Milestone Group PLC: Final Results

Milestone Group PLC: Final Results

MILESTONE GROUP PLC
("Milestone" or the "Company")

Final Results

Milestone, the AIM quoted (AIM: MSG) provider of digital media and technology solutions, announces its final results for the year ended 30 September 2013.  

Highlights

  • The launch of the Passion Project, a youth engagement and employability programme
  • Successful adaption and pilot of the SFK schools materials resulting in the launch of "Winning in the Game of Life" (Level 1) programme suitable for all UK primary schools
  • OnGuard Software developed resulting in revenue generating pilot post year-end
  • Oil Productions Ltd rebranded and repositioned, now trading as Relative
  • Establishment of the Milestone Foundation
  • Three key appointments - Kevin Everett to the Board as Non-Executive Director, Ximo Peris as Youth Development Director and Darren Groucutt as Creative Director of Relative
     

Deborah White, CEO and Interim Chairman, commented:

"2013 has been a challenging but rewarding period of product expansion and project growth. It has incorporated the final period of business repositioning and integration necessary to create the appropriate launch pad and platform needed for Milestone's future growth and development. We believe that the Company has come through an extensive period of redevelopment from which new and sustainable revenues and growth can be delivered across each of our exciting projects."

For further information:

Milestone Group PLC
Deborah White, Chief Executive

Tel: 020 7929 7826
Cairn Financial Advisers LLP, Nominated Adviser
Liam Murray / Avi Robinson

Tel: 020 7148 7900
Hybridan LLP, Broker
Claire Louise Noyce

Tel: 020 7947 4350

CHAIRMAN'S STATEMENT

Foreword

It is a pleasure to deliver this report on behalf of the Board and management team. This year has been a challenging but rewarding period of product expansion and project growth. It has incorporated the final period of business repositioning and integration necessary to create the appropriate launch pad and platform needed for Milestone's future growth and development.

Developments

Passion Project

In January 2013, the Company announced the launch of Milestone's Passion Project, a youth engagement and employability programme aimed at inspiring young people to explore their passions and skills, which are then matched with vocational and employment opportunities. Using Milestone's digital media and technological capabilities, along with access to the goods and services of strong delivery partners, this programme offers young people holistic career and employability assistance in an easily accessible and appropriate manner.

A key part of the Passion Project's development has been the work undertaken with a number of focus groups. The data collected from a series of workshops and feedback sessions have helped to shape the Passion Project's design and user process. These events were organised and led by Ximo Peris. Appointed as the Passion Project's Youth Development Director in February 2013, his role has a clear direction and objective, which is to target and engage the young people and organisations that represent the Project's chosen audience.

The Passion Project uses a 3-step approach incorporating both physical and digital activities to engage with young people. The first of the Passion Project's physical events involved a pan London, 32-borough football knock-out competition, entitled BE United, and organised in conjunction with 10, and with the support of all, of London's Professional Football Clubs' Community Trust Schemes.

This pilot competition involved several thousand young people and culminated with the finals event, which was held at the London Soccerdome on 19 February 2014. All the participants have registered on the BE United digital portal as part of the Passion Project pilot and will be given the opportunity to participate fully in the Passion Project as it expands.

Milestone Foundation

During the year, the Company established the Milestone Foundation ("Foundation"), a registered charity designed to underpin the Passion Project. The Foundation aims to tackle three key social problems: youth unemployment, lack of safe spaces and activities and a lack of activities to develop emotional intelligence. Its objectives are community participation in healthy recreation, advancement of education and the relief of unemployment, promotion of social inclusion and other charitable purposes.

The Foundation is led by Kevin Everett and run by a Board of Trustees made up from Milestone Group team members. The Foundation will soon include a number of independently appointed Trustees and will be assisted by an advisory board made up of sector specific partners.

Once independently funded, the Foundation will licence the Passion Project from Milestone Group. This complements the Company's digital media and technical capabilities in the engagement and management of large audiences with the Foundation's ability to deliver, monitor and record social outcomes resulting from the collaboration between the Passion Project and its delivery partners.

SFK

Early in this period, the Company signed a definitive agreement with Spirituality for Kids (International) Inc. ("SFK") for the use of a range of their educational materials. The initial materials chosen for adaptation were deemed appropriate for Key Stage 2 Level (Years 4 and 5 in primary schools).

Milestone, in conjunction with Prospects and Prospects Improve, worked to adapt this first level of the materials to meet the UK Curriculum requirements for Spiritual, Cultural, Emotional and Social Education in primary schools as determined by the Department of Education's proposed 2013 framework. It was agreed that in the event of a successful initial pilot further development on the Level 2 and 3 materials for primary schools and those for the secondary schools would be undertaken.

