Milestone Group plc: Your Virtual Digital Department
Final Results
Milestone Group Plc
(“Milestone” or the “Company”)
Milestone Group PLC (AIM: MSG), the AIM quoted digital solutions and technology agency, announces its Final Results for the year ended 30 September 2010.
Highlights of the year
· Financial highlights: revenue produced
· Investment in JumpStart Wireless Corporation and Ve Interactive Ltd
· Reseller agreements with JumpStart Wireless and Ve Interactive
· Key personnel: appointment of Guy van Zwanenberg as Finance Director
Deborah White, CEO, said: “2010 was a year of transition and while significant steps were taken to transforming the Company into a digital solutions provider, progress was slower than anticipated. As a result, for the year ahead the focus is to build on the progress made in 2010 and in particular, to develop the Group’s revenue streams and to strengthen the Company’s financial position.”
In accordance with Rules 20 and 26 of the AIM Rules for Companies, the Annual Report and Financial Statements for the financial year ended 30 September 2010 and the notice of the annual general meeting have been sent to shareholders shortly and will also be available on the Company’s website www.milestonegroup.co.uk/circulars.html. The Company’s annual general meeting will be held at the offices of Lawrence Graham LLP, 4 More London Riverside, London SE1 2AU, at 11.00 a.m. on Monday 28 March 2011.
FOR FURTHER INFORMATION:
Milestone Group PLC
Deborah White, Chief Executive Tel: 020 7929 7826
Strand Hanson Ltd, NOMAD
Richard Tulloch / David Altberg Tel: 020 7409 3494
Hybridan LLP, Broker
Claire Louise Noyce Tel: 020 7947 4350
Chairman’s Statement
Financial Summary
The Group is pleased to announce it has generated sales from website and smart-phone application development in the year of £56,752 (2009: nil). However, the transition of the Company to a digital solutions provider has taken longer than anticipated which has impacted the Group’s ability to generate revenues. In addition, as a result of the interest shown in the JumpStart technology, the Company has been targeting larger companies than initially planned, which has resulted in longer lead times due to their procurement processes being a minimum of 6-9 months. Despite generating its first revenues under the new strategy, the Group made a loss for the year of £1,225,480 (2009: loss of £392,002), due to the costs associated with establishing the business as a provider of digital solutions as well as the associated costs of dealing with historical issues.
Balance sheet net liabilities at the year end were £1,027,031 (2009: net liabilities £410,637). The significant increase was due to an increase in trade and other payables to £837,289 (2009: £373,424) and an increase in short term borrowings which increased to £392,300 (2009: £50,000). These increases were offset by an increase in the Group’s assets as a result of its investments in JumpStart Wireless Corporation and Ve Interactive Ltd. However, since the year end, the Company’s net liabilities have been reduced significantly through a number of equity placings, which raised an additional £580,000, as well as the conversion of £150,000 of interest bearing loans and £25,000 of trade and other payables into new shares and also the issue of new shares in respect of £320,000 of accrued but unpaid remuneration and the settlement of discretionary awards due to certain Directors.
These results are presented under Adopted International Financial Reporting Standards (“Adopted IFRS”).
Investments and reseller agreements
In October 2009, the Company entered into two reseller agreements with JumpStart Wireless Corporation and Ve Interactive Ltd.
The Company secured the distribution rights for JumpStart’s mobile enterprise application software solutions in the UK in return for a strategic equity investment of £61,713 in JumpStart Wireless Corporation. JumpStart’s innovative technology is a cost-effective solution to transform any mobile device into a reporting tool for employees working remotely from company premises.
The Company also entered into a UK distribution agreement with Ve Interactive Ltd., a leading provider in the Online Shopping Cart Abandonment solutions market, in return for a strategic equity investment of £101,111. Online Shopping Cart Abandonment solutions are specialised, web-based solutions for e-vendors to improve sales conversion from abandoned shopping carts. Converting even a small percentage of those abandoned shopping carts into sales represents significant value to e-vendors.
Moving Forward
The technology and media sectors are changing rapidly, with new overlaps and opportunities being created at an unprecedented rate. The "age of austerity" has forced businesses across Europe to rethink their IT and technology expenditure and strategies in order to leverage benefit from existing assets, or to purchase technology more wisely than before (Source: Digital Britain Report June 2009).
Additionally, the USA is investing heavily in cyber-security and technological growth, with the UK striving to become the global trend-setter for digital advancement (Source: Digital Britain Report June 2009). Milestone believes that these factors have combined to create an opportunity for a new breed of consulting and solutions business. It is the intention of Milestone that it will help traditional businesses invest in and exploit technology and digital media in new and strategically valuable ways to maximise business function efficiencies whilst retaining control of their cost base.
The Board believes that they have identified an opportunity in the market place where the specialist services offered, combined with the strengths of their strategic partnerships and network across business could bring new possibilities to the Company. While a significant proportion of the targeted sales will focus on large companies, which inevitably have long lead times and procurement processes, the Company is also seeking to generate revenues from smaller clients in the nearer term.
Management Changes
In December 2009, Guy van Zwanenberg, who has significant experience of growing small media businesses, agreed to step up to the Board as Finance Director and he is a valuable member of the team.
During the year both John Sanderson and Mark Hargreaves stepped down from the Board. John had spent considerable time helping the transition of the business and felt that his skills were best suited elsewhere. Mark had joined the Board during the year to help cultivate the relationship with Ve Interactive but as Ve Interactive has grown, he felt he needed to focus solely on Ve Interactive Ltd and hence he has had to step down from the Board of Milestone, although he remains a firm ally of the Company.
Other matters
A significant shareholder in the Company has made certain allegations against the Company and the Directors. For the avoidance of doubt, no formal proceedings have been brought against the Company or the Directors and the Board is of the opinion that such allegations made against the Company and the Directors are without any merit and would be vigorously defended in the event that any formal claim was forthcoming.
