CTEA.L Regulatory News (CTEA)

27 Jun 2005 07:00

Milestone Group PLC27 June 2005 For Immediate Release 27 June 2005 MILESTONE GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31st MARCH 2005 Milestone Group PLC ("Milestone" or "the Group"), the AIM-listed media group,today announces Interim results for the six months ended 31st March 2005. Overview: • Group turnover on operating activities: £2.4m (2004: £3.1m) • Gross profit: £0.9m (2004: £1.5m) • Operating loss: £1.3m (2004: £1.8m) • Basic and diluted loss: 5p (2004: 10p) • goetzpartners corporate advisers instructed to undertake comprehensive review of strategy with Arden Partners Highlights: Publishing: • Management streamlined under new Group Publishing Manager, Howard Taylor • Sales yields improved at core newspaper titles over period, reflecting investment • Division well positioned to grow revenue from core titles Radio: • Significant progress achieved in development of Milestone's radio brands and audiences. • Operating model refined at all four Milestone-controlled stations • Increase in total hours listened to the four stations goes against national trend for local commercial radio and reflects strong programming and marketplace perception of Milestone's brands Television: • Losses falling as cost reductions impact • Ofcom exploring opportunities for digital local television Commenting on the results, Andy Craig, Chief Executive, said: "Management is focused on growing revenues whilst controlling costs to targetoverall profitability in what is widely acknowledged to be a challengingadvertising marketplace. In addition, strategically, the Board are appraisingoptions to maximise value for shareholders. "Management has confidence in the quality of its businesses, the assets in theGroup, its workforce and the longer term prospects for the markets in which itoperates." For further information:Milestone Group Tel: 01235 547 800Andy Craig, Chief Executive Arden Partners Limited Tel: 020 7398 1632Richard Day Buchanan Communications Tel: 0207 466 5000Bobby Morse / Suzanne Brocks/ Eleanor Williamson Milestone Group PLC Interim Report Chief Executive's Review for the six month period ended 31 March 2005 Overview: • Group turnover on operating activities: £2.4m (2004: £3.1m) • Gross profit: £0.9m (2004: £1.5m) • Operating loss: £1.3m (2004: £1.8m) • Basic and diluted loss: 5p (2004: 10p) • goetzpartners corporate advisers instructed to undertake comprehensive review of strategy with Arden Partners In the first quarter of the current year, losses from trading were broadly inline with management expectations. However, the second quarter's results havebeen impacted significantly as a result of subdued advertising spend from theretail sector. Overall trading has been affected by a combination of staffchanges and associated increased costs, volatility in non-traditional revenuesand a toughening of market conditions. Publishing • Division sales: £1,530,000 (2004: £1,874,000) • Division loss: £264,000 (2004: £115,000) The division continues to publish a range of advertising-based titles; a numberof the most successful being enhanced and expanded during the period. Revenueshave broadly held up despite the decision last year to rationalise some non-coretitles. At the same time, the division has witnessed a marked reduction indebtor days, bad debts and credits, in comparison with the last financial year,as a result of new procedures implemented. The 'Courier Journal' free newspaper title for Oxfordshire has been redesignedand is being distributed in new areas of the county for the first time.Management is pleased with the high rates of newspapers being picked up in theseand other selected areas where the Courier Journal has introduced a 'dispenser'distribution. The new in-house advertisement production department is now fullyoperational. As announced on 23 June 2005, Publishing Director Tom McGowran resigned withimmediate effect from both the Group's Board and the publishing division. Inthese challenging times, Mr McGowran decided to look at other opportunities andthe Board thanks him for his efforts and contributions. A major restructuring ofthe division is underway with immediate action being taken to rationalisemanagement, simplify reporting lines and incentivise staff so as to targetprofitability. The Board is pleased to announce that the division's Head of Production, HowardTaylor, has been promoted to the