A successful pilot involving 34 primary schools was completed in July 2013. The pilot feedback received resulted in a set of final amendments being made to the materials in November 2013 in preparation for a national roll-out commencing in early 2014.

As part of the adaptation, the programme was rebranded as "Winning in the Game of Life". The programme is scheduled to deliver gross revenues of between £500 and £1,000 per level per school with a target market of the 22,000 UK primary schools.

Since the period end, this has been followed up by an expansion in the scope of the legal agreement with SFK to include training materials for a wider range of age groups and provides the Company with an opportunity for focused and tailored training for young people as they ready themselves for the transition into working life. This expansion to the initial agreement allows the Company the opportunity to promote these training products to its key strategic delivery and distribution partners involved in the Passion Project and other delivery channels outside of the schools and education sector.

This extended agreement also enables Milestone and SFK to generate revenues from the co-creation and delivery of new materials including those appropriate for young people aged between 16 - 24 who are termed as NEET's  (Not in Employment, Education or Training) and those involved in apprenticeship programmes.

The positive changes in behaviour that have been independently recorded and evaluated resulting from the use of these materials offers Milestone the potential for attracting social impact funding and further supports the aims of both the Passion Project and the Foundation.

Net revenues from the sale of these collaborated materials will be split equally between Milestone and SFK.

OnGuard

Since the purchase of the Faciliated Electronic Data Software ("FEDS") in August 2011, Milestone has been developing the OnSide product which will be further utilised in the Passion Project as it expands. The initial development work on the OnSide product has allowed for a spin-off called OnGuard to be developed. OnGuard is a business management solution specifically targeting the security industry. It utilises the latest mobile and cloud technologies to support the administrative, operational and financial functions of the Manned Guarding sector. OnGuard provides audited process and resource management along with integrated business functionality, improving inter-departmental efficiencies and reporting.

Market research suggests similar, but lower specification products achieve licencing fees in the range of £10 to £80 per guard per calendar month, with OnGuard pitched between these. The Security Industry Authority (SIA) currently has 120,000 security personnel registered in UK, providing a market size of in excess of £28m.

Post period end, in October, Milestone signed an agreement to provide STM with a paid for pilot of the software solution. The value of this agreement has been heavily discounted from the £108,000 list price that would normally be applied for a 500-user agreement in recognition of STM's contribution to the development of the project. STM is a UK based security company and an experienced supplier of solutions for manned security and customer service staff. Their clients include over 50 sites on the London Overground, Southern Rail, South West Trains, Network Rail, English Heritage and Westgate Shopping Centres.

Since the year-end STM have been working with Milestone to test and evaluate the product, giving Milestone the necessary feedback to develop additional functionality and revenue opportunities.

Oil Productions Ltd ("Oil"), trading as Relative

Having an in-house digital media and technical capability was deemed essential to the planned development and growth strategy of the Group. In August 2011, Milestone purchased Oil to act as an in-house enabler function for the development of the key products that are now shaping the Company's future.

The benefits of having a strong in-house delivery team with a shared common focus cannot be understated. It is becoming ever more evident that the recent restructure undertaken by the Board was the correct strategy to adopt. We are excited about the growing potential offered by the new product range that is emerging which we believe has the potential to become both highly scalable and significant in their revenue generating capabilities.

Going forward, Oil should be capable of generating strong revenues and profitability in its own right, but having taken time to look at this aspect of the business in depth and, as we flagged at the AGM last year, the Directors made the decision to exit some of the very low / no margin digital business in favour of retaining the capacity to initially develop our own product range and then to refocus on much higher margin digital media work better suited to our skills. Whilst this has resulted in much lower revenues for 2013, this lays the foundations for a sustainable and profitable future.  

As previously reported, March 2013 saw changes in the management team of Oil with Darren Groucutt being appointed as the new Creative Director. This appointment formed part of the reshaping and rebranding of the company, which is now trading as Relative. The new leadership team in the digital agency has now firmly established itself in the marketplace winning a number of high profile clients in the latter part of the year.

Relative has been key in developing the Company's internal projects, particularly the Passion Project, OnGuard and Winning in the Game of Life whilst working hard to establish an external client pipeline.

The first of its own projects was Panna Paint, an interactive freestyle football app that uses bespoke technology to give motion a visual dimension. This technology was further developed into B++, an immersive and interactive app using light, sound and live performance to create a visual experience. In conjunction with the Dollop DJs, B++ was used to take over the Barbican foyer for a 3-day residency during the month long Hack the Barbican event.