Funding
During the year the Company raised additional funds in order to meet its liabilities and to provide working capital through a combination of equity issues and new interest bearing loans. During the year 38,769,779 new shares were issued for a total consideration of £609,087, of which £411,000 was received in cash with the remainder being issued to existing and new creditors in exchange for goods or services received or in settlement of loan balances. In addition, the Company raised net £307,500 through new interest bearing loans.
Since the year end, the Company has raised £580,000 in cash through the issue of 49,765,030 new shares and converted £150,000 of interest bearing loans and £25,000 of trade and other payables into new shares in addition to issuing new shares to certain Directors in respect of £320,000 of accrued but unpaid remuneration and settlement of a discretionary award. As a result, the Group’s net liabilities have been reduced significantly since the year end.
In the short term, Milestone’s focus is on strengthening its financial position in order to create a stable position from which to grow the business and its revenues. As such, until such time as the Company is generating revenues on a consistent basis, the Company continues to be reliant on its ability to manage the timing of settlement of its liabilities and to raise further funds in the immediate to short term thereafter.
Potential further subscriptions
Protecting the interests of the Company’s current shareholders is a priority and the Board’s strategy is to seek to raise funds on a basis which is fair to all.
During the year the Company has raised a series of subscriptions to support the Company’s working capital requirements. The Board was pleased with the appetite which has been shown for these subscriptions and welcomes its new shareholders.
As set out above, the Company will likely have to raise further monies through subscriptions for new shares in the immediate to short term thereafter and as such, any enquiries in relation to participating in any further subscriptions should be sent to the Company Secretary at the registered address or emailed to him at graham.urquhart@milestonegroup.co.uk.
Outlook
The Board has a clear strategy for developing the Company and taking advantage of opportunities as they arise. The Company has developed a pipeline of potential sales and it is anticipated that this will lead to revenues within the next 12 months. In addition, with the funds raised post the year end, the creditor position has improved and while the Company is better placed to take advantage of the changing media landscape, in the short term it continues to be reliant on its ability to manage the timing of settlement of its current and future liabilities and to raise further funds in the immediate to short term thereafter.
In conclusion, we remain confident that during the coming year the Company will take advantage of the changes that have taken place and consolidate its position as a digital solutions provider.
Deborah White
Executive Director
Extracts from the Report of the Directors
Directors in the period
Deborah White, Executive Director
Guy van Zwanenberg, Finance Director (appointed 14 December 2009)
Anthony Moss, Non-Executive Director (appointed 30 July 2009)
John Sanderson, Non-Executive Chairman (appointed 1 February 2006, resigned 4 February 2010)
Stephen Mark Hargreaves, Non-Executive Director (appointed 7April 2010, resigned 16 November 2010)
Results and dividends
The consolidated results of the Group for the year are set out below and show the loss after tax for the year of £1,225,480 (2009: £392,002).
The directors do not recommend the payment of a dividend (2009: nil).
Principal activities, review of business and future developments
A review of the year is held within the Chairman’s statement above.
The Group offers its shareholders exposure to the digital media sector. Milestone brings together media practices and technology to deliver interactive digital solutions across web, phone and portable media.
Key performance indicators (“KPIs”)
Given the nature of the Group, no numerical financial KPIs have been set. The focus for the Group has been on stabilising its financial position. The transition to a digital solutions provider has taken longer than expected which has impacted the Group’s ability to generate revenues. In addition, as a result of interest shown in the JumpStart technology, the Company has been targeting larger companies than initially anticipated, which has resulted in longer lead times due to their procurement processes being a minimum of 6-9 months.
The Board’s focus is now a lot clearer than it was 12 months ago and the Board is now concentrating on the provision of digital solutions in various industry sectors such as security and logistics, although we are by no means restricted to these two vertical markets. The Board have set performance targets of winning two major contracts by the year end of 30 September 2011.
Financial instruments and principal risks and uncertainties
The Group had £357,500 of interest bearing loans outstanding at the year end. The Group’s modest cash reserves during the year were held in bank current and deposit accounts.
This report contains certain forward looking statements with respect to the principal risks and uncertainties facing the Group. These statements can be identified by the use of forward looking terminology such as “believe”, “could”, “expects”, “plan”, “anticipate”, “envisage”, “estimate”, “intend”, “should”, “may” or comparable terminology indicating expectations or beliefs concerning future events. By their very nature, these forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements. The forward looking statements reflect the knowledge and information available at the date of preparation of this annual report and will not be updated during the year. Nothing in this report should be construed as a profit forecast.
The Directors consider cash flow to be the material financial risk to the Group in the immediate future. The Board intends that, as new projects are developed, the material risks will be fully assessed.
Going concern
Whilst the Group has made a loss in the year and had net liabilities of £1,027,031 at the year end, the Board feel it is appropriate to adopt the going concern basis in preparing the annual reports and accounts. There are significant risks and uncertainties surrounding the going concern assumption.
(“Milestone” or the “Company”)
Milestone Group PLC (AIM: MSG), the AIM quoted digital solutions and technology agency, announces its Final Results for the year ended 30 September 2010.
Highlights of the year
· Financial highlights: revenue produced
· Investment in JumpStart Wireless Corporation and Ve Interactive Ltd
· Reseller agreements with JumpStart Wireless and Ve Interactive
· Key personnel: appointment of Guy van Zwanenberg as Finance Director
Deborah White, CEO, said: “2010 was a year of transition and while significant steps were taken to transforming the Company into a digital solutions provider, progress was slower than anticipated. As a result, for the year ahead the focus is to build on the progress made in 2010 and in particular, to develop the Group’s revenue streams and to strengthen the Company’s financial position.”