new position of Group Publishing Manager.Howard has over 30 years of experience in the publishing industry, includinglaunching and subsequently selling his own titles in the Thames Valley. TheBoard is in no doubt that Howard's entrepreneurial flair and local publishingexperience will be an asset to the division at this stage of its development. Sales yields have improved at the core newspaper titles over the period,reflecting investment already made in product, staff training and new clientmanagement systems. As a consequence, the division is well positioned to growits revenue from core titles. It is anticipated that this will provide a solidfoundation from which to build sustainable increased revenues as marketconditions improve. Radio Performance of four continuing radio stations controlled by the Group: • Rugby FM sales: £236,000 (2004: £217,000) • Rugby FM profit: £8,000 (2004: loss of £23,000) • Kestrel FM sales: £279,000 (2004: £276,000) • Kestrel FM loss: £383 (2004: profit of £18,000) • Kick FM sales: £194,000 (2004: £215,000) • Kick FM loss: £47,000 (2004:loss of £59,000) • Passion sales: £79,000 (2004: £182,000) • Passion loss: £123,000 (2004: loss of £54,000) Significant progress has been achieved in the development of Milestone's radiobrands and audiences. Rugby FM, the majority-owned Milestone station based inWarwickshire, has further consolidated its market-leading audience figures andposted a maiden profit for the period. This operating model is being refined atall four Milestone-controlled stations. It is anticipated that recent substantial improvements in audiences will furthersupport the development of long-term revenue bookings. The increase in totalhours listened to the four stations from 737,000 (RAJAR, Q1, 2004) to 894,000(RAJAR Q1, 2005) goes against the national trend for local commercial radio andreflects the strong programming and marketplace perception of Milestone'sbrands. The Group has been unsuccessful in the three new radio licence applications ithas supported this year in Blackburn, Cornwall and Banbury. The Board isreviewing its development strategy and will participate in forthcomingapplications where it believes it has the greatest chance of implementingcommercially-successful cross media operations. Two areas falling into thiscategory - southern Oxfordshire and Andover - are expected to be advertised in2006. Whilst it is realistic to expect licence applications to remaincompetitive, the Board will continue to follow a policy of submitting targeted,well-researched, applications with sensible prospects of success. Television • Division sales: £111,000 (2004: £237,000) • Division loss: £169,000 (2004: loss of £202,000) Losses from Milestone's existing television interests (Oxford & Southampton onair / Reading & Portsmouth launch date to be confirmed) are falling as costreductions impact. The Group's experiment in moving to a new commission onlysales model demonstrates how local television can generate revenue fromadvertiser-funded local programming whilst operating on a low fixed overhead. The Board continues to support the long term potential for local television in adigital environment and strongly welcomes Ofcom's most recent suggestion thatDCMS consider allocating funding for digital local TV trials. In the meantime,the Group's existing analogue local television ("RSL") licences have beenextended by Ofcom until June 2007. Financing On 17th February 2005, the Company placed 5,500,000 new ordinary shares withDirectors and institutional investors for a total of £1.1m. Outlook Management is focused on growing revenues whilst controlling costs to targetoverall profitability in what is widely acknowledged to be a challengingadvertising marketplace. The Group will continue a policy of pursuingappropriate opportunities to apply for targeted new radio licences. In addition,strategically, the Board are appraising a wide range of potential options'including realising the value of assets of the Group and providing the Groupwith greater scale to maximise value for shareholders. The Board have instructedthe media management and corporate consultancy, goetzpartners, to work alongsideits NOMAD and Broker, Arden Partners, to advise them in regard to this review.It is anticipated that this review of the current structure will lead to someexceptional costs being incurred in the current financial year. In light of thedeterioration in its