The development of this technology and the media attention it received resulted in Relative being chosen from over 1,000 entrants as one of 10 finalists to attend the Nokia Future Capture Hackathon held in Lund, Sweden, in August 2013. The event was designed to showcase the potential of Nokia's flagship mobile, the Lumia 1020 and its 41-megapixel camera. Relative took the Panna Paint product and made a functional application for Windows Devices.  This app has gone on to receive just under 24,000 downloads and is featured in the Nokia Collection of the Windows App Store. In March 2014, Relative will be attending South by Southwest (SXSW) in Austin, Texas, with a new version of the B++ platform as part of Hackney House's award winning trade mission.

Later in the year Relative was approached to work with Team GB to deliver the visual digital content for the British Olympic Association Ball in October 2013. This event was held at the Grosvenor Hotel in London and is a major fundraising event in the British Olympic Team's calendar.

Since the year-end, the work the team has put into the business is now starting to bear fruit. Relative has now built a strong pipeline of potential work, with a number of good size contracts in the latter stages of negotiation. Whilst there can be no certainty to the signing of new contracts, the Directors are increasingly and cautiously optimistic that the strategy of the production business is now on the right path and we look forward to updating the market further on this as and when appropriate.

Ve Interactive Ltd

During the year to 30 September 2012, the Group recognised the progress that Ve Interactive has made since the Group's original investment by uplifting the value of its holding from £101,111 to £910,000. In this period, the Company has realised over 50% of this value by selling a portion of the asset at the uplifted value.

Management Changes

The Board is pleased with the additions made to the management team during this period.

In February 2013, Ximo Peris joined the team as Youth Development Director on the Passion Project.  Ximo previously worked with the London 2012 bid team to deliver the Computer Generated Imagery ("CGI"), as well as co-ordinating an extensive team, to create the images and film sequences that communicated the Olympic vision to a global audience. Subsequently, Ximo worked with Crystal CG as part of the team that delivered the digital content for the London 2012 Olympic and Paralympic Games.  

In his role within Milestone's Passion Project, Ximo has been working with a number of focus groups incorporating a broad spectrum of diverse young people and initiatives from across London. The aim of engaging and working alongside focus groups is to collaborate and elicit feedback on the development of the Passion Project's methodology ensuring it meets the target audience's needs and expectations.

In March 2013, Mike Bennett left Oil in order to concentrate on his other business activities and was replaced by Darren Groucutt as the Creative Director of Oil. Darren was previously employed at Crystal CG International as the Creative Director responsible for film and animation, during which time he worked on the concept, delivery and direction of extensive high-level digital content for the London 2012 Olympic and Paralympic Games. Darren is keen to build upon his past successes and is focused upon building a team of young creative talent. It is a testament to the Company's vision for both Relative and the Group as a whole that two highly talented and industry-renowned creative individuals such as Darren and Ximo have chosen to join our team.

In May 2013, Kevin Everett was appointed to the Board of Milestone as a Non-Executive Director. Kevin is currently Treasurer and Chairman of the Board of the Sir John Cass Foundation. Kevin has over 22 years experience in the charitable sector and is a common councilman of the City of London Corporation. During his career, Kevin has balanced professional and charitable careers, particularly focusing on business and education. He has vast experience in connecting foundations with the corporate sector, a model now used by industry to bring education and employers closer together. One of his key responsibilities as a member of the Milestone team will be to lead the development of the Foundation, its Board of Trustees and its advisory board.

Financial Summary

During the year, the Group's net loss was £980,570 (2012: £1,395,630), which includes a realised gain on the sale of investments of £440,605. Revenues were £152,373 (2012: £766,391) due to a large amount of work being carried out to develop the internal projects, including the Passion Project, SFK and OnGuard. These products are now in the position to create revenues, as well as delivering inspiring change to the lives of young people and the opportunity to attract social impact funding. Net Liabilities at the period end were £1,017,950 (2012: £108,346).  

These results are presented under European Union Adopted International Financial Reporting Standards ("EU Adopted IFRS").

Funding

During the year, the Company issued 44,200,877 new ordinary shares for a total consideration of £508,650 of which £407,500 was received in cash, £46,000 was in exchange for goods or services received and the remainder was part of the purchase of the FEDS Software and of Oil Productions Ltd.

