Interim Results

Milestone Group PLC 29 June 2004 For Immediate Release 29th June 2004 MILESTONE GROUP PLC RESULTS FOR THE SIX MONTHS ENDED 31st MARCH 2004 Milestone Group PLC ('Milestone' or 'the Group'), the AIM-listed cross media group, today announces its results for the six months ended 31st March 2004. Highlights during the period â€¢ Turnover of Â£3.1m, gross profit of Â£1.5m and operating losses of Â£1m â€¢ Launch of new property related titles in Basingstoke and Oxfordshire â€¢ In Publishing Division, Milestone now has in-house pre-press function, lowering future costs â€¢ Radio Division significantly improved with the disposal of two non core radio assets for Â£1.25m and RAJAR figures for Rugby FM placing it number one in its market â€¢ Television Division expanded, with acquisition of licenses in Southampton and Portsmouth Commenting on the results, Andy Craig, Chief Executive, said: 'These results represent the first trading period since Milestone fully consolidated its local television, radio and publishing assets. We are beginning to see some strong attraction for our unique offering for our clients through local publishing, radio and television advertising, whilst continuing to look at opportunities of growing the business organically and through selective acquisitions.' For further information: Milestone Group Tel: 01235 547 800 Andy Craig - Chief Executive Buchanan Communications Tel: 020 7466 5000 Bobby Morse / James Strong Attached: Chief Executive's Review Consolidated Profit & Loss Account Consolidated Balance Sheet Consolidated Cashflow Statement Notes to the Accounts Milestone Group PLC Interim Report Chief Executive's Review for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- Milestone has made progress during its first six months trading period as a fully consolidated company with confirmation of the Group's ability to achieve revenues through its unique cross media strategy focused on local and niche markets. In the six months to the 31st March 2004 the Group turnover was Â£3.1m with a gross profit of Â£1.5m and operating loss for the period of Â£1m. Cost of disposal of assets, acquisition of minority interests and goodwill amortisation amounted to a further Â£1.1m producing a total loss for the period of Â£2.1m. The basic and diluted loss per share for the period amounted to 10p. Publishing We have started piloting new publications in two core areas of the group. In North Hampshire we have launched 'Basingstoke Property Weekly' as a weekly property supplement. In Oxfordshire we have established 'Oxfordshire Living' - a monthly arts and lifestyle magazine targeting wealthy households. Though early in their development the initial response to our new publications has been strong and a roll out of similar titles to further regions is therefore being considered. Our new magazines department provides us with the ability to exploit further niche publishing opportunities in the future. In December we established an in-house 'pre-press' department to provide advertising design services to clients. Whilst considerable set-up costs have been incurred in our first year (particularly during the 'handover period' during which time we have been required to continue to employ external production services) this new department will ensure the Group's publishing division benefits from increased efficiencies in future years. In May we were delighted to welcome Tom McGowran, the former Chief Executive of Tindle Newspapers, in the new position of Publishing Director. In our preliminary results statement we acknowledged that the calendar year had begun with some challenging months and this was particularly the case in publishing. Advertising sales within the Courier Group, acquired by Milestone in July 2003, remain predominantly on short-term contracts. One of Tom's priorities will be to seek to build the number of clients signing multiple week bookings, stabilizing weekly revenues. We are extremely pleased to have been able to attract someone of Tom's calibre and we share Tom's confidence in his ability to substantially grow the profitability of the Group's publishing assets as part of a wider cross-media mix. The impact of the set-up costs for our pre-press department combined with the volatility associated with the Courier Group's short term advertising contracts will make a material impact on the profitability of the division. Milestone Group PLC Interim Report Chief Executive's Review for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- Radio Milestone views commercial radio stations as the building blocks from which we are able to grow our media business. Our strategy is to add value to the Group principally by launching brand extensions on the back of the loyalty enjoyed by local or regional niche broadcast platforms, breaking the revenue 'ceiling' that is often perceived to exist in radio. Recently in Basingstoke we launched a Kestrel loyalty card in conjunction with retailers whilst in Oxford, Passion magazine, a new glossy monthly listings magazine, has made a profitable contribution to the Passion brand since it launched in January 2004. Whilst a number of radio groups appear to question the value of 'localness' in their broadcast output, Milestone is proving the success of its strategy recording increased listening across its radio portfolio, with our most recently launched station, Rugby FM, now established as the market leader according to official RAJAR research. Ofcom have announced their plans for new FM licenses and it is the Group's intention to submit applications with partners in a number of areas. During the period the Group completed