30 Jun 2008 07:28
MILESTONE GROUP PLC
RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2008
AIM listed Milestone Group PLC ("Milestone" or the "Group") announces its results for the six months ended 31 March 2008.
Highlights
Group operating loss of £0.3 million (six months ended 31 March 2007 operating loss: £0.7 million)
Appointment of new Chief Executive and Finance Director
Board exploring new fundraising and business opportunities
Milestone Chairman, John Sanderson, said:
"The Board is exploring a number of potential opportunities to develop the Group including a possible new venture in digital media."
* For further information *
| Milestone |
|
| John Sanderson, Chairman | Tel: 020 7580 244 |
| Deborah White, Chief Executive | Tel: 020 7648 1043 |
| Ian Lodwick, Finance Director | Tel: 07850 190 958 |
| Arden Partners plc | Tel: 020 7398 1632 |
| Richard Day / Adrian Trimmings |
* Below *
Chairman's statement
Unaudited Consolidated Income Statement
Unaudited Consolidated Balance Sheet
Unaudited Consolidated Cashflow statement
Notes to the interim financial information
CHAIRMAN'S STATEMENT
Strategic review and acquisition of The Flex
Milestone floated in 2003 as a provider of media services with the intention that it would explore the opportunity to exploit new media platforms as they emerged over time.
On 31 March 2008 the Company announced its final results for the year ended 30 September 2007. Having completed the disposal of its interests in traditional publishing and radio, the Company had retained its local television operation and assessed new opportunities presented by the convergence of broadcasting and communications technologies. The strategic review process took longer than originally anticipated, culminating on 15 January 2008 with the acquisition of an 80 per cent interest in The Flex for the nominal consideration of £100. As part of this transaction Jamie Bloom, the former major shareholder in The Flex, entered into a £500,000 loan facility agreeing to provide funds to meet the Group's working capital requirements.
On 31 March 2008, the Board accepted Mr Bloom's resignation as a director of the Company on health grounds. Also on that date, a new executive management team was appointed with Deborah White and Ian Lodwick becoming Chief Executive and Finance Director respectively (both initially working on a part time basis). The Company placed further development of The Flex on hold in order to reassess its business plan and review the ongoing strategy for the Group.
Finance
The Company stated in its final results that it was dependent upon the loan facility with Jamie Bloom in order to continue to trade on a going concern basis. To date the Board has not been successful in drawing down funds under the terms of this loan facility. Whilst sympathetic to the personal health issues raised by Mr Bloom, the next step for the Company is to take advice on the most appropriate action with a view to ensuring that the loan facility is honoured.
The Board consider the current funding uncertainty is having an adverse impact on the Company's business, making it impossible to properly plan expenditure. Having reviewed the options available, the Board has concluded that the Company has an urgent requirement to put in place new funding arrangements if it is to be able to continue to trade and meet its working capital requirements in the short-term. To this end, the Company is in the advanced stages of seeking to raise additional funds from third parties through a combination of a limited subscription in new shares of the Company and a convertible loan instrument. The Board is confident this limited fundraising will be successful and intends to call a general meeting of the Company to approve the proposed arrangements once they are finalised.
Strategy
The new management team are exploring opportunities to seek to build value for Shareholders. In particular, the Board are exploring the opportunity to launch a new digital media platform promoting leisure activities to young people. The potential exposure for Milestone is therefore twofold - the economics of the internet itself and the economics of promoting opportunities for participants to take part in new activities.
The Company's task is to populate any new internet business in which it invests with engaging material. To this end, the Company is exploring a potential joint venture with a third party based around encouraging young people to be active and participate in sporting activities.
Existing operations
The Company's purpose in acquiring The Flex was to develop an internet platform to showcase new talent, primarily in the field of new music. Since the £500,000 loan facility has not been honoured, it is has not been possible for trading to progress. The Board perceives that the main value in The Flex lies in the software code it has developed, but it is not yet evident whether and how this can be rapidly monetised. The Board is undertaking an ongoing review of The Flex and aims to reach a conclusion as soon as possible.