markets, management no longer considers it likely toachieve its earlier stated intention that all three trading divisions will startmaking a positive cash contribution prior to the end of September 2005. Management has confidence in the quality of its businesses, the assets in theGroup, its workforce and the longer term prospects for the markets in which itoperates and continues to ensure the requisite finance is available to supportMilestone through this period. Andy Craig Chief Executive 27th June 2005 Consolidated profit and loss account for the six month period ended 31 March2005 Consolidated profit and loss account for the six month period ended 31 March2005 Unaudited Unaudited Audited six months six months Year ended ended ended 31 March 31 March 30 September Note 2005 2004 2004 £ £ £Turnover 2,358,732 3,083,549 5,852,803 Cost of sales (1,448,537) (1,606,397) (3,351,014) Gross Profit 910,195 1,477,152 2,501,789 Distribution costs (61,203) - (123,875)Administrative expenses:Impairment of goodwill - - (2,884,549)Other administrativeexpenses (2,167,010) (3,308,438) (5,891,833) (2,167,010) (3,308,438) (8,776,382) (1,318,018) (1,831,286) (6,398,468) Other operating income 10,340 - 68,806 Group operating loss (1,307,678) (1,831,286) (6,329,662) Share of operatingloss in associatedundertakings (98,239) (74,400) (229,750)Loss on disposal ofgroup operations 2 - (296,083) (305,927) Loss on ordinary activitiesbefore interest (1,405,917) (2,201,769) (6,865,339) Interest receivable -Group 15,097 15,020 36,766Interestreceivable-assoc undertakings 285 - 604Interest payable - Group (22,258) - (11,735)Interest payable -assoc undertakings (12,552) (3,044) (21,341) Loss on ordinary activitiesbefore taxation (1,425,345) (2,189,793) (6,861,045) Taxation on loss fromordinaryactivities 3 - - 29,211 Loss on ordinary activitiesafter taxation (1,425,345) (2,189,793) (6,831,834)Minority interest 17,489 49,747 25,671Loss for the financialperiod (1,407,856) (2,140,046) (6,806,163) Basic and diluted lossper share 4 (5.16) p (10.0) p (31.11)p All amounts relate to continuing activities All recognised gains and losses are included in the profit and loss account Consolidated balance sheet at 31 March 2005 Unaudited Unaudited Audited 31 March 2005 31 March 2004 30 September 2004 Note £ £ £ £ £ £ FixedassetsIntangible assets 5 8,390,484 12,483,432 8,686,209Tangible assets 912,302 862,465 1,011,068Fixed assetinvestments 962,306 1,163,387 1,074,075 10,265,092 14,509,284 10,771,352 CurrentassetsDebtors 1,313,096 1,692,431 1,392,062Cash at bank andin hand 1,499,257 675,317 299,786 2,812,353 2,367,748 1,691,848Creditors:amounts fallingdue within one year (2,932,706) (2,008,307) (1,909,633) Net current(liabilities)/assets (120,353) 359,441 (217,785) Total assets lesscurrent liabilities 10,144,739 14,868,725 10,553,567 Creditors:amounts fallingdue after more thanone year (137,862) (92,736) (142,095) Provisions forliabilities andcharges - (15,523) - 10,006,877 14,760,466 10,411,472 Capital andreservesCalled upsharecapital 6 2,760,510 2,185,510 2,210,510Share premiumaccount 7 7,692,985 6,997,235 7,222,235Merger reserve 7 11,119,585 11,119,585 11,119,585Profit andlossaccount 7 (11,642,713) (5,568,740) (10,234,857) Equity shareholders'funds 9,930,367 14,733,590 10,317,473 Minority 76,510 26,876 93,999interests 10,006,877 14,760,466 10,411,472 Consolidated cash flow statement for the six month period ended 31 March 2005 Unaudited Unaudited Audited 31 March 2005 31 March 2004 30 Sept 2004 Note £ £ £ £ £ £ Net cashoutflowfromoperating activities 8 (828,491) (1,103,550) (1,776,239) Returns oninvestmentsandservicing offinance Interest received 15,097 15,020 36,766 Interest paid (22,258) (3,044) (11,735) Net cash (outflow)/inflow from returnson investment andservicing of finance (7,161) 11,976 25,031 TaxationUK corporation - - -tax Capitalexpenditure Purchase of (10,796) (82,185) (86,170)tangible fixed assets Receipts fromsale oftangiblefixed assets - - 20,354 (10,796) (82,185) (65,816) Acquisitions anddisposals Proceeds fromdisposal of Groupoperations - 1,250,000 1,250,000 Overdraft fromdisposal of Groupoperations 12,027 12.027 Cost of disposal ofGroup operations - (141,636) (151,479) Investment inassociate undertakings - - (73,087) Net cash inflow fromacquisitions anddisposals - 1,120,391 1,037,461 Cash outflow beforefinancing (846,448) (53,368) (779,563) Financing Issue of share capital 1,100,000 - - Cost