Interim Results

Milestone Group PLC 14 June 2007 MILESTONE GROUP PLC RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007 AIM listed Milestone Group PLC ('Milestone' or the 'Company') announces its results for the six months ended 31 March 2007. Highlights •Operating loss for the six months ended 31 March 2007 reduced to £0.7m inclusive of a £0.3m provision for management restructuring (six months ended 31 March 2006 operating loss: £2.0m) •£0.6m of cash reserves (31 March 2006: £0.7m) •Management restructure as strategic review approaches conclusion Milestone Chairman, John Sanderson, said: 'The Company's strategic review is now entering its final stages and the Board intends to make an announcement to shareholders in due course.' For further information: Milestone Group PLC Tel: 020 7580 2444 John Sanderson, Chairman Arden Partners plc Tel: 020 7398 1632 Richard Day / Adrian Trimmings Below: Chairman's Statement Unaudited Consolidated Profit & Loss Account Unaudited Consolidated Balance Sheet Unaudited Consolidated Cashflow statement Notes to the interim financial information Milestone Group PLC Results for the six months ended 31 March 2007 CHAIRMAN'S STATEMENT Strategic Review During the financial year ended 30 September 2006, the Board pursued a strategy of maximising shareholder value by undertaking a structured disposal of the group's traditional publishing and radio assets. The strategy fulfilled two essential objectives for the group: (i) to eliminate losses from continued trading in an increasingly challenging publishing and radio environment and (ii) to provide cash from asset sales to provide working capital and enable the Company to explore new opportunities on behalf of shareholders. This review is ongoing and it is intended to make further announcements to shareholders in due course. Television Division Loss reduced to £40,000 on turnover of £46,000 (2006: loss of £96,000 on turnover of £76,000) The television division continues to trade at a modest loss broadly in line with expectations. Although investment in the group's local TV licences has been fully written down in the Company's books, the Board believes the channels could add value either to an enlarged Milestone Group or a third party. The future of the assets is therefore likely to be influenced by the Company's wider strategic review which is ongoing. In the meantime, trading is expected to remain subdued in light of the exceptionally low overheads now in place. The Company continues to be at the forefront of campaigning for local television to gain access to the Freeview platform post digital switchover. Meetings have been attended with both DCMS and DTI who are now expecting to make policy decisions, with Ofcom, in the coming year. Post Balance Sheet Events The Board announced in May 2007 that, in order to facilitate the conclusion of the group's strategic review, the Company's two executive directors had agreed to stand down from their full time positions. Milestone's former CEO, Andy Craig, remains on the board as a non-executive director whilst Finance Director, Brian Chester, continues to serve in his original role but in a part time capacity. As a consequence of these new arrangements, the Company's ongoing monthly overheads have been significantly reduced. Upon completion of the Company's strategic review, neither Andy Craig or Brian Chester will be entitled to any further termination payments. In addition, all three holders of options under the Milestone Unapproved Share Option Scheme, Andy Craig, Brian Chester and Dan Cass, have agreed to waive all outstanding options granted to them. I would like to take this opportunity to express my gratitude to my colleagues for the diligent manner in which they are continuing to perform their services to Milestone as the Company approaches the final stages of its strategic review. Future Trading The Company has sufficient reserves in place to continue to trade as a going concern for the foreseeable future. The Board is considering the likely funding requirements of an expansion of the Company's business as part of its strategic review process. Outlook The Board is working with vigour to seek to bring its strategic review to a satisfactory conclusion. As stated in February 2007, the Company essentially has two options: (i) a paper-based acquisition expanding the group's interests and taking the business in a new direction or (ii) the winding-up of the group following a sale of the TV division and distribution of any outstanding cash to shareholders. The Company is currently investigating a possible transaction with one particular entity although the final outcome, at this stage, remains uncertain. The Board is