As set out in the final results, the Group has the opportunity to be one of the first in the UK to launch local TV channels on the digital terrestrial television (Freeview) platform. Ofcom has agreed in principle to offer the opportunity to existing holders of Local TV Licences to convert their services from analogue to digital transmissions in the areas in which their licences operate. The Board intends to assess this opportunity during the final months of this financial year.
The Group currently holds more terrestrial Local TV Licences than any other group in the UK (with the restricted service licences to broadcast to Oxford, Reading, Southampton and Portsmouth although only Oxford is currently on-air). Revenue associated with the television division is expected to remain nominal until such time as any new business plan is finalised.
Milestone is active in campaigning against Ofcom's plans to withdraw the existing Local TV Licensing regime between now and 2012, which would force Milestone to surrender its existing Local TV Licences. Milestone is playing an active role in "United for Local Television", an umbrella group lobbying the Government and Ofcom to make provision to secure long-term access to Freeview for local TV services throughout the UK.
Board changes
"It is with great pleasure that I welcome my new Board colleagues, Deborah White and Ian Lodwick. In the three months since Deborah and Ian have been in place in their executive positions they have injected tremendous energy and dedication into putting in place a new strategy for the Group. I am very much looking forward to working with Deborah and Ian during the final quarter of the year as we seek to seek to finalise this strategy.
I would again like to place on record my gratitude to my former Board colleagues, Mark Levine, Andy Craig and Brian Chester all of whom resigned during the course of the period."
Outlook
The Board is in the advanced stages of putting in place new funding arrangements. The Board is currently exploring a number of potential opportunities with a particular focus on the opportunities presented by digital media. The Company is in discussions with a third party to form a joint venture into which Milestone could inject its management expertise. The development of the Company is likely to be subject to shareholder approval of new funding arrangements and the Board intends to call a general meeting of the Company once its proposals are finalised.
John Sanderson
Non-Executive Chairman
30 June 2008
| Milestone Group PLC | ||||||||
| CONSOLIDATED INCOME STATEMENT | ||||||||
| Unaudited | Unaudited | Audited | ||||||
| Six months | Six months | Year | ||||||
| ended | ended | ended | ||||||
| Note | 31 March 2008 | 31 March 2007 | 30 September 2007 | |||||
| As restated | As restated | |||||||
| £ | £ | £ | ||||||
| Turnover | 6,784 | 50,918 | 51,328 | |||||
| Cost of sales | (25,402) | (7,097) | (50,059) | |||||
| Gross Profit / (Loss) | (18,618) | 43,821 | 1,269 | |||||
| Administrative costs | (328,538) | (770,056) | (1,065,705) | |||||
| Other operating income | 21,861 | 54,381 | 87,530 | |||||
| Operating loss | (325,294) | (671,854) | (976,906) | |||||
| Finance income | 2,595 | 20,893 | 27,421 | |||||
| Finance expense | (12) | (2,936) | (2,361) | |||||
| Loss before tax | (322,711) | (653,897) | (951,846) | |||||
| Tax expense | 0 | 0 | 0 | |||||
| Loss after tax | (322,711) | (653,897) | (951,846) | |||||
| Minority interest | 4, 7 | 1,717 | 0 | 0 | ||||
| Loss for the period | (320,994) | (653,897) | (951,846) | |||||
| Basic and diluted loss per share | 5 | (1.2) | (2.4) | (3.4) | ||||
| Milestone Group PLC | ||||||||
| CONSOLIDATED BALANCE SHEET | ||||||||
| Unaudited | Unaudited | Audited | ||||||
| Note | 31 March 2008 | 31 March 2007 | 30 September 2007 | |||||
| As restated | As restated | |||||||
| £ | £ | £ | ||||||
| Assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 32,352 | 11,313 | 7,664 | |||||
| Total non-current assets | 32,352 | 11,313 | 7,664 | |||||
| Current Assets | ||||||||
| Trade and other receivables | 101,191 | 136,400 | 81,942 | |||||
| Cash and cash equivalents | 21,644 | 593,735 | 102,443 | |||||
| Total current assets | 122,835 | 730,135 | 184,385 | |||||
| Total Assets | 155,187 | 741,448 | 192,049 | |||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | (432,397) | (516,995) | (265,544) | |||||
| Total liabilities | (432,397) | (516,995) | (265,544) | |||||
| Net assets | (277,210) | 224,453 | (73,495) | |||||
| Shareholders' equity | ||||||||
| Share capital | 6 | 2,760,510 | 2,760,510 | 2,760,510 | ||||
| Share premium | 7,692,985 | 7,692,985 | 7,692,985 | |||||
| Merger reserve | 11,432,467 | 11,119,585 | 11,119,585 | |||||
| Retained earnings | (22,163,173) | (21,348,626) | (21,646,575) | |||||
| Shareholders' Equity | (277,211) | 224,454 | (73,495) | |||||
| Milestone Group PLC | ||||||||
| CONSOLIDATED CASH FLOW STATEMENT | ||||||||
| Unaudited | Unaudited | Audited | ||||||
| Six months | Six months | Year | ||||||
| ended | ended | ended | ||||||
| 31 March 2008 | 31 March 2007 | 30 September 2007 | ||||||
| As restated | As restated | |||||||
| £ | £ | £ | ||||||
| Cash flows from operating activities | ||||||||
| Loss before tax | (325,294) | (671,854) | (976,906) | |||||
| Adjustments for: | ||||||||
| Depreciation | 2,287 | 4,104 | 7,003 | |||||
| Finance Income | ||||||||
| (Gain)/loss on sale of plant and equipment | (11,442) | |||||||
| Operating loss before changes in working capital | (323,007) | (667,750) | (981,345) | |||||
| (Increase)/decrease in trade and other receivables | (19,249) | 27,341 | 92,800 | |||||
| Increase/(decrease) in trade and other payables | 166,853 | 140,052 | (111,400) | |||||
| Cash used in operations | (175,403) | (500,357) | (999,945) | |||||
| Net cash used in operating activities | (175,403) | (500,357) | (999,945) | |||||
| Cash flows from investing activities | ||||||||
| Acquisition of subsidiaries, net of cash acquired | 93,191 | 0 | 0 | |||||
| Purchase of plant and equipment | (1,170) | (7,882) | (7,882) | |||||
| Sale of plant and equipment | 0 | 0 | 1,193 | |||||
| Interest received | 2,595 | 20,893 | 27,421 | |||||
| Interest paid | (12) | (2,936) | (2,361) | |||||
| Cash generated by / (used in) investing activities | 94,604 | 10,075 | 18,371 | |||||
| Cash outflow from financing activities | ||||||||
| Loan repayments | 0 | (3,063) | (3,063) | |||||
| Net cash outflow from financing activities | 0 | (3,063) | (3,063) | |||||
| (Decrease)/Increase in cash and cash equivalents | (80,799) | (493,345) | (984,637) | |||||
| Cash and cash equivalents at beginning of period | 102,443 | 1,087,080 | 1,087,080 | |||||
| Cash and cash equivalents at end of period | 21,644 | 593,735 | 102,443 | |||||
Milestone Group PLC
NOTES TO THE INTERIM FINANCIAL INFORMATION
for the six month period ended 31 March 2008
1. * General information *
Milestone Group PLC is a company incorporated in the United Kingdom under the Companies Act 1985 with registration number 4689130. In these notes, references to the Company refer solely to Milestone Group PLC and exclude consolidation with the results of its associated companies. References to the "Group" include and consolidate associated companies of Milestone Group PLC. The Company is domiciled in the United Kingdom and has its registered office at Alexandra Court, 270 Woodstock Road, Oxford OX2 7NW. The Company's shares are listed on the AIM of the London Stock Exchange. A copy of the interim report is posted to Shareholders and can also be obtained from the Company's website at www.milestonegroup.co.uk
2. * Basis of preparation *
The unaudited interim report was approved by the Board of Directors on 27 June 2008.