In accordance with Rules 20 and 26 of the AIM Rules for Companies, the Annual Report and Financial Statements for the financial year ended 30 September 2010 and the notice of the annual general meeting have been sent to shareholders shortly and will also be available on the Company’s website www.milestonegroup.co.uk/circulars.html. The Company’s annual general meeting will be held at the offices of Lawrence Graham LLP, 4 More London Riverside, London SE1 2AU, at 11.00 a.m. on Monday 28 March 2011.
FOR FURTHER INFORMATION:
Milestone Group PLC
Deborah White, Chief Executive Tel: 020 7929 7826
Strand Hanson Ltd, NOMAD
Richard Tulloch / David Altberg Tel: 020 7409 3494
Hybridan LLP, Broker
Claire Louise Noyce Tel: 020 7947 4350
Chairman’s Statement
Financial Summary
The Group is pleased to announce it has generated sales from website and smart-phone application development in the year of £56,752 (2009: nil). However, the transition of the Company to a digital solutions provider has taken longer than anticipated which has impacted the Group’s ability to generate revenues. In addition, as a result of the interest shown in the JumpStart technology, the Company has been targeting larger companies than initially planned, which has resulted in longer lead times due to their procurement processes being a minimum of 6-9 months. Despite generating its first revenues under the new strategy, the Group made a loss for the year of £1,225,480 (2009: loss of £392,002), due to the costs associated with establishing the business as a provider of digital solutions as well as the associated costs of dealing with historical issues.
Balance sheet net liabilities at the year end were £1,027,031 (2009: net liabilities £410,637). The significant increase was due to an increase in trade and other payables to £837,289 (2009: £373,424) and an increase in short term borrowings which increased to £392,300 (2009: £50,000). These increases were offset by an increase in the Group’s assets as a result of its investments in JumpStart Wireless Corporation and Ve Interactive Ltd. However, since the year end, the Company’s net liabilities have been reduced significantly through a number of equity placings, which raised an additional £580,000, as well as the conversion of £150,000 of interest bearing loans and £25,000 of trade and other payables into new shares and also the issue of new shares in respect of £320,000 of accrued but unpaid remuneration and the settlement of discretionary awards due to certain Directors.
These results are presented under Adopted International Financial Reporting Standards (“Adopted IFRS”).
Investments and reseller agreements
In October 2009, the Company entered into two reseller agreements with JumpStart Wireless Corporation and Ve Interactive Ltd.
The Company secured the distribution rights for JumpStart’s mobile enterprise application software solutions in the UK in return for a strategic equity investment of £61,713 in JumpStart Wireless Corporation. JumpStart’s innovative technology is a cost-effective solution to transform any mobile device into a reporting tool for employees working remotely from company premises.
The Company also entered into a UK distribution agreement with Ve Interactive Ltd., a leading provider in the Online Shopping Cart Abandonment solutions market, in return for a strategic equity investment of £101,111. Online Shopping Cart Abandonment solutions are specialised, web-based solutions for e-vendors to improve sales conversion from abandoned shopping carts. Converting even a small percentage of those abandoned shopping carts into sales represents significant value to e-vendors.
Moving Forward
The technology and media sectors are changing rapidly, with new overlaps and opportunities being created at an unprecedented rate. The "age of austerity" has forced businesses across Europe to rethink their IT and technology expenditure and strategies in order to leverage benefit from existing assets, or to purchase technology more wisely than before (Source: Digital Britain Report June 2009).
Additionally, the USA is investing heavily in cyber-security and technological growth, with the UK striving to become the global trend-setter for digital advancement (Source: Digital Britain Report June 2009). Milestone believes that these factors have combined to create an opportunity for a new breed of consulting and solutions business. It is the intention of Milestone that it will help traditional businesses invest in and exploit technology and digital media in new and strategically valuable ways to maximise business function efficiencies whilst retaining control of their cost base.
The Board believes that they have identified an opportunity in the market place where the specialist services offered, combined with the strengths of their strategic partnerships and network across business could bring new possibilities to the Company. While a significant proportion of the targeted sales will focus on large companies, which inevitably have long lead times and procurement processes, the Company is also seeking to generate revenues from smaller clients in the nearer term.
Management Changes
In December 2009, Guy van Zwanenberg, who has significant experience of growing small media businesses, agreed to step up to the Board as Finance Director and he is a valuable member of the team.
During the year both John Sanderson and Mark Hargreaves stepped down from the Board. John had spent considerable time helping the transition of the business and felt that his skills were best suited elsewhere. Mark had joined the Board during the year to help cultivate the relationship with Ve Interactive but as Ve Interactive has grown, he felt he needed to focus solely on Ve Interactive Ltd and hence he has had to step down from the Board of Milestone, although he remains a firm ally of the Company.
Other matters
A significant shareholder in the Company has made certain allegations against the Company and the Directors. For the avoidance of doubt, no formal proceedings have been brought against the Company or the Directors and the Board is of the opinion that such allegations made against the Company and the Directors are without any merit and would be vigorously defended in the event that any formal claim was forthcoming.
Funding
During the year the Company raised additional funds in order to meet its liabilities and to provide working capital through a combination of equity issues and new interest bearing loans. During the year 38,769,779 new shares were issued for a total consideration of £609,087, of which £411,000 was received in cash with the remainder being issued to existing and new creditors in exchange for goods or services received or in settlement of loan balances. In addition, the Company raised net £307,500 through new interest bearing loans.
Since the year end, the Company has raised £580,000 in cash through the issue of 49,765,030 new shares and converted £150,000 of interest bearing loans and £25,000 of trade and other payables into new shares in addition to issuing new shares to certain Directors in respect of £320,000 of accrued but unpaid remuneration and settlement of a discretionary award. As a result, the Group’s net liabilities have been reduced significantly since the year end.
In the short term, Milestone’s focus is on strengthening its financial position in order to create a stable position from which to grow the business and its revenues. As such, until such time as the Company is generating revenues on a consistent basis, the Company continues to be reliant on its ability to manage the timing of settlement of its liabilities and to raise further funds in the immediate to short term thereafter.
