Final Results
Milestone Group PLC
18 March 2004
For Immediate Release Thursday 18th March 2004
MILESTONE GROUP PLC
RESULTS FOR THE 12 MONTHS ENDED 30TH SEPTEMBER 2003
Milestone Group PLC ('Milestone' or 'the Group'), the new cross media group
focussed on local markets, today announces its results for the period ended 30th
September 2003.
Highlights during the period
• Flotation of Milestone on AIM, raising £9.5million
• Operating losses for the year (excluding goodwill impairment and
amortisation) of £2.7 million, based on aggregated turnover of £5.8
million*
• Successful integration of businesses during the period including
Courier Newspapers and Fusion Radio Group
• Milestone's pioneering 'Basingstoke model' demonstrates success of its
cross media strategy:
- Kestrel FM registers 60% year-on-year sales increase
- Basingstoke Observer newspaper cuts costs year-on year by 26%
• Post-September 2003:
- Progress broadly in line with management expectations for new period
- Disposal of non-core radio assets in South East London
- First audience research results for Rugby FM and SIX TV significantly
ahead of management expectations
Commenting on the results, Andy Craig, Chief Executive, said:
'The past year laid the foundations of what will become a fast growth local
media company. The acquisition of Courier Newspapers, the consolidation of the
Fusion Radio Group, and the strengthening of the Milestone Board has further
provided the Group with an excellent platform to deliver on our stated cross
media strategy.'
*Note: The figures stated aggregate the performance for the 12 months to
September 30th 2003 for the trading companies comprising the Group at
flotation on 1st July 2003, in contrast to the financial statements
which only consolidate the three months following the flotation
For further information:
Milestone Group Tel: 01235 547 800
Andy Craig - Chief Executive
Buchanan Communications Tel: 020 7466 5000
Bobby Morse / James Strong
Attached:
Chairman's Statement
Chief Executive's Review
Consolidated Profit & Loss Account
Consolidated Balance Sheet
Consolidated Cashflow Statement
Notes to the Accounts
CHAIRMAN'S STATEMENT
Small markets offer big opportunities. That is the basis upon which the
Milestone Group is developing new publishing and broadcasting platforms in local
markets.
With the benefit of its local media strategy, Milestone is continuing to prove
that it is able to successfully launch new products and develop its existing
products against well established competitors.
On 1st July 2003, Milestone listed on the Alternative Investment Market ('AIM')
as a unique stock with a strong focus on generating revenues from cross media.
Milestone's local media portfolio is made up of three complementary delivery
platforms - publishing, radio and television. Wherever possible each of these
platforms are used to help drive audience and advertising revenues to the other
- offering clients a highly cost effective service to reach local markets.
At the time of the flotation Milestone acquired a number of trading entities.
The Initial Public Offer ('IPO') raised £9.5million, the net proceeds of which
were used as set out in the Group's AIM Admission Document:- to help fund the
acquisition of Courier Newspapers (£4.5million), to repay Group debt
(£1.8million) and to provide general working capital for the Group.
In September 2003, the Board welcomed Roger Laughton CBE as a non-executive
director. Roger brings with him specific expertise in the television sector as a
former Chief Executive of United News and Media's broadcast division. Milestone
enters its first full year of trading confident that it has in place a strong
board and a sound strategy - the foundations of its future success.
I would like to thank our staff for their considerable efforts throughout this
exciting time. With their skills, intelligence, hard work and enthusiasm, we
produce some of the best local publications, radio and TV in the UK.
The year ending 30 September 2003 was focussed on structuring the group into a
multi platform media company. This was achieved through integrating
acquisitions, consolidating certain assets and establishing a quotation on AIM.
Our first results reflect the position of the different businesses around the
time of the IPO, and include only three months of subsequent trading as part of
the converged Milestone Group.
We have met our first objective, establishing the infrastructure for our cross
media strategy. We remain confident of our ability and are entirely committed to
deliver on our proposed strategy at the time of the IPO - namely to become a
significant profitable force in UK media.