Milestone Group PLC has adopted International Financial Reporting Standards (IFRS).
The Company will apply IFRS in its financial statements for the period ending 30 September 2008. These interim statements are therefore produced in accordance with IFRS and International Financial Reporting interpretations (IFRIC) that are expected to be applicable at 30 September 2008. These standards remain subject to ongoing amendment and/or interpretation and are therefore still subject to change. Therefore the amounts included in these statements may change as a result of subsequent amendments to IFRS required for first time adoption or for new standards issued after the balance sheet date.
The basis of preparation and accounting policies followed in this interim statement are not the same as those used to prepare the Annual Report and Accounts for the year ended 30 September 2007 which were prepared in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP).
The interim financial information contained in this report covers the half year from 1 October 2007 to 31 March 2008, is unaudited and does not constitute statutory financial statements as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 30 September 2007 has been extracted from the statutory accounts for that period as restated to reflect the principles and terminology of IFRS. These financial statements were prepared under UK GAAP. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts had reference to a fundamental uncertainty in respect of going concern but was unqualified and did not contain a statement under section 237(2)-(3) of the Companies Act 1985.
The Group is reliant on the loan facility with Jamie Bloom, which the Group regards as legally binding, in order to continue to trade as a going concern. At the time of approving these interim statements, Jamie Bloom has been unable to provide liquid funds in order for the Group to draw down on this facility. Whilst the Board is sympathetic to Jamie Bloom's current personal health problems, it intends to use all reasonable endeavours to resolve this issue amicably but, if necessary, intends to take to take appropriate action to ensure the facility is honoured.
The material uncertainty in respect to the Directors ability to draw down on the loan facility may cast significant doubt over the Group's ability to continue as a going concern and therefore it may be unable to
realise its assets and discharge its liabilities in the normal course of business. The financial statements do
not include the adjustments that would result if the Group was unable to continue as a going concern.
The financial statements are presented in UK sterling and all values are rounded to the nearest pound.
| 3. * Segmental reporting * | |||||||||||||
| The Group's primary reporting segments are the following business segments: | |||||||||||||
| Continuing operations Six months ended 31 March 2008 | |||||||||||||
| Oxford | The Flex | Company | Group | ||||||||||
| Broadcasting | Total | ||||||||||||
| £ | £ | £ | £ | ||||||||||
| Turnover | 5,584 | 0 | 1,200 | 6,784 | |||||||||
| Cost of sales | (25,402) | (25,402) | |||||||||||
| Gross Profit / (Loss) | (19,818) | 0 | 1,200 | (18,618) | |||||||||
| Administrative costs | (42,376) | (86,113) | (200,048) | (328,538) | |||||||||
| Other operating income | 14,861 | 7,000 | 21,861 | ||||||||||
| Operating loss | (47,333) | (86,113) | (191,848) | (325,294) | |||||||||
| Finance income | 0 | 266 | 2,329 | 2,595 | |||||||||
| Finance expense | (12) | (12) | |||||||||||
| Loss before tax | (47,345) | (85,847) | (189,519) | (322,711) | |||||||||
| Tax expense | 0 | 0 | 0 | 0 | |||||||||
| Loss after tax | (47,345) | (85,847) | (189,519) | (322,711) | |||||||||
| Minority interest | 1,717 | 1,717 | |||||||||||
| Loss for the period | (47,345) | (84,130) | (189,519) | (320,994) | |||||||||
4. * Minority interest *
Represents the loss attributable to the minority shareholders in The Flex (International) Limited ("The Flex"), of which the Company acquired an 80 per cent interest on 15 January 2008. The results of The Flex are stated and consolidated with the Group's results as from this date.