Potential further subscriptions
Protecting the interests of the Company’s current shareholders is a priority and the Board’s strategy is to seek to raise funds on a basis which is fair to all.
During the year the Company has raised a series of subscriptions to support the Company’s working capital requirements. The Board was pleased with the appetite which has been shown for these subscriptions and welcomes its new shareholders.
As set out above, the Company will likely have to raise further monies through subscriptions for new shares in the immediate to short term thereafter and as such, any enquiries in relation to participating in any further subscriptions should be sent to the Company Secretary at the registered address or emailed to him at graham.urquhart@milestonegroup.co.uk.
Outlook
The Board has a clear strategy for developing the Company and taking advantage of opportunities as they arise. The Company has developed a pipeline of potential sales and it is anticipated that this will lead to revenues within the next 12 months. In addition, with the funds raised post the year end, the creditor position has improved and while the Company is better placed to take advantage of the changing media landscape, in the short term it continues to be reliant on its ability to manage the timing of settlement of its current and future liabilities and to raise further funds in the immediate to short term thereafter.
In conclusion, we remain confident that during the coming year the Company will take advantage of the changes that have taken place and consolidate its position as a digital solutions provider.
Deborah White
Executive Director
Extracts from the Report of the Directors
Directors in the period
Deborah White, Executive Director
Guy van Zwanenberg, Finance Director (appointed 14 December 2009)
Anthony Moss, Non-Executive Director (appointed 30 July 2009)
John Sanderson, Non-Executive Chairman (appointed 1 February 2006, resigned 4 February 2010)
Stephen Mark Hargreaves, Non-Executive Director (appointed 7April 2010, resigned 16 November 2010)
Results and dividends
The consolidated results of the Group for the year are set out below and show the loss after tax for the year of £1,225,480 (2009: £392,002).
The directors do not recommend the payment of a dividend (2009: nil).
Principal activities, review of business and future developments
A review of the year is held within the Chairman’s statement above.
The Group offers its shareholders exposure to the digital media sector. Milestone brings together media practices and technology to deliver interactive digital solutions across web, phone and portable media.
Key performance indicators (“KPIs”)
Given the nature of the Group, no numerical financial KPIs have been set. The focus for the Group has been on stabilising its financial position. The transition to a digital solutions provider has taken longer than expected which has impacted the Group’s ability to generate revenues. In addition, as a result of interest shown in the JumpStart technology, the Company has been targeting larger companies than initially anticipated, which has resulted in longer lead times due to their procurement processes being a minimum of 6-9 months.
The Board’s focus is now a lot clearer than it was 12 months ago and the Board is now concentrating on the provision of digital solutions in various industry sectors such as security and logistics, although we are by no means restricted to these two vertical markets. The Board have set performance targets of winning two major contracts by the year end of 30 September 2011.
Financial instruments and principal risks and uncertainties
The Group had £357,500 of interest bearing loans outstanding at the year end. The Group’s modest cash reserves during the year were held in bank current and deposit accounts.
This report contains certain forward looking statements with respect to the principal risks and uncertainties facing the Group. These statements can be identified by the use of forward looking terminology such as “believe”, “could”, “expects”, “plan”, “anticipate”, “envisage”, “estimate”, “intend”, “should”, “may” or comparable terminology indicating expectations or beliefs concerning future events. By their very nature, these forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements. The forward looking statements reflect the knowledge and information available at the date of preparation of this annual report and will not be updated during the year. Nothing in this report should be construed as a profit forecast.
The Directors consider cash flow to be the material financial risk to the Group in the immediate future. The Board intends that, as new projects are developed, the material risks will be fully assessed.
Going concern
Whilst the Group has made a loss in the year and had net liabilities of £1,027,031 at the year end, the Board feel it is appropriate to adopt the going concern basis in preparing the annual reports and accounts. There are significant risks and uncertainties surrounding the going concern assumption.
Consolidated statement of comprehensive income for the year ended 30 September 2010
2010 2009
£ £
Revenue 56,752 -
Cost of sales (32,625) -
Gross profit 24,127 -
Other operating income - 9,268
Administrative expenses (1,135,749) (392,664)
(1,135,749) (383,396)
Loss from operations (1,111,622) (383,396)
Finance expense (113,782) -
Finance income 6 20
Loss before taxation (1,225,398) (383,376)
Taxation expense - -
Loss from continuing operations (1,225,398) (383,376)
Loss on discontinued operations net of tax (82) (8,626)
Total comprehensive loss (1,225,480) (392,002)
Attributable to owners of the parent (1,225,480) (392,002)
Basic and diluted loss per share from continuing operations (pence) (1.17) (0.56)
Basic and diluted loss per share from discontinued operations (pence) - (0.01)
Total basic and diluted loss per share (1.17) (0.57)
2010 2009
£ £
Revenue 56,752 -
Cost of sales (32,625) -
Gross profit 24,127 -
Other operating income - 9,268
Administrative expenses (1,135,749) (392,664)
(1,135,749) (383,396)
Loss from operations (1,111,622) (383,396)
Finance expense (113,782) -
Finance income 6 20
Loss before taxation (1,225,398) (383,376)
Taxation expense - -
Loss from continuing operations (1,225,398) (383,376)
Loss on discontinued operations net of tax (82) (8,626)
Total comprehensive loss (1,225,480) (392,002)
Attributable to owners of the parent (1,225,480) (392,002)