Julian Blackwell
Chairman
CHIEF EXECUTIVE'S REVIEW
The operating loss (excluding goodwill impairment and amortisation) for the
three months ended 30 September 2003 was £1.1million. The aggregated operating
loss (excluding goodwill impairment and amortisation) for the twelve months
ended 30 September 2003 was £2.7million based on the aggregation of the non
audited management accounts for the nine months ended 30 June 2003 and the
audited results to 30 September 2003. This result was ahead of management
expectations. The aggregated turnover for the twelve months ended 30 September
2003 was £5.8million. The enlarged group now has a cohesive structure and the
foundations are in place to deliver our stated cross media strategy.
Milestone produces original content targeted at discrete communities,
disseminating local news and entertainment through publishing, radio and
television platforms - all supported by paid-for commercial advertising.
Milestone has a long-term vision of local publishing, local radio and local
television working together. As technology converges, Milestone's local media
brands are well placed to consolidate their position.
Our initial focus is on communities located within some of the wealthiest parts
of the UK - Hampshire, Berkshire, Oxfordshire and Warwickshire. We intend to
explore appropriate opportunities to enhance shareholder value by expanding
Milestone's portfolio of products both within our existing core regions and in
new areas where we can realistically establish a base for further expansion.
Milestone listed on AIM on 1st July 2003. We immediately put in place a three
month programme to integrate the newly-enlarged business. We also undertook a
strategic review with a view to either improving or rationalising all
under-performing business units and to dispose of non-core assets.
Since the flotation, we have put in place a clear strategy and operating
infrastructure across the whole group. Locally-based staff implement local
policies building local client relationships. The Group is strongly committed to
employee training and development to encourage staff retention and productivity.
I am grateful to all of our staff who make a real difference to the communities
that Milestone serves each and every day.
Publishing Division
Prior to 1st July, the privately-owned 'Milestone Group Holdings' owned one
stand-alone weekly free newspaper - the Basingstoke Observer. The acquisition of
Courier Newspapers ('Courier') added eight additional free titles to the new
Milestone Group at flotation, of which three are weekly Oxfordshire-based
newspapers. Courier also publish a number of weekly supplements and special
magazines.
Courier was attractive to Milestone as many of its publications are based in and
around Oxford, enabling us to develop a tri-media strategy for the area
alongside our existing radio and television interests.
In July 2003, we commenced the integration of a number of the management and
back-office functions of the Basingstoke Observer and Courier. This process was
completed by October 2003 in line with our original timetable and we are
confident the integration will further increase our profit margins within the
division.
During the year the Basingstoke Observer has continued to go from strength to
strength, with considerable loyalty demonstrated by its readers and advertisers.
The Basingstoke Observer cut its costs by over £200,000 (26%) primarily as a
result of the cross-promotion and close relationship it has with Milestone's
local radio station Kestrel FM. This relationship helped facilitate a move from
a traditional door-to-door distribution to become a free 'pick up' available
from local retail outlets, reducing distribution and printing costs, as well as
providing an identifiable readership base. Details on where to obtain the
newspaper are promoted on Kestrel FM. The Basingstoke Observer provides a
compelling business model capable of replication elsewhere.
Radio Division
We believe that smaller radio licences are often most valuable when operated
with the support of a wider group and, most importantly, as part of a wider
strategy which fully exploits the considerable brand loyalty a local station
enjoys. We explore opportunities to maximise returns from Milestone's radio
assets not just through media-based brand extensions such as publications or TV
programming but also events and exhibitions.
On 1st July the Group acquired the whole of the Fusion Radio Group, a company in
which Milestone previously had significant ownership and management links.
Milestone's radio division has seen good progress during the year and beyond:
• North Hampshire's Kestrel FM proved the success of Milestone's cross
media model which we intend to expand. Turnover increased by over £200,000
(a 60% increase) and the station registered its first ever profit. Around
10% of the stations revenues were derived directly from 'relationship
revenues' - incremental revenues generated as a result of cross media sales
in conjunction with the Basingstoke Observer.
