,040,257). The effect ofall potential ordinary shares is antidilutive. 2007 2006Basic and diluted loss per share:Continuing activities (3.4)p (4.4)pDiscontinued activities - (10.3)p 12 * Intangible assets * Group Goodwill on Consolidation £CostAt 1 October 2006 and 30 September 2007 14,347,031 _________Amortisation and impairmentAt 1 October 2006 and 30 September 2007 14,347,031 _________Net book valueAt 30 September 2007 and 30 September 2006 - _________ In the course of the year ended 30 September 2006, the Directors considered thecarrying value of goodwill in accordance with FRS 11 "Impairment of Fixed Assetsand Goodwill". Based on their review they concluded that the goodwill wasimpaired and therefore wrote it down to the recoverable amount based on netrealisable value. 13 * Tangible assets * Fixtures Fittings, Production Leasehold Equipment and studioGroup Improvements & machinery equipment Total £ £ £ £CostAt 1 October 2006 65,197 183,341 568,395 816,933 Additions - 7,882 - 7,882Disposals - (857) (275,000) (275,857) _______ _______ ________ ________ At 30 September 2007 65,197 190,366 293,395 548,958 _______ _______ ________ ________ DepreciationAt 1 October 2006 65,197 177,621 566,580 809,398 Provided for the year - 5,248 1,755 7,003 Disposals - (107) (275,000) (275,107) _______ _______ ________ ________ At 30 September 2007 65,197 182,762 293,335 541,294 _______ _______ ________ ________Net book valueAt 30 September 2007 - 7,604 60 7,664 _______ _______ ________ ________ At 30 September 2006 - 5,720 1,815 7,535 _______ _______ ________ ________ The net book value of tangible fixed assets for the group includes an amount of£Nil (2006 - £854) in respect of assets held under finance leases or hirepurchase contracts, all of which related to fixtures and fittings held. Thedepreciation charge for 2007 in respect of such assets amounted to £Nil (2006 -£466). Production Computer and studio Fixtures and officeCompany Equipment and fittings equipment Total £ £ £ £CostAt 1 October 2006 275,000 12,759 132,415 420,174Additions - - 7,882 7,882Disposals (275,000) - (857) (275,857) ________ _______ _______ _______ At 30 September 2007 - 12,759 139,440 152,199 ________ _______ _______ _______DepreciationAt 1 October 2006 275,000 12,725 128,291 416,016Charge for the year - 34 4,105 4,139Disposals (275,000) - (107) (275,107) ________ _______ _______ _______ At 30 September 2007 - 12,759 132,289 145,048 ________ _______ _______ _______Net book valueAt 30 September 2007 - - 7,151 7,151 ________ _______ _______ ________ At 30 September 2006 - 34 4,124 4,158 ________ _______ _______ ________ 14 * Fixed assets Investments * Shares in subsidiary undertakingsCompany £CostAt 1 October 2006 and 30 September 2007 2,645,384 _________Provision for diminution in valueAt 1 October 2006 and 30 September 2007 2,645,384 _________Net book valueAt 30 September 2007 and at 30 September 2006 - ________ During the year, the principal investments of the Group, all of which have beenincluded in the consolidated financial statements, were as stated below: Proportion of voting rights and ordinaryName Nature of business share capital held Milestone Television Company Limited Holding Company 100Oxford Broadcasting Limited Television Broadcasting 100Milestone Radio Holdings Limited (1) Holding Company 100 (1) Struck off on 23 October 2007. 15 * Debtors * Group Company Group Company 2007 2007 2006 2006 £ £ £ £ Trade debtors 28,268 4,140 55,940 17,683Other debtors 25,761 25,761 76,903 76,303Prepayments and accrued income 27,913 9,317 30,900 17,473 ________ ________ ________ ________ 81,942 39,218 163,743 111,459 ________ ________ ________ ________ All amounts fall due for payment within one year. 16 * Creditors: amounts falling due within one year * Group Company Group Company 2007 2007 2006 2006 £ £ £ £ Bank loans and overdrafts (secured) - - 134,101 125,545Trade creditors 122,328 104,493 89,039 59,811Other creditors - - 13,626 3,750Taxation and social security 2,404 - 17,852 16,694Accruals and deferred income 140,812 108,268 256,427 198,006 ________ ________ ________ _______ 265,544 212,761 511,045 403,806 ________ ________ ________ _______ The bank loans and overdrafts at 30 September 2006 were secured by a fixed andfloating charge over all the current and future assets of the group and thecompany. 17 * Creditors: amounts falling due after more than one year * Group Group 2007 2006 £ £ Bank loan - 3,063 ________ ________ The bank loan commenced in 1999 and was repayable in monthly instalments over a10 year term. Interest was payable at 3.35 per cent per annum above BarclaysBank base rate. The remaining balance of the loan was settled in full during theyear. . Group Bank Bank loans and loans and overdrafts Overdrafts 2007 2006 £ £Maturity of debt: In one year or less, or on demand - 134,101 _______ _______ In more than one year but not more than two years - 3,063 _______ _______ 18 * Financial instruments * The Group may hold or issue financial instruments to finance its operations andto manage the interest rate risks arising from its operations and from itssources of finance. In addition various financial instruments such as tradedebtors and trade creditors, arise directly from the Group's operations. The Board have not treated short term