doing all it can to reach a conclusion and intends to make a further announcement in due course. Throughout this period the Board will remain focused on minimising overheads and losses. John Sanderson Chairman 13 June 2007 Consolidated profit and loss account for the six month period ended 31 March 2007 Audited Audited Unaudited Unaudited Year ended Year ended Audited Six months Six months 30 September 30 September Year ended Note ended ended Continuing Discontinued 30 September 31 March 31 March 2006 2006 Total 2006 2007 2006 £ £ £ £ £ Turnover 50,918 1,762,883 137,719 2,825,183 2,962,902 Cost of sales 7,097 1,300,897 110,156 2,312,082 2,422,238 --------- -------- --------- --------- --------- Gross Profit 43,821 461,986 27,563 513,101 540,664 Distribution costs - 55,295 - 55,295 55,295 Impairment of goodwill - 557,138 - 471,538 471,538 Other administrative 770,056 1,817,229 1,293,165 1,549,123 2,842,288 expenses --------- -------- --------- --------- --------- (726,235) (1,967,676) (1,265,602) (1,562,855) (2,828,457) Other operating income 54,381 445 5,120 14,768 19,888 --------- -------- --------- --------- --------- Group operating loss (671,854) (1,967,231) (1,260,482) (1,548,087) (2,808,569) --------- -------- --------- --------- --------- Profit/(Loss) on disposal of - 180,796 - (1,227,652) (1,227,652) group operations --------- -------- --------- --------- --------- Loss on ordinary activities (671,854) (1,786,435) (1,260,482) (2,775,739) (4,036,221) before interest Interest receivable 20,893 457 8,295 Interest payable 2,936 45,854 68,933 --------- -------- --------- Loss on ordinary activities (653,897) (1,831,832) (4,096,859) before taxation Taxation on loss from ordinary activities 2 - - 8,885 --------- -------- --------- Loss on ordinary activities (653,897) (1,831,832) (4,087,974) after taxation Minority interest - 47,852 47,717 ========= ======== ========= Loss for the financial (653,897) (1,783,980) (4,040,257) period ========= ======== ========= Basic and diluted loss per share 3 (2.4) p (6.4) p (14.8) All recognised gains and losses are included in the profit and loss account Consolidated balance sheet at 31 March 2007 Unaudited Unaudited Audited 31 March 2007 31 March 2006 30 September 2006 Note £ £ £ £ £ £ Fixed assets Intangible - 2,475,212 - assets Tangible 11,313 496,679 7,535 assets --------- --------- --------- Fixed asset - 22,529 - investments --------- --------- --------- 11,313 2,994,420 7,535 Current assets Debtors 136,400 770,369 163,743 -------- --------- ------- Cash at bank 593,735 718,066 1,221,181 and in hand -------- --------- ------- 730,135 1,488,435 1,384,924 Creditors: amounts falling due within one year 516,995 1,321,513 511,045 -------- --------- ------- --------- --------- --------- Net current 213,140 166,922 873,879 (liabilities) /assets --------- --------- --------- Total assets 224,453 3,161,342 881,414 less current liabilities Creditors: - 4,192 3,063 amounts falling due after more than one year --------- --------- --------- Provisions - 22,523 - for liabilities and charges --------- --------- --------- 224,454 3,134,627 878,351 ========= ========= ========= Capital and reserves Called up 4 2,760,510 2,760,510 2,760,510 share capital Share premium 5 7,692,985 7,692,985 7,692,985 account Merger 5 11,119,585 11,119,585 11,119,585 reserve --------- --------- --------- Profit and 5 (21,348,626) (18,438,453) (20,694,729) loss account --------- --------- --------- Equity 224,454 3,134,627 878,351 shareholders'funds ========= ========= ========= Consolidated cash flow statement for the six month period ended 31 March 2007 Unaudited Unaudited Audited 31 March 2007 31 March 2006 30 Sept 2006 Note £ £ £ £ £ £ ------- -------- -------- -------- ------- -------- Net cash outflow from operating 6 (500,357) (931,465) (1,338,318) activities Returns on investments and servicing of finance Interest 20,893 457 8,295 received Interest (2,936) (45,854) (68,933) paid ------- -------- ------- Net cash 17,957 (45,397) (60,638) inflow / (outflow) from returns on investment and servicing of finance Taxation UK corporation tax - - 8,885 Capital expenditure Purchase of (7,882) (1,738) (1,744) tangible fixed assets Receipts - 500 500 from sale of tangible fixed assets ------- -------- ------- (7,882) (1238) (1,244) Acquisitions and disposals Proceeds - 1,947,175 3,394,066 from disposal of business operations Cash - (98,667) (210,887) disposed of with business operations Cost of - (174,611) (333,662) disposal of business operations ------- -------- ------- Net cash - 1,673,897 2,849,517 inflow from acquisitions and disposals -------- -------- -------- Cash (490,282) 695,797 1,458,202 (outflow) inflow before financing Financing