• Rugby FM performed significantly ahead of the financial projection it
submitted to the Radio Authority as part of its original licence
application for its first full year on-air.
• West Berkshire's Kick FM launched a new programme schedule in mid-2003
which has contributed towards improved local sales yields.
• Oxford's Passion 107.9 (re-branded from 'Fusion 107.9') progressed
from a niche student proposition towards serving a wider audience as
Oxford's local station.
• The Group has a significant stake (37%) in Reading 107 FM which
successfully launched in October 2002.
Television Division
We are positioning Milestone to be a force in the future of television in the UK
- local television. As ITV entrenches itself as a national brand, in Oxfordshire
SIX TV is recognised as part of the media landscape as a free-to-air terrestrial
analogue channel. Revenues have increased significantly over a short period of
time. In July 2003, Milestone was awarded the new local television licence for
the Reading area of Berkshire. We are now reviewing with our engineers and Ofcom
the feasibility of our transmission options for the launch of this new licence.
Publishing Division Post-Period Activities
Subsequent to the year-end, we have launched three new titles. Thames Valley
Life (launched October 2003) and Oxfordshire Living (launched February 2004) are
monthly lifestyle magazines. Basingstoke Property Weekly (launched October 2003)
is a weekly supplement distributed with the Basingstoke Observer any by estate
agents in North Hampshire. Together, these titles replace the Courier's
specialist classified publications which did not make a contribution.
Elements of the 'Basingstoke model' have started to be introduced into
Oxfordshire; the weekly Journal title has become available as a free 'pick up'
from selected retail outlets - extending its reach. Customer relations have been
improved through the use of regular customer forums and we have put in place an
integrated features plan for selling specific cross media campaigns in the
county.
A significant development in December 2003 was the establishment of a new design
business based at the Group's headquarters in Abingdon. As a consequence, we are
now able to provide the Group and external clients with high-quality design
services produced in-house. Our titles are already benefiting from greater
control over advertisement production and the unit has gained an external
contract with a local authority.
Radio Division Post Period activities
In January 2004, we disposed of Milestone's two non-core radio stations in South
East London, Time FM and Fusion 107.3, for a total consideration of
£1.25million. Our radio division now comprises interests in five radio stations
- four of which are controlling interests - each focussed on providing smaller
communities with highly-local news and information alongside a music mix of
local appeal.
In January 2004, Rugby FM received its first official Rajar audience figures
giving it a weekly reach of 41% - more listeners than any other radio station in
its area. These launch Rajar results put Rugby FM alongside the UK's most
successful radio stations and we anticipate will help it to reach profitability
further ahead of its original business plan.
Since the year-end Oxford's Passion 107.9 has implemented relaxations to its
transmission arrangements putting it in a stronger position to grow its
audience. In January 2004 we introduced an opportunity for advertisers to buy
the Passion brand across three platforms with the launch of a monthly Passion
magazine (available as a free 'pick-up' from selected retail outlets in
Oxfordshire) and the launch of Passion TV within the evening schedule of SIX TV.
The Passion brand appeals primarily to young professionals in Oxfordshire and
the brand sales team are able to sell all three platforms, improving sales
productivity.
Milestone has significant interests in a number of groups intending to submit
applications for future prospective analogue radio licences. We consequently
welcome the recent suggestion from Ofcom, the new communications regulator, that
it will seek a speedy review of its plans for new FM radio licensing.
Television Division Post-Period Activities
SIX TV is now developing an independent research currency for local television
that conforms to industry research standards. This research over the period
October to December 2003 shows a daily reach for SIX TV amongst a representative
sample of its potential analogue audience of 18%. These first audience results
are ahead of management expectations and further demonstrates the benefits of
cross media promotion which SIX TV now receives in Oxfordshire. As well as being
an important aid in increasing future sales revenues, the research enables the
channel to better focus its resources on the most popular programming genres. In
November 2003 SIX TV spearheaded the Group's editorial co-operation by pooling
its news resources with Passion 107.9, the radio station for Oxford, now based
at SIX TV's studio premises.