debtors and creditors as financial assetsand financial liabilities respectively for the purposes of the disclosuresrequired by FRS 25 "Derivatives and other Financial Instruments: Disclosures". The Group's financial instruments, all of which are denominated in sterling,comprised financial assets and financial liabilities, details of which are asfollows: Financial assets The group's financial assets were: Floating rate financial assets 2007 2006 £ £ Cash at bank and in hand 102,443 1,221,181 _________ _________ As at 30 September 2007, £102,443 (2006 - £1,221,181) of the Group's financialassets was money held in bank current and reserve accounts, which were instantaccess. This money is used to provide the necessary finance for the group'soperations. The Group does not undertake any foreign currency transactions and therefore isnot susceptible to exchange rate fluctuations. The Group does not hold or issuederivative financial instruments. Financial liabilities The group's financial liabilities were: Floating rate financial liabilities 2007 2006 £ £ Bank loans and overdrafts - due in less than 1 year - 134,101Bank loans - due in more than 1 year - 3,063 _______ _______ Financial liabilities The Group had no bank loans or overdrafts as at 30 September 2007 (2006 -£134,101). The Group's had financial liabilities falling due after more than one year at 30September 2007 of £Nil (2006 - £3,063). The 2006 balance comprised a flexiblebusiness bank loan, from Barclays Bank Plc. This loan carried interest at 3.5per cent over Barclays Bank's base rate and was due for repayment by 2009. Thebank loan was secured by a floating charge over all the current and futureassets of Oxford Broadcasting Limited. The loan was repaid in January 2007. During the year to 30 September 2006, the group's operations were funded largelyby the provision of bank overdraft facilities and invoice discountingarrangements. The group was subject to interest rate risk to the extent that theoverdraft facilities provided bore interest at approximately 3 per cent abovethe bank base rate. This interest rate was subject to change. The Directorsconsidered the fair value of the Group's financial assets and liabilities to bethe same as their book values. 19 * Share capital * Group and company Group and company 2007 2007 2006 2006 £ Number £ NumberAuthorised Ordinary shares of 10p each 5,000,000 50,000,000 5,000,000 50,000,000 _________ _________ _________ _________ Group and company Group and company 2007 2007 2006 2006 £ Number £ NumberAllotted, called up and fully paid Ordinary shares of 10p each 2,760,510 27,605,095 2,760,510 27,605,095 _________ _________ _________ _________ Share options At 30 September 2007 there were two share option schemes in place - the "Milestone Group PLC 2003 Unapproved Share Option Scheme" and the "MilestoneGroup PLC 2003 Approved Share Option Scheme". On 18 May 2007 all option holders waived their rights to participate in theMilestone Group PLC 2003 Unapproved Share Option Scheme as part of theiremployment termination agreements with the company. At 30 September 2007, no share options had been issued under the Milestone GroupPLC 2003 Approved Share Option Scheme. 20 * Reserves * Share Profit Premium Merger and loss account reserve accountGroup £ £ £ At 1 October 2006 7,692,985 11,119,585 (20,694,729)Loss for the year - - (951,846) _________ _________ _________ At 30 September 2007 7,692,985 11,119,585 (21,646,575) _________ _________ _________ Share Profit premium and loss account accountCompany £ £At 1 October 2006 7,692,985 (9,520,723) Loss for the year - (996,721) ________ ________ At 30 September 2007 7,692,985 (10,517,444) _________ _________ 21 * Reconciliation of movements in shareholders' funds * Group Company Group Company 2007 2007 2006 2006 £ £ £ £ (Loss)/profit for the year (951,846) (996,721) (4,040,257) 2,955,186Opening shareholders' funds 878,351 932,772 4,918,608 (2,022,414) _________ _________ _________ _________ Closing shareholders' funds (73,495) (63,949) 878,351 932,772 _________ _________ _________ _________ 22 * Pensions * The Group companies operate defined contribution pension schemes. The assets areheld separately from those of the companies in independently administered funds.Pension contributions are also paid into Directors' personal pension schemes. 23 * Commitments under operating leases * As at 30 September 2007, the Group had annual commitments under non-cancellableoperating leases as set out below: Land and Land and buildings Other buildings Other 2007 2007 2006 2006 £ £ £ £ Operating leases which expire: In one to two years 29,750 - - - In two to five years - 50,352 28,750 52,212 ________ ________ _______ _______ 29,750 50,352 28,750 52,212 ________ ________ _______ _______ 24 * Related party transactions * During the year, Milestone Group PLC made purchases amounting to £87,000 (2006 -£6,000) from MGH Investments Limited. £17,500 was owed to MGH InvestmentsLimited at 30 September 2007 (2006 - £Nil). Mr A T Craig was a director of thecompany during the year and MGH Investments Limited is a company in which he hasa beneficial controlling interest. During the year, Milestone Group PLC made purchases amounting to £20,000 (2006 -£Nil) from Chesterbrown Consultants Limited. £12,230 was owed to ChesterbrownConsultants Limited at 30 September 2007 (2006 - £Nil). Mr B R Chester was adirector of the company during the year and Chesterbrown Consultants Limited isa company in which he has a controlling interest. Mark Levine, a director of the company during the year, is an employee ofElliott Advisors (UK) Limited. Elliott Advisors (UK) Limited are connected toElliott International L.P. and Elliott Associates L.P. As at 30 September 2007,6,280,413 and 1,466,285 ordinary shares of 10p each in the company were held byElliott International L.P. and Elliott Associates L.P., respectively. Furtherdetails are provided in the Report of the Directors. 