Since the year-end, the Company has issued 33,986,235 new ordinary shares, raising £258,813 in cash, exchanging £17,049 worth for services and £48,000 for the final tranche of the purchase of Oil Productions. The Company continues to carefully manage its working capital position and will need to raise further monies through subscriptions for new shares in the short term to continue to support its business activities until they are fully revenue generating.

The Company is firmly focused on generating revenue through all of its activities as well as developing further opportunities. Protecting the interest of the Company's current shareholders is a priority and the Board's strategy is to seek to raise funds on a basis that is fair to all.

Outlook

The Directors believe that Milestone has come through an extensive period of redevelopment and has now established a demonstrable base from which new and sustainable revenues and growth can be delivered across each of its exciting projects.  

Deborah White

Chief Executive Officer and Interim Chairman

25 February 2014

Consolidated statement of comprehensive income for the year ended 30 September 2013

 
20132012
££
Revenue152,373776,391
Cost of sales (119,924) (429,345)
Gross profit32,449347,046
Other operating income 287,500 2,500
Realised gain on disposal 440,605 -
Administrative expenses (1,632,909) (1,641,338)
(904,804) (1,638,838)
Loss from operations(872,355)(1,291,792)
Finance expense (108,232) (169,552)
Finance income 17 94
Loss before taxation(980,570)(1,461,220)
Taxation credit - 65,590
Net loss for the year(980,570)(1,395,630)
Items which may be reclassified subsequently to profit or loss
Adjustment in carrying value of available for sale investments (23,160) 808,889
Recycling of realised gain on sale of available for sale financial assets (440,605) -
Total comprehensive loss for the year(1,444,334)(586,741)
Attributable to owners of the parent(1,444,334)(586,741)
Basic and diluted loss per share (pence)(0.24)(0.42)
 
 

Consolidated statement of financial position at 30 September 2013  

20132012
££
Non-current assets
Intangible assets 189,488 540,342
Available for sale investments 454,763 971,713
644,2511,512,055
Current assets
Trade and other receivables 50,728 87,195
Cash and cash equivalents 17,025 40,409
67,753127,604
Current liabilities
Trade and other payables (1,259,017) (1,165,891)
Interest bearing loans (470,937) (422,114)
(1,729,954)(1,588,005)
Non-current liabilities
Deferred tax liabilities - -
Other payables - (160,000)
-(160,000)
Net liabilities(1,017,950)(108,346)
Capital and reserves attributable to
owners of the Company
Share capital 417,178 372,977
Share premium account 11,847,178 11,395,961
Shares to be issued 109,313 70,000
Merger reserve 11,119,585 11,119,585
Capital redemption reserve 2,732,904 2,732,904
Retained losses (27,244,108) (25,799,773)
Total Equity(1,017,950)(108,346)

Consolidated statement of cash flows for the year ended 30 September 2013

Cash flow from operating activities20132012
££
Loss for the year(980,570)(1,395,630)
Adjustments for:
Amortisation of intangible assets 37,814 248,779
Depreciation of tangible assets - 8,293
Realised gain on disposal of investments (440,605) -
Impairment of goodwill 313,040 -
Net bank and other interest charges 108,215 169,428
Issue of share options / warrants charge - 32,909
Services settled by the issue of shares 16,768 25,495
Adjustment to deferred consideration payable (280,000) (45,025)
Release of deferred tax provisions - (65,590)
Net cash before changes in working capital(1,225,338)(1,021,341)
Decrease / (increase) in trade and other receivables 36,468 169,516
(Decrease) / increase in trade and other payables 275,219 (38,844)
Cash from operations(913,651)(890,669)
Interest received 17 94
Interest paid (2,248) (5,035)
Net cash flows from operating activities(915,882)(895,610)
Investing activities
Proceeds from sale of held for sale investments 447,135 -
Net cash flows used in investing activities447,135-
Financing activities
Issue of ordinary share capital 407,500 812,386
Repayment of loan (93,137) (3,500)
New loans raised 131,000 39,020
Net cash flows from financing activities445,363847,906
Net (decrease) / increase in cash (23,384)(47,704)
Cash and cash equivalents at beginning of year 40,409 88,113
Cash and cash equivalents at end of year17,02540,409

Consolidated statement of changes in equity for the year ended 30 September 2013

Share CapitalShare PremiumShares to be issuedOther ReservesRetained EarningsTotal Equity
££££££
Balance at
30 Sept 2011
289,22810,641,830-13,852,489(25,245,941)(462,394)
Loss for the year - - - - (1,395,630) (1,395,630)
Other comprehensive income - - - - 808,889 808