In November 2003, the Group acquired the outstanding 9% minority interests in
Oxford's SIX TV in return for shares in Milestone. We are now participating in
productive discussions with the Department of Culture, Media and Sport regarding
the priority we wish the Government to give to the provision of new terrestrial
digital platforms for local television services.
Dividend Policy
The Board's intention is for the Company to re-invest any net earnings to
finance the growth and expansion of its business and accordingly they do not
intend that the Company shall pay dividends in the foreseeable future. The Board
will continue to review the appropriateness of its dividend policy as the
business of the Group develops.
Outlook
In the first quarter of the new financial year the Group progressed broadly in
line with management expectations. Whilst 2004 started with a tough January and
February, we are on course for a strong March. The results of favourable market
research, particularly at SIX TV, is having an increasing impact on
forward-bookings and revenue yields for the remainder of the year. As a result
of the restructuring of the business achieved to date, we move forward with
confidence in our products, strategy and ability to deliver fast growth.
Andy Craig
Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period ended 30 September 2003
Acquisitions
1 July 2003
to 30 September 2003
Note £
Turnover 2 1,191,089
Cost of sales (672,751)
Gross Profit 518,338
Distribution costs (28,868)
Administrative expenses:
Impairment of goodwill (2,189,490)
Other administrative expenses (1,924,720)
(4,114,210)
(3,624,740)
Other operating income 40,130
Group operating loss (3,584,610)
Share of operating loss in associated undertakings (77,930)
Loss on ordinary activities before interest (3,662,540)
Interest receivable 19,834
Interest payable and similar charges (13,760)
Loss on ordinary activities before taxation (3,656,466)
Taxation on loss from ordinary activities 3 (5,523)
Loss on ordinary activities after taxation (3,661,989)
Minority interest 26,051
Loss for the financial period and accumulated for the period (3,635,938)
Basic and diluted loss per share 4 (39.3) p
All amounts relate to continuing activities
All recognised gains and losses are included in the profit and loss account
CONSOLIDATED BALANCE SHEET
at 30 September 2003
Note 2003 2003
£ £
Fixed assets
Intangible assets 14,075,558
Tangible assets 1,098,148
Fixed asset investments 1,237,787
16,411,493
Current assets
Debtors - due in more than 1 year 1,431,334
Cash at bank and in hand 894,770
2,326,104
Creditors: amounts falling due within one year (1,874,771)
Net current assets 451,333
Total assets less current liabilities 16,862,826
Creditors: amounts falling due
after more than one year (152,163)
Provisions for liabilities and charges (15,523)
16,695,140
CONSOLIDATED BALANCE SHEET
at 30 September 2003 (Continued)
Note 2003
£
Capital and reserves
Called up share capital 2,159,998
Share premium account 6,997,235
Merger reserve 10,889,978
Profit and loss account (3,428,694)
Equity shareholders' funds 5 16,618,517
Minority interests 76,623
16,695,140
The financial statements were approved by the Board on 17th March 2004
A T Craig
Director
COMPANY BALANCE SHEET
at 30 September 2003
Note 2003 2003
£ £
Fixed assets
Tangible assets 596
Investments 2,548,380
2,548,976
Current assets
Debtors 7,554,462
Creditors: amounts falling due within one year (208,014)
Net current assets 7,346,448
Total assets less current liabilities 9,895,424
Creditors: amounts falling due after more than one year (2,500,000)
7,395,424
Capital and reserves
Called up share capital 2,159,998
Share premium account 6,997,235
Profit and loss account (1,761,809)
Equity shareholders' funds 7,395,424
The financial statements were approved by the Board on 17th March 2004.