25 * Reconciliation of operating loss to net cash outflow from operatingactivities * 2007 2006 £ £ Operating loss (976,906) (2,808,569) Amortisation and impairment of intangible fixed assets - 703,283 Profit on disposal of fixed assets (11,442) (500) Depreciation of tangible fixed assets 7,003 368,430 Decrease in debtors 92,800 111,910 (Decrease)/increase in creditors (111,400) 287,128 _________ ________ Net cash outflow from operating activities (999,944) (1,338,318) ________ _________ 26 * Reconciliation of net cash outflow to movement in net funds * 2007 2006 £ £ (Decrease/)increase in cash (984,637) 1,160,662Cashflows from changes in debt financing 3,063 297,540 ________ ________ Movement in net debt resulting from cashflows (981,574) 1,458,202Opening net funds/(debt) 1,084,017 (374,185) ________ ________ Closing net funds 102,443 1,084,017 ________ ________ 27 * Analysis of net funds * At 30 At 30 September Cash September 2006 flow 2007 £ £ £ Cash at bank and in hand 1,221,181 (1,118,738) 102,443Bank overdrafts (134,101) 134,101 - ________ ________ ________ 1,087,080 (984,637) 102,443 Bank loan due after one year (3,063) 3,063 - ________ ________ ________ Total 1,084,017 (981,574) 102,433 ________ ________ ________ 28 * Post balance sheet events * On 15 January 2008, Milestone acquired 6,400,000 A ordinary shares of £0.01 eachin The Flex (International) Limited ("The Flex"), representing 80 per cent ofthe issued share capital of The Flex, for a nominal consideration of £100. TheFlex is a new social networking website business due to launch beta trials in2008. Two of the directors of The Flex, Jamie Bloom and Deborah White, wereappointed to the Board of Milestone simultaneous with this transaction. On 31March 2008 Deborah White was promoted to the role of Chief Executive and JamieBloom resigned from the Board for personal health reasons. Also, on 15 January 2008, the Company entered into an 'arms length' loanarrangement with Jamie Bloom in order to fund the general working capitalrequirements of the Group. The facility of £500,000 is unsecured and can bedrawn down by request of the Company over a period of 18 months. Any use of thefacility will bear interest at a rate of 3 per cent per annum above the Bank ofEngland base rate. No other charges are payable in connection with the facilityincluding no penalties for early repayment. All loans and interest accrued underthe facility become repayable in full in December 2010. The Group is reliant on the loan facility with Jamie Bloom in order to continueto trade as a going concern. Whilst this facility is regarded as legallybinding, the Board is sympathetic to Jamie Bloom's current personal healthproblems and have not been able to draw down on this facility. The Board intendsto use all reasonable endeavours to resolve this issue amicably but, ifnecessary, intends to take to take appropriate action to ensure the facility ishonoured. Laurence Bloom, the brother of Jamie Bloom, was, at the time of the transactionon 15 January 2008, the largest single shareholder in Milestone with abeneficial interest in 28.06 per cent of the Company's total issued sharecapital. Laurence Bloom and Jamie Bloom, their family and associates areminority shareholders in The Flex. The Flex employs Ryan Bloom, the son ofLaurence Bloom, and also rents office space in London's Victoria ultimatelyowned by Laurence Bloom. After consulting with the Company's Nominated Advisers, Arden Partners plc, theBoard agreed that the acquisition of the majority shareholding in The Flex andthe terms of the loan facility to the Company from Jamie Bloom were made atarms' length and on normal commercial terms. Following the acquisition of The Flex it was agreed to continue to operate thebusiness on a skeleton staffing whilst undertaking a full review of its launchbusiness plan. The Board is in the process of considering further potential funding options toenable a more aggressive expansion of the Group and its businesses. As part ofthis process, a resolution is being tabled at the Annual General Meeting, to beheld on 30 April 2008, giving the Board the authority to allot new shares to avalue representing approximately 20 per cent of the issued share capital of theCompany. * NOTICE OF ANNUAL GENERAL MEETING * NOTICE IS HEREBY GIVEN that the fifth Annual General Meeting of the Company willbe held at 12noon on Wednesday 30 April 2008 at the offices of Silver Planet, 2Royal Exchange Steps, The Royal Exchange, London EC3V 3DG. Full details arebeing posted to shareholders. This information is provided by RNS The company news service from the London Stock Exchange