Basic and diluted loss per share from continuing operations (pence) (1.17) (0.56)
Basic and diluted loss per share from discontinued operations (pence) - (0.01)
Total basic and diluted loss per share (1.17) (0.57)
Consolidated statement of financial position at 30 September 2010
2010 2009
£ £
Non-current assets
Goodwill - -
Investments 162,824 -
Property, plant & equipment 741 -
163,565 -
Current assets
Trade and other receivables 39,745 2,462
Cash and cash equivalents - 10,325
39,745 12,787
Current liabilities
Bank overdrafts (752) -
Trade and other payables (837,289) (373,424)
Interest bearing loans (392,300) (50,000)
(1,230,341) (423,424)
Net liabilities (1,027,031) (410,637)
Capital and reserves attributable to owners of the Company
Share capital 127,067 88,298
Share premium account 9,050,141 8,479,824
Merger reserve 11,119,585 11,119,585
Capital Redemption Reserve 2,732,904 2,732,904
Retained losses (24,056,728) (22,831,248)
Total Equity (1,027,031) (410,637)
2010 2009
£ £
Non-current assets
Goodwill - -
Investments 162,824 -
Property, plant & equipment 741 -
163,565 -
Current assets
Trade and other receivables 39,745 2,462
Cash and cash equivalents - 10,325
39,745 12,787
Current liabilities
Bank overdrafts (752) -
Trade and other payables (837,289) (373,424)
Interest bearing loans (392,300) (50,000)
(1,230,341) (423,424)
Net liabilities (1,027,031) (410,637)
Capital and reserves attributable to owners of the Company
Share capital 127,067 88,298
Share premium account 9,050,141 8,479,824
Merger reserve 11,119,585 11,119,585
Capital Redemption Reserve 2,732,904 2,732,904
Retained losses (24,056,728) (22,831,248)
Total Equity (1,027,031) (410,637)
Consolidated statement of cash flows for the year ended 30 September 2010
Cash flow from operating activities
2010 2009
£ £
Loss for the year (1,225,480) (392,002)
Adjustments for:
Depreciation of tangible assets 365 -
Profit on disposal of property, plant and equipment - (597)
Net bank and other interest charges 47,305 10
Profit on sale of discontinued operations net of tax - -
Issue of share options - 4,800
Issue of financial liabilities 66,471 -
Recognition of negative goodwill - -
Net loss before changes in working capital (1,111,339) (387,789)
Decrease/(increase) in trade and other receivables (37,283) 68,690
(Decrease)/increase in trade and other payables 560,480 (89,284)
Cash from operations (588,142) (408,383)
Interest received 6 20
Interest paid (12,511) (30)
Net cash flows from operating activities (600,647) (408,393)
Investing activities
Acquisition of Investments (162,824) -
Purchase of property, plant and equipment (1,106) -
Sale proceeds of property, plant and equipment - 597
Net cash flows used in investing activities (163,930) 597
Financing activities
Issue of ordinary share capital 411,000 356,500
Repayment of loan (3,000) (10,000)
New loans raised 345,500 60,000
Net cash flows from financing activities 753,500 406,500
Net decrease in cash (11,077) (1,296)
Cash and cash equivalents at beginning of period 10,325 11,621
Cash and cash equivalents at end of period (752) 10,325
Cash flow from operating activities
2010 2009
£ £
Loss for the year (1,225,480) (392,002)
Adjustments for:
Depreciation of tangible assets 365 -
Profit on disposal of property, plant and equipment - (597)
Net bank and other interest charges 47,305 10
Profit on sale of discontinued operations net of tax - -
Issue of share options - 4,800
Issue of financial liabilities 66,471 -
Recognition of negative goodwill - -
Net loss before changes in working capital (1,111,339) (387,789)
Decrease/(increase) in trade and other receivables (37,283) 68,690
(Decrease)/increase in trade and other payables 560,480 (89,284)
Cash from operations (588,142) (408,383)
Interest received 6 20
Interest paid (12,511) (30)
Net cash flows from operating activities (600,647) (408,393)
Investing activities
Acquisition of Investments (162,824) -
Purchase of property, plant and equipment (1,106) -
Sale proceeds of property, plant and equipment - 597
Net cash flows used in investing activities (163,930) 597
Financing activities
Issue of ordinary share capital 411,000 356,500
Repayment of loan (3,000) (10,000)
New loans raised 345,500 60,000
Net cash flows from financing activities 753,500 406,500
Net decrease in cash (11,077) (1,296)
Cash and cash equivalents at beginning of period 10,325 11,621
Cash and cash equivalents at end of period (752) 10,325
Consolidated statement of changes in equity for the year ended 30 September 2010
Share Share Merger Capital Retained Total
Capital Premium Reserve Redemption Earnings Equity
£ £ £ £ £ £
Balance at 30
Sept 2008 2,790,795 8,023,012 11,119,585 - (22,444,046) (510,654)
Total comprehensive
income - - - - (392,002) (392,002)
Shares issued 30,408 456,812 - - - 487,220
Share options granted - - - - 4,800 4,800
Repurchase of
deferred share
capital (2,732,905) - - 2,732,904 - -
Balance at 30
Sept 2009 88,298 8,479,824 11,119,585 2,732,904 (22,831,248) (410,637)
Total comprehensive
income - - - - (1,225,480) (1,225,480)
Shares issued 38,769 570,317 - - - 609,086
Share options granted - - - - - -
Repurchase of
deferred share capital - - - - - -
Balance at 30
Sept 2010 127,067 9,050,141 11,119,585 2,732,904 (24,056,728) (1,027,031)
The accompanying accounting policies and notes form an integral part of these financial statements.
Notes (forming part of the financial statements)
1 Accounting policies
Basis of preparation Milestone Group plc is a company registered and resident in England and Wales.
These financial statements were authorised for issue by the Board of Directors on 28 February 2011.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group').
The parent company financial statements present information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').
The financial information set out in this announcement does not constitute the Group's statutory accounts, as defined in Section 435 of the Companies Act 2006, for the years ended 30 September 2010 or 30 September 2009, but is derived from the 2010 Annual Report. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered in due course.
The consolidated statement of comprehensive income, consolidated statement of financial position, consolidated cashflow, consolidated statement of changes in equity (above) and associated notes are extracts from the financial statements and do not constitute the group’s statutory accounts.