A T Craig
Director
CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30 September 2003
Note 2003 2003
£ £
Net cash outflow from operating activities 7 (1,036,278)
Returns on investments and servicing of finance
Interest received 19,834
Interest paid (13,760)
Net cash inflow from returns on investment and servicing 6,074
of finance
Taxation
UK corporation tax -
Capital expenditure
Purchase of tangible fixed assets (5,917)
Acquisitions and disposals
Purchase of subsidiary undertakings (4,500,000)
Cash acquired with subsidiary undertakings (314,557)
Net cash outflow from acquisitions (4,814,557)
Cash outflow before financing (5,850,678)
Financing
Issue of share capital 8,130,000
Cost of issuing share capital (657,765)
Loan repayments (978,000)
Cash inflow from financing 6,494,235
Increase in cash in the period 643,557
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
for the period ended 30 September 2003
1 Accounting policies
The financial information contained in this announcement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
for the period ended 30 September 2003. A copy of the annual accounts will be
posted to shareholders by 23rd March 2004, and will be filed with the registrar
of companies in due course.
2 Turnover, loss and net assets
The turnover, pre tax loss and net assets at the balance sheet date are
attributable to the principal activities of the group. These categories have
been analysed by class of business as set out below. The United Kingdom is the
only geographical market.
Turnover Pre-tax loss
1 July 2003 to 1 July 2003 to
30 September 2003 30 September 2003
£ £
Analysis by class of business:
Publishing Division 803,113 (328,441)
Radio Division 319,120 (2,766,041)
Television Division 68,856 (317,917)
1,191,089 (3,412,399)
Head office costs - (244,067)
1,191,089 (3,656,466)
Net assets
30 September 2003
£
Net operating assets
Publishing Division 6,502,237
Radio Division 6,702,828
Television Division 3,631,143
16,836,208
Head office cost liabilities (141,068)
16,695,140
3 Taxation on loss from ordinary activities
1 July 2003 to
30 September 2003
£
UK corporation tax
Current tax on losses of the period -
Deferred tax
Origination and reversal of timing differences 5,523
Taxation on loss on ordinary activities 5,523
The tax assessed for the period is different than the standard rate of
corporation tax in the UK. The differences are explained below:
1 July 2003 to
30 September 2003
£
Loss on ordinary activities before tax (3,656,466)
Loss on ordinary activities at the standard rate
of corporation tax in the UK of 30% (1,096,940)
Effects of:
Expenses not deductible for tax purposes 859,494
Capital allowances for period in excess of depreciation 72,011
Unutilised tax losses 158,605
Income not taxable for tax purposes (2,200)
Other items 9,030
Current tax charge for the period -
Factors that may affect future tax charges
Deferred tax assets of approximately £3 million (group) and £23,854 (company)
have not been recognised in the financial statements as there is currently
insufficient evidence that any deferred tax assets would be recoverable.
The group has unutilised tax losses of approximately £10 million available for
relief against future profits, subject to agreement by the Inland Revenue.
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 9,303,269 and
the loss was £3,656,466. The effect of all potential ordinary shares is
antidilutive.
5 Reconciliation of movements in shareholders' funds
Group Company
2003 2003
£ £
Loss for the period (3,635,938) (1,761,809)
Capital contribution 207,244 -
Flotation costs (1,552,765) (1,552,765)
Shares issued in the period 2,159,998 2,159,998
Merger reserve 10,889,978 -
Premium on shares issued on flotation 8,550,000 8,550,000
Net addition to and closing shareholders' funds 16,618,517 7,395,424
6 Post balance sheet events
On 15 January 2004, Milestone Radio Holdings Limited (formerly Fusion Radio
Holdings Limited), a subsidiary of the company, completed the disposal of
its investment in Time FM 106.8 Limited and Fusion 107.3 FM Limited. The
consideration of £625,000 for the sale of Fusion 107.3 FM Limited was
received on 15 January 2004. The consideration of £625,000 for the sale of
Time FM 106.8 Limited has been deferred for payment until 31 March 2004.
On 3 November 2003, the company acquired the remaining 9.26% of the
ordinary share capital of Oxford Broadcasting Limited, a subsidiary of the
company.
7 Reconciliation of operating loss to net cash outflow from operating
activities
2003
£
Operating loss (3,611,390)
Amortisation and impairment of intangible fixed assets 2,559,858
Depreciation 88,774
Decrease in debtors 42,772
Decrease in creditors (116,292)
Net cash outflow from operating activities (1,036,278)
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