5. * Loss per share *
Basic loss per share has been calculated in accordance with FRS 22. Basic loss per share has been calculated by dividing the loss on ordinary activities after taxation by the weighted average number of ordinary shares in issue during the year. The weighted average number of equity shares in issue was 27,605,095 and the loss was £320,994. The effect of all potential ordinary shares is antidilutive
6. Share capital
| 2008 | 2008 | 2007 | 2007 | ||
| £ | Number | £ | Number | ||
| Authorised | |||||
| Ordinary shares of 10p each | 5,000,000 | 50,000,000 | 5,000,000 | 50,000,000 | |
| 2008 | 2008 | 2007 | 2007 | ||
| £ | Number | £ | Number | ||
| Allotted, called up and fully paid | |||||
| Ordinary shares of 10p each | 2,760,510 | 27,605,095 | 2,760,510 | 27,605,095 | |
7. * Acquisition of The Flex from Jamie Bloom and loan arrangements *
On 15 January 2008, Milestone acquired 6,400,000 A ordinary shares of £0.01 each in The Flex (International) Limited ("The Flex"), representing 80 per cent of the issued share capital of The Flex, for a nominal consideration of £100.
Also, on 15 January 2008, the Company entered into an 'arms length' loan arrangement with Jamie Bloom in order to fund the general working capital requirements of the Group. The facility of £500,000 is unsecured and can be drawn down by request of the Company over a period of 18 months. Any use of the facility will bear interest at a rate of 3 per cent per annum above the Bank of England base rate. No other charges are payable in connection with the facility including no penalties for early repayment. All loans and interest accrued under the facility become repayable in full in December 2010.The Group is reliant on the loan facility with Jamie Bloom in order to continue to trade as a going concern. Whilst
this facility is regarded as legally binding, the Board is sympathetic to Jamie Bloom's current personal health problems and have not been able to draw down on this facility. The Board intends to use all reasonable endeavours to resolve this issue amicably but, if necessary, intends to take to take appropriate action to ensure the facility is honoured.
Laurence Bloom, the brother of Jamie Bloom, was, at the time of the transaction on 15 January 2008, 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. After consulting with the Company's Nominated Advisers, Arden Partners plc, the Board agreed that the acquisition of the majority shareholding in The Flex and the terms of the loan facility to the Company from Jamie Bloom were made at arms' length and on normal commercial terms.
Following the acquisition of The Flex it was agreed to scale back whilst undertaking a full review of its launch business plan.
COMPANY INFORMATION
Directors: John Sanderson
Non Executive Chairman (appointed 1 February 2006,
Acting Finance Director, 7 March to 31 March 2008)
Deborah White
Non-Executive Director (appointed 15 January 2008)
Appointed as Chief Executive 31 March 2008
Ian Lodwick
Finance Director (appointed 31 March 2008)
Other Directors during the period: Jamie Bloom
Non-Executive Director (appointed 15 January 2008,
resigned 31 March 2008)
Andy Craig
Non-Executive Director (resigned 7 March 2008)
Brian Chester
Finance Director (resigned 7 March 2008)
Mark Levine
Non-Executive Director (resigned 22 November 2007)
Secretary: Tim Eustace
Address and registered office: Alexandra Court, 270 Woodstock Road, Oxford OX2 7NW
Telephone: 01865 314 700
Fax: 01865 55 33 55
Website www.milestonegroup.co.uk
Registered in England company no: 4689130
Auditors: BDO Stoy Hayward LLP, Kings Wharf, 20-30 Kings Road,
Reading, Berkshire RG1 3EX
Nominated Adviser and Broker: Arden Partners plc, Nicholas House, 3 Laurence Pountney Hill,
London EC4R 0EU
Registrars: Capita IRG plc, Northern House, Woodsome Park, Fenay Bridge, Huddersfield,
West Yorkshire HD8 OLA
Solicitors: Lawrence Graham LLP, 4 More London Riverside, London
SE1 2AU