the disposal of two non-core London-based subsidiary undertakings, Time FM 106.8 Limited and Fusion 107.3 FM Limited. The aggregate consideration for the sale of Â£1.25m was received in line with the payment terms agreed with the purchaser prior to the end of the period. The Group's trading results for the year will include some exceptional costs associated with this sale. Television In November 2003 we acquired the outstanding minority shareholding in SIX TV Oxford not already owned by the Group. During the past six months costs have been further reduced and benefits of the integration of the cross-media businesses have been highlighted, most especially through impressive audience research results for the channel. We believe that these research results will over time translate into higher advertising order values and, to this end, we recently brought in new sales management to implement our revenue plan. We have continued to participate in constructive discussions with Ofcom and the DCMS regarding the implications of 'digital switchover' for local television operators. As announced in April, we have acquired ownership of the Local Television licences for Portsmouth and Southampton (the latter of which was inherited as an 'on-air' broadcasting channel and we have now re-branded as SIX TV). This week we completed an agreement to acquire a substantial amount of studio and transmission equipment of use to SIX TV Southampton not previously owned by the channel. Milestone Group PLC Interim Report Chief Executive's Review for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- Outlook In the first quarter of the new financial year the Group progressed broadly in line with management expectations. Revenue in the subsequent two quarters has proven to be more volatile and, combined with the one-off issues already highlighted in the Publishing Division, we therefore anticipate that losses for the year will now be higher than originally expected. The Board is confident that fluctuations will be reduced as a consequence of new sales management and procedures recently implemented. Overall we anticipate that the outcome for the year will reflect improved trading - demonstrating the opportunities for greater future growth presented by expansion of our cross media strategy. The smaller local media marketplace remains fractured with no dominant player providing all three media. The Group has been offered a short term facility should this be required for working capital purposes. At the same time, we are exploring a number of options for organic developments and potential acquisitions. Andy Craig Chief Executive 29th June 2004 Milestone Group PLC Interim Report Consolidated profit and loss account for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- Unaudited Audited six months three months ended ended Note 31 March 30 September 2004 2003 Â£ Â£ Turnover 3,083,549 1,191,089 Cost of sales (1,606,397) (672,751) ---------- ---------- Gross Profit 1,477,152 518,338 Distribution costs - (28,868) Administrative expenses: ---------- ---------- Impairment of goodwill - (2,189,490) Loss on disposal of group operations 2 (296,083) - Other administrative expenses (3,308,438) (1,924,720) ---------- ---------- (3,604,521) (4,114,210) ---------- ---------- (2,127,369) (3,624,740) Other operating income - 40,130 ---------- ---------- Group operating loss (2,127,369) (3,584,610) Share of operating loss in associated (74,400) (77,930) undertakings ---------- ---------- Loss on ordinary activities before (2,201,769) (3,662,540) interest Interest receivable 15,020 19,834 Interest payable and similar charges (3,044) (13,760) ---------- ---------- Loss on ordinary activities before (2,189,793) (3,656,466) taxation Taxation on loss from ordinary 3 - (5,523) activities ---------- ---------- Loss on ordinary activities after (2,189,793) (3,661,989) taxation Minority interest 49,747 26,051 ---------- ---------- Loss for the financial period and accumulated for the period (2,140,046) (3,635,938) ========== ========== Basic and diluted loss per share 4 (10.0) p (39.3) p ========== ========== All amounts relate to continuing activities All recognised gains and losses are included in the profit and loss account Milestone Group PLC Interim Report Consolidated balance sheet at 31 March 2004 -------------------------------------------------------------------------------- Unaudited Audited 31 March 2004 30 September 2003 Note Â£ Â£ Â£ Â£ Fixed assets Intangible assets 5 12,483,432 14,075,558 Tangible assets 862,465 1,098,148 Fixed asset 1,163,387 1,237,787 investments ---------- -------- 14,509,284 16,411,493 Current assets Debtors - due in more than 1,692,431 1,431,334 1 year Cash at bank and in 675,317 894,770 hand --------- -------- 2,367,748 2,326,104 Creditors: amounts falling due within one year (2,008,307) (1,874,771) --------- -------- Net current 359,441 451,333 assets ---------- -------- Total assets less current 14,868,725 16,862,826 liabilities Creditors: amounts falling due after more than one (92,736) (152,163) year Provisions for liabilities (15,523) (15,523) and charges ---------- ---------- 14,760,466 16,695,140 ========== ======== Capital and reserves Called up share 6 2,185,510 2,159,998 capital Share premium 7 6,997,235 6,997,235 account Merger reserve 7 11,119,585 10,889,978 Profit and loss 7 (5,568,740) (3,428,694) account ---------- -------- Equity 14,733,590 16,618,517 shareholders' funds Minority 26,876 76,623 interests ---------- -------- 14,760,466 16,695,140 ========== ======== Milestone Group PLC Interim Report Consolidated cash flow statement for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- Unaudited