Statutory accounts for the year to 30 September 2009 and 30 September 2010 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2009 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation. This emphasis drew attention to the Company’s ability to manage the timing of settlement of liabilities associated with its previous activities. It noted that a material uncertainty existed which cast significant doubt about the company’s ability to continue as a going concern. The Independent Auditors' Report on the Annual Report and Financial Statements for 2010 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation which is reproduced below. This emphasis drew attention to the Company’s ability to raise funds and generate sales to satisfy liabilities associated with its activities. It noted that a material remains which may cast significant doubt about the company’s ability to continue as a going concern. The basis of preparation is reproduced below.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s statement.
The net liability balance sheet position as at 30 September 2010, being the Company’s financial year-end, was £1,027,031 (2009: £410,637). Subsequent to the balance sheet date, the Board has been able to agree funding in the form of further share issues raising £580,000 in cash and converted £150,000 of interest bearing loans and £25,000 of creditors into new shares in addition to issuing new shares in respect of accrued but unpaid remuneration and the settlement of a discretionary award to certain Directors. The Company is however reliant on its continuing ability to manage the timing of settlement of its current and future liabilities and further fundraising will be required in the immediate to short term thereafter. As such, the Directors intend to strengthen the Company’s financial position through a combination of further fundraises in the immediate to short term thereafter and subsequently from proceeds generated from trading activities.
The future business model is based around generating revenue from two areas being the provision of digital solutions and commissions from the sale of the JumpStart and Ve Interactive products, both of which have taken considerably longer to convert than previously anticipated. As a result the Board has prepared forecasts to reflect this and the agreements that have or are expected to be entered into. These forecasts show the business being profitable and cash generative in the future. However, achieving these forecasts will be dependent upon achieving sales and obtaining sufficient funding to settle existing and future obligations.
The Directors have concluded that the need to generate future funds from either further fundraising or from trading activities to satisfy the settlement of its ongoing and future liabilities represents a material uncertainty, which may cast significant doubt upon the Group’s and the Company’s ability to continue as a going concern. Nevertheless after making enquiries and considering this uncertainty and the measures that can be taken to mitigate the uncertainty, the Directors have a reasonable expectation that the Group and the Company will have adequate resources to continue in existence for the foreseeable future. For these reasons they continue to adopt the going concern basis in preparing the annual report and accounts. The financial statements do not include any adjustments that would result if the Group and Company was unable to continue as a going concern.
2 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management’s best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 1, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Going concern
Management have considered that the Group remains a going concern. The going concern assumption is discussed further in Note 1.
Available for sale investments
Management have concluded that the investments held are fully recoverable and are therefore included at cost, subject to no impairment.
3 Segment analysis
The Board have reviewed the requirements under IFRS8 Segmental Reporting and have concluded that there is only one reportable segment for the Group. As a result, no detailed disclosures have been presented on separate reportable segments.
All of the Group’s current operations are carried out in the UK. The Group therefore only has one geographical segment.
4 Revenue
Revenue in the year was £56,792 (2009: nil). The group is not reliant upon any one customer to generate operational cash-flows. All revenue was generated from the United Kingdom.
5 Tax on loss on ordinary activities
Notes (forming part of the financial statements)
1 Accounting policies
Basis of preparation Milestone Group plc is a company registered and resident in England and Wales.
These financial statements were authorised for issue by the Board of Directors on 28 February 2011.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group').
The parent company financial statements present information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').
The financial information set out in this announcement does not constitute the Group's statutory accounts, as defined in Section 435 of the Companies Act 2006, for the years ended 30 September 2010 or 30 September 2009, but is derived from the 2010 Annual Report. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered in due course.
The consolidated statement of comprehensive income, consolidated statement of financial position, consolidated cashflow, consolidated statement of changes in equity (above) and associated notes are extracts from the financial statements and do not constitute the group’s statutory accounts.
Statutory accounts for the year to 30 September 2009 and 30 September 2010 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for 2009 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation. This emphasis drew attention to the Company’s ability to manage the timing of settlement of liabilities associated with its previous activities. It noted that a material uncertainty existed which cast significant doubt about the company’s ability to continue as a going concern. The Independent Auditors' Report on the Annual Report and Financial Statements for 2010 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation which is reproduced below. This emphasis drew attention to the Company’s ability to raise funds and generate sales to satisfy liabilities associated with its activities. It noted that a material remains which may cast significant doubt about the company’s ability to continue as a going concern. The basis of preparation is reproduced below.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s statement.
The net liability balance sheet position as at 30 September 2010, being the Company’s financial year-end, was £1,027,031 (2009: £410,637). Subsequent to the balance sheet date, the Board has been able to agree funding in the form of further share issues raising £580,000 in cash and converted £150,000 of interest bearing loans and £25,000 of creditors into new shares in addition to issuing new shares in respect of accrued but unpaid remuneration and the settlement of a discretionary award to certain Directors. The Company is however reliant on its continuing ability to manage the timing of settlement of its current and future liabilities and further fundraising will be required in the immediate to short term thereafter. As such, the Directors intend to strengthen the Company’s financial position through a combination of further fundraises in the immediate to short term thereafter and subsequently from proceeds generated from trading activities.
The future business model is based around generating revenue from two areas being the provision of digital solutions and commissions from the sale of the JumpStart and Ve Interactive products, both of which have taken considerably longer to convert than previously anticipated. As a result the Board has prepared forecasts to reflect this and the agreements that have or are expected to be entered into. These forecasts show the business being profitable and cash generative in the future. However, achieving these forecasts will be dependent upon achieving sales and obtaining sufficient funding to settle existing and future obligations.