ofissuing share capital (79,250) - - Loan repayments (1,135) (31,186) (2,298) Capital element offinance leases repaid (5,629) - (44,039) Cash inflow/(outflow) from financing 1,013,986 (31,186) (46,337) Increase/(Decrease) incash inthe period 9,10 167,538 (84,554) (825,900) Notes to the Interim financial information for the six month period ended 31March 2005 1. Basis of preparation The Interim Report was approved by the Board of Directors on 27 June 2005. The financial information contained in this Interim Report has been prepared onthe basis of the accounting policies set out in the Group's audited accounts forthe year ended 30 September 2004. The financial information for the six months ended 31 March 2005 and 31 March2004 is unaudited. The financial information for the Group set out above does not constitute"statutory accounts" within the meaning of Section 240 of the Companies Act1985. The information for the year ended 30 September 2004 has been extractedfrom the statutory accounts of Milestone Group PLC for that year which receivedan unqualified audit report and have been delivered to the Registrar ofCompanies. 2. Loss on disposal of group operations There has been no disposal of Group operations during the period ended 31 March2005. On 15 January 2004 the Group completed the disposal of two subsidiaryundertakings, Time FM 106.8 Limited and Fusion 107.3 FM Limited. Theconsideration for the sale of Time FM 106.8 Limited was £625,000 and resulted ina loss of £106,007 to the Group. The consideration for the sale of Fusion 107.3FM Limited was £625,000 and resulted in a loss of £190,076 to the Group. The total loss on disposal of operations of £296,083 recognised in the periodended 31 March 2004 includes an amount of £1,222,847 in respect of a write downof unamortised goodwill. 3. Taxation Deferred tax assets have not been recognised on the basis that their futureeconomic benefit is not certain. 4. Loss per share Basic loss per share has been calculated in accordance with FRS 14. Basic lossper share has been calculated by dividing the loss on ordinary activities beforetaxation by the weighted average number of ordinary shares in issue during theperiod. The weighted average number of equity shares in issue was 27,605,095 andthe loss was £1,425,345. The effect of all potential ordinary shares isantidilutive. 5. Intangible assets Goodwill on Consolidation £Cost At 1 October 2004 and 31 March 2005 14,347,031 AmortisationAt 1 October 2004 5,660,822Provided for the period 295,725 At 31 March 2005 5,956,547 Net book valueAt 31 March 2005 8,390,484 At 30 September 2004 8,686,209 6. Share capital Group and company Group and company 2005 2005 2004 2004 £ Number £ Number Authorised Ordinary shares of 10p each 5,000,000 50,000,000 5,000,000 50,000,000 Group and company Group and company 2005 2005 2004 2004 £ Number £ Number Allotted, called upand fully paid Ordinary shares of 10p each 2,760,510 27,605,095 2,210,510 22,105,095 Following the resolution passed at the Extraordinary General Meeting on 14 March2005, 5,500,000 new ordinary shares of 10p each were issued on 15 March 2005 at0.20p each having been admitted for listing on that day. 7. Reserves Share Profit premium Merger and loss account reserve account £ £ £Group At 1 October 2004 7,222,235 11,119,585 (10,234,857) Loss for the period - - (1,407,856) Premium on shares issued 470,750 - - At 31 March 2005 7,692,985 11,119,585 (11,642,713) 8. Reconciliation of operating loss to net cash outflow from operating activities 2005 £ Operating loss (1,307,678) Amortisation 295,725 Depreciation 109,562 Decrease in debtors 78,966 Decrease in creditors (5,066) Net cash outflow from operating activities (828,491) 9. Reconciliation of net cash outflow to movement in net debt 2005 £ Increase in cash in the period 167,538Cash outflow from decrease in debt and lease financing 6,764 Movement in the period 174,302 Net debt at 1 October 2004 (206,857) Net debt at 31 March 2005 (32,555) 10. Analysis of net debt At At 1 October Cash 31 March 2004 flow 2005 £ £ £ Cash at bank and in hand 299,786 1,199,471 1,499,257 Bank overdrafts (482,129) (721,232) (1,203,361) Factoring loan - (310,701) (310,701) (182,343) 167,538 (14,805) Debt due after one year (7,901) 1,135 (6,766) Finance leases (16,613) 5,629 (10,984) Total (206,857) 174,302 (32,555) END This information is provided by RNS The company news service from the London Stock Exchange