Audited 31 March 2004 30 September 2003 Note Â£ Â£ Â£ Â£ Net cash outflow from operating 8 (1,103,550) (1,036,278) activities Returns on investments and servicing of finance Interest received 15,020 19,834 Interest paid (3,044) (13,760) -------- -------- Net cash inflow from returns on investment and servicing of 11,976 6,074 finance Taxation UK corporation tax - - Capital expenditure Purchase of tangible (82,185) (5,917) fixed assets Acquisitions and disposals Purchase of subsidiary - (4,500,000) undertakings Cash acquired with - (314,557) subsidiary undertakings Proceeds from disposal of 1,250,000 - group operations Overdraft from disposal of 12,027 - group operations Cost of disposal of group (141,636) - operations -------- -------- Net cash inflow/(outflow) from acquisitions and disposals 1,120,391 (4,814,557) --------- -------- Cash outflow before (53,368) (5,850,678) financing Financing Issue of share - 8,130,000 capital Cost of issuing - (657,765) share capital Loan repayments (31,186) (978,000) -------- -------- Cash (outflow)/inflow from (31,186) 6,494,235 financing --------- -------- (Decrease)/increase in cash in the period 9,10 (84,554) 643,557 ========= ======== Milestone Group PLC Interim Report Notes to the Interim financial information for the six month period ended 31 March 2004 -------------------------------------------------------------------------------- 1 Basis of preparation The Interim Report was approved by the Board of Directors on 29 June 2004. The financial information contained in this Interim Report has been prepared on the basis of the accounting policies set out in the Group's audited accounts for the period ended 30 September 2003. The financial information for the six months ended 31 March 2004 are unaudited. The financial information for the Group set out above does not constitute 'statutory accounts' within the meaning of Section 240 of the Companies Act 1985. The information for the period ended 30 September 2003 has been extracted from the statutory accounts of Milestone Group PLC for that period which received an unqualified audit report and have been delivered to the Registrar of Companies. 2 Loss on disposal of group operations On 15 January 2004 the Group completed the disposal of two subsidiary undertakings, Time FM 106.8 Limited and Fusion 107.3 FM Limited. The consideration for the sale of Time FM 106.8 Limited was Â£625,000 and resulted in a loss of Â£106,007 to the Group. The consideration for the sale of Fusion 107.3 FM Limited was Â£625,000 and resulted in a loss of Â£190,076 to the Group. The total loss on disposal of operations of Â£296,083 includes an amount of Â£1,222,847 in respect of a write down of unamortised goodwill. 3 Taxation Deferred tax assets have not been recognised on the basis that their future economic benefit is not certain. 4 Loss per share Basic loss per share has been calculated in accordance with FRS 14. Basic loss per share has been calculated by dividing the loss on ordinary activities before taxation by the weighted average number of ordinary shares in issue during the period. The weighted average number of equity shares in issue was 21,855,095 and the loss was Â£2,189,793. The effect of all potential ordinary shares is antidilutive. 5 Intangible assets Goodwill on Consolidation Â£ Cost At 1 October 2003 16,608,636 Additions 255,119 Disposals (2,559,773) ---------- At 31 March 2004 14,303,982 ========== Amortisation At 1 October 2003 2,533,078 Provided for the period 624,398 Disposals (1,336,926) ---------- At 31 March 2004 1,820,550 ========== Net book value 12,483,432 ========== At 31 March 2004 6 Share capital Group and company 2004 2004 Â£ Number Authorised Ordinary shares of 10p each 5,000,000 50,000,000 ========== ========== Group and company 2004 2004 Â£ Number Allotted, called up and fully paid Ordinary shares of 10p each 2,185,510 21,855,095 ========== ========== On 3 November 2003, 255,119 ordinary shares of 10p each were issued at Â£1 each as consideration for the transfer of the 9.26% share capital of Oxford Broadcasting Limited not already owned by Milestone Group PLC. 7 Reserves Share Profit premium Merger and loss account reserve account Â£ Â£ Â£ Group At 1 October 2003 6,997,235 10,889,978 (3,428,694) Loss for the period - - (2,140,046) Premium on shares issued - 229,607 - --------- --------- ---------- At 31 March 2004 6,997,235 11,119,585 (5,568,740) ========= ========= ========== 8 Reconciliation of operating loss to net cash outflow from operating activities 2004 Â£ Operating loss (2,127,369) Amortisation 624,398 Depreciation 147,874 Loss on disposal of group operations 296,083 Increase in debtors (432,498) Increase in creditors 387,962 --------- Net cash outflow from operating activities (1,103,550) ========= 9 Reconciliation of net cash outflow to movement in net funds 2004 Â£ Decrease in cash in the period (84,554) Cash outflow from decrease in debt and lease financing 31,186 --------- Movement in the period (53,368) Net Funds at 1 October 2003 612,371 --------- Net Funds at 31 March 2004 559,003 ========= 10 Analysis of net funds At At 1 October Cash 31 March 2003 flow 2004 Â£ Â£ Â£ Cash at bank and in hand 894,770 (219,453) 675,317 Bank overdrafts (251,213) 134,899 (116,314) --------- --------- ---------- 643,557 (84,554) 559,003 Debt due after one year (10,199) 10,199 - Finance leases (20,987) 20,987 - --------- --------- ---------- Total 612,371 (53,368) 559,003 ========= ========= ========== This information is provided by RNS The company news service from the London Stock Exchange

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