New Loans - - 211,400 advanced Loan (3,063) (1,208) (213,737) repayments Capital - (4,676) (11,882) element of finance leases repaid Repayments/ - (276,883) (283,321) advances under invoice discounting agreements ------- -------- ------- Cash outflow (3,063) (282,767) (297,540) from financing ======== ======== ======== (Decrease) / 7,8 (493,345) 413,030 1,160,662 increase in cash in the period ======== ======== ======== Notes to the Interim financial information for the six month period ended 31 March 2007 1 Basis of preparation The Interim Report was approved by the Board of Directors on 13 June 2007. Except as noted below the financial information contained in this Interim Report has been prepared on the basis of the accounting policies set out in accordance with applicable United Kingdom accounting standards in the Group's audited accounts for the year ended 30 September 2006. In preparing this information the Group has adopted for the first time FRS 20 'Share-based Payment'. This has not resulted in any changes to the current or comparative period financial information. The financial information for the six months ended 31 March 2007 and 31 March 2006 is unaudited. The comparatives for the full year ended 30 September 2006 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 237 (2)-(3) of the Companies Act 1985.' 2 Taxation Deferred tax assets have not been recognised on the basis that their future economic benefit is not certain. 3 Loss per share Basic loss per share has been calculated in accordance with FRS 22. Basic loss per share has been calculated by dividing the loss on ordinary activities 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 27,605,095 and the loss was £653,897. The effect of all potential ordinary shares is antidilutive. 4 Share capital 2007 2007 2006 2006 £ Number £ Number Authorised Ordinary shares of 10p each 5,000,000 50,000,000 5,000,000 50,000,000 ========== ========== ========== ======== 2007 2007 2006 2006 £ Number £ Number Allotted, called up and fully paid Ordinary shares of 10p each 2,760,510 27,605,095 2,760,510 27,605,095 ========== ========== ========== ======== 5 Reserves Share Profit Premium Merger and loss Account Reserve Account £ £ £ Group At 1 October 2006 7,692,985 11,119,585 (20,694,729) Loss for the period - - (653,897) --------- --------- ---------- At 31 March 2007 7,692,985 11,119,585 (21,348,626) ========= ========= ========== 6. Reconciliation of operating loss to net cash outflow from operating activities 2007 £ Operating loss (671,854) Depreciation 4,104 Decrease in debtors 27,341 Increase in creditors 140,052 --------- Net cash outflow from operating activities (500,357) ========= 7 Reconciliation of net cash outflow to movement in net funds 2007 £ Decrease of cash in period (490,282) Cash outflow from decrease in debt financing (3,063) --------- Movement in the period (493,345) Net cash at 1 October 2006 1,087,080 --------- Net cash at 31 March 2007 593,735 ========= 8 Analysis of net debt At 1 October Cash At 31 March 2006 Flow 2007 £ £ £ Cash at bank and in hand 1,221,181 (627,446) 593,735 Bank overdrafts (134,101) 134,101 - --------- --------- ---------- 1,087,080 (493,345) 593,735 Debt due after one year (3,063) 3063 - --------- --------- ---------- Total 1,084,017 (490,282) 593,735 ========= ========= ========== 9 Post Balance Sheet Events In order to reduce management costs, Chief Executive, Andy Craig, has agreed to allow his existing service contract to be terminated as of 18 May 2007 but to remain on the Milestone Board serving as a non executive director. Separately, MGH Investments Limited, a consultancy company controlled by Andy Craig, has been contracted to provide corporate finance advice to the Company until the completion of the group's strategic review. Similarly, the Company's Finance Director, Brian Chester, has agreed to allow his existing service contract to be terminated as of 18 May 2007 but to remain on the Milestone Board serving in the capacity of part time Finance Director. Separately, ChesterBrown Limited, a company controlled by Brian Chester, has been contracted to provide ongoing consultancy services to the Company until the completion of the group's strategic review. Under the terms of these compromise, consultancy and directorship arrangements the aggregate amount payable to Andy Craig and MGH Investments Limited is £155,000 and to Brian Chester and ChesterBrown Limited £121,000. These costs have been accrued for in the accounts to 31 March 2007 consistent with the Board's expectation at that time. This information is provided by RNS The company news service from the London Stock Exchange

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