The Directors have concluded that the need to generate future funds from either further fundraising or from trading activities to satisfy the settlement of its ongoing and future liabilities represents a material uncertainty, which may cast significant doubt upon the Group’s and the Company’s ability to continue as a going concern. Nevertheless after making enquiries and considering this uncertainty and the measures that can be taken to mitigate the uncertainty, the Directors have a reasonable expectation that the Group and the Company will have adequate resources to continue in existence for the foreseeable future. For these reasons they continue to adopt the going concern basis in preparing the annual report and accounts. The financial statements do not include any adjustments that would result if the Group and Company was unable to continue as a going concern.
2 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management’s best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 1, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Going concern
Management have considered that the Group remains a going concern. The going concern assumption is discussed further in Note 1.
Available for sale investments
Management have concluded that the investments held are fully recoverable and are therefore included at cost, subject to no impairment.
3 Segment analysis
The Board have reviewed the requirements under IFRS8 Segmental Reporting and have concluded that there is only one reportable segment for the Group. As a result, no detailed disclosures have been presented on separate reportable segments.
All of the Group’s current operations are carried out in the UK. The Group therefore only has one geographical segment.
4 Revenue
Revenue in the year was £56,792 (2009: nil). The group is not reliant upon any one customer to generate operational cash-flows. All revenue was generated from the United Kingdom.
5 Tax on loss on ordinary activities
2010 2009
£ £
Loss from operations before tax (1,225,480) (392,002)
Loss from operations at the standard rate of
corporation tax in the UK of 28% (2009:28%) (343,134) (109,761)
Effects of:
Expenses not deductible for tax purposes 20,195 43,937
Capital allowances in excess of depreciation 102 (45,843)
Short term timing differences 59,733 -
Unutilised tax losses and other deductions 263,104 111,667
Current tax charge in the period - -
£ £
Loss from operations before tax (1,225,480) (392,002)
Loss from operations at the standard rate of
corporation tax in the UK of 28% (2009:28%) (343,134) (109,761)
Effects of:
Expenses not deductible for tax purposes 20,195 43,937
Capital allowances in excess of depreciation 102 (45,843)
Short term timing differences 59,733 -
Unutilised tax losses and other deductions 263,104 111,667
Current tax charge in the period - -
Deferred tax assets of approximately £1.27m (Group) and £1.27m (Company) have not been recognised in the financial statements as there is currently insufficient evidence to suggest that any deferred tax asset would be recoverable. The Group has unutilised tax losses of approximately £4.7m (Company £4.7m) which would be available to carry forward against future profits from the same activity, subject to agreement by HM Revenue & Customs.
6 Dividend
No dividends have been paid or proposed in the year (2009: nil).
7 Loss per share
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the average number of shares in issue during the year. The calculation of diluted loss per share is based on the basic loss per share, adjusted to allow for the issue of shares and the post tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.
There were 500,000 share options outstanding at the year-end (2009: 500,000). However, the figures for 2010 and 2009 have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.
6 Dividend
No dividends have been paid or proposed in the year (2009: nil).
7 Loss per share
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the average number of shares in issue during the year. The calculation of diluted loss per share is based on the basic loss per share, adjusted to allow for the issue of shares and the post tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.
There were 500,000 share options outstanding at the year-end (2009: 500,000). However, the figures for 2010 and 2009 have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.
2010 2009
Weighted Weighted
average Per share average Per share
Loss number of Amount Loss number of amount
£ shares Pence £ shares pence
Basic and diluted loss per
share attributable to
shareholders. (1,225,480) 104,340,306 (1.17) (392,002) 68,094,035 (0.57)
Weighted Weighted
average Per share average Per share
Loss number of Amount Loss number of amount
£ shares Pence £ shares pence
Basic and diluted loss per
share attributable to
shareholders. (1,225,480) 104,340,306 (1.17) (392,002) 68,094,035 (0.57)
8 Goodwill and intangible assets
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated against the television division.
The recoverable amounts of the CGUs are determined from value in use calculations.
During the year to 30 September 2006 the Company directors considered the carrying value of goodwill and wrote the remaining value to nil.
Subsidiaries as at 30 September 2010 were:
· Oxford Broadcasting Limited, analogue television broadcasting (held as disposed)
· Milestone Media Limited, dormant
· Nexstar League Limited, dormant
9 Property, plant and equipment
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated against the television division.
The recoverable amounts of the CGUs are determined from value in use calculations.
During the year to 30 September 2006 the Company directors considered the carrying value of goodwill and wrote the remaining value to nil.
Subsidiaries as at 30 September 2010 were:
· Oxford Broadcasting Limited, analogue television broadcasting (held as disposed)
· Milestone Media Limited, dormant
· Nexstar League Limited, dormant
9 Property, plant and equipment
Short leasehold Fixtures and Production
Property Fittings and Studio
Improvements equipment Equipment Total
£ £ £ £
Cost
At 1 October 2008 65,197 191,536 293,395 550,128
Disposals (65,197) (39,336) 293,395) (397,928)
At 30 September 2009 - 152,200 - 152,200
At 1 October 2009 - 152,200 - 152,200
Additions - 1,106 - 1,106
At 30 September 2010 - 153,306 - 153,306
Depreciation
At 1 October 2008 65,197 191,536 293,335 550,128
Disposed in year (65,197) (39,336) (293,395) (397,928)
At 30 September 2009 - 152,200 - 152,200
At 1 October 2009 - 152,200 - 152,200
Charge for year - 365 - 365
At 30 September 2010 - 152,565 - 152,565
Net book value
At 30 September 2010 - 741 - 741
At 30 September 2009 - - - -
Property Fittings and Studio
Improvements equipment Equipment Total
£ £ £ £
Cost
At 1 October 2008 65,197 191,536 293,395 550,128
Disposals (65,197) (39,336) 293,395) (397,928)
At 30 September 2009 - 152,200 - 152,200
At 1 October 2009 - 152,200 - 152,200
Additions - 1,106 - 1,106
At 30 September 2010 - 153,306 - 153,306
Depreciation
At 1 October 2008 65,197 191,536 293,335 550,128
Disposed in year (65,197) (39,336) (293,395) (397,928)
At 30 September 2009 - 152,200 - 152,200
At 1 October 2009 - 152,200 - 152,200
Charge for year - 365 - 365
At 30 September 2010 - 152,565 - 152,565
Net book value
At 30 September 2010 - 741 - 741
At 30 September 2009 - - - -
10 Available for sale investments
Total
£
Cost
At 1 October 2009 -
Additions 162,824
At 30 September 2010 162,824
Net book value
At 30 September 2010 162,824
At 30 September 2009 -
During the year, the Company made two trade investments to establish a strategic relationship with two privately owned software vendors. 90,910 ordinary shares of $1.10 each were acquired in Jumpstart Wireless Corporation at a cost of £61,713. 26 ordinary shares were acquired in Ve Interactive Limited for a cost of £101,111. These shareholdings constitute minority interests in the businesses as part of the Group’s strategic partnership and allow the Group to act as a sales agent on behalf of their products. The Directors have no plans to dispose of these assets.
The shareholdings at the year end constitute ownership no more than 3% of total shareholdings in each entity. No fair value information has been disclosed. The instruments are held within privately owned, unquoted businesses; as no active market exists the directors are unable to arrive at a reasonable fair value for the investments at the financial year end. Due to the nature of the assets the Directors feel that credit risk relating to these assets is low. All assets are denominated in sterling.
The directors have performed an impairment review at the year end on the basis of recoverable value. The directors note that third parties continue to invest in the two businesses above at a price in excess of the carrying value in the financial statements at the year end. The directors note that the investments represent businesses who are developing exciting new technologies in their field.
No impairment has been proposed.
11 Post balance sheet events
(i) Subscriptions and funding
Subsequent to the balance sheet date the Company announced subscriptions to support the short term working capital requirements.
On 10 November 2010 the Company announced that it had agreed to issue 17,873,391 ordinary shares of 0.1p each for a cash consideration of £201,969.
On 25 November 2010 the Company announced that it had agreed to issue 24,408,061 ordinary shares of 0.1p each for a cash consideration of £275,811.
On 20 December 2010 the Company announced that it had agreed to issue 1,966,337 ordinary shares of 0.1p each for a cash consideration of £22,219.61, 15,000,000 ordinary shares of 0.1p each for the conversion of an outstanding loan together with associated accrued interest amounting to £159,000, 400,000 ordinary shares of 0.1p each to the Company’s NOMAD for a deemed aggregate value of £5,000 and 28,318,584 ordinary shares of 0.1p each to certain Directors of the Company in settlement of accrued but unpaid remuneration and a settlement of a discretionary award.
On 31 December 2010 the Company announced that it had agreed to issue 5,517,241 ordinary shares of 0.1p each for a cash consideration of £80,000.
These transactions are not reflected in the financial statements since shares were not issued and admitted to AIM for trading until after the balance sheet date.
(ii) Oxford Broadcasting Limited
On the 12 January 2011 an application was made to Companies House to strike off Oxford Broadcasting Limited.
Total
£
Cost
At 1 October 2009 -
Additions 162,824
At 30 September 2010 162,824
Net book value
At 30 September 2010 162,824
At 30 September 2009 -
During the year, the Company made two trade investments to establish a strategic relationship with two privately owned software vendors. 90,910 ordinary shares of $1.10 each were acquired in Jumpstart Wireless Corporation at a cost of £61,713. 26 ordinary shares were acquired in Ve Interactive Limited for a cost of £101,111. These shareholdings constitute minority interests in the businesses as part of the Group’s strategic partnership and allow the Group to act as a sales agent on behalf of their products. The Directors have no plans to dispose of these assets.
The shareholdings at the year end constitute ownership no more than 3% of total shareholdings in each entity. No fair value information has been disclosed. The instruments are held within privately owned, unquoted businesses; as no active market exists the directors are unable to arrive at a reasonable fair value for the investments at the financial year end. Due to the nature of the assets the Directors feel that credit risk relating to these assets is low. All assets are denominated in sterling.
The directors have performed an impairment review at the year end on the basis of recoverable value. The directors note that third parties continue to invest in the two businesses above at a price in excess of the carrying value in the financial statements at the year end. The directors note that the investments represent businesses who are developing exciting new technologies in their field.
No impairment has been proposed.
11 Post balance sheet events
(i) Subscriptions and funding
Subsequent to the balance sheet date the Company announced subscriptions to support the short term working capital requirements.
On 10 November 2010 the Company announced that it had agreed to issue 17,873,391 ordinary shares of 0.1p each for a cash consideration of £201,969.
On 25 November 2010 the Company announced that it had agreed to issue 24,408,061 ordinary shares of 0.1p each for a cash consideration of £275,811.
On 20 December 2010 the Company announced that it had agreed to issue 1,966,337 ordinary shares of 0.1p each for a cash consideration of £22,219.61, 15,000,000 ordinary shares of 0.1p each for the conversion of an outstanding loan together with associated accrued interest amounting to £159,000, 400,000 ordinary shares of 0.1p each to the Company’s NOMAD for a deemed aggregate value of £5,000 and 28,318,584 ordinary shares of 0.1p each to certain Directors of the Company in settlement of accrued but unpaid remuneration and a settlement of a discretionary award.
On 31 December 2010 the Company announced that it had agreed to issue 5,517,241 ordinary shares of 0.1p each for a cash consideration of £80,000.
These transactions are not reflected in the financial statements since shares were not issued and admitted to AIM for trading until after the balance sheet date.
(ii) Oxford Broadcasting Limited
On the 12 January 2011 an application was made to Companies House to strike off Oxford Broadcasting Limited.
Copyright Milestone Group PLC 2010 | Registered in England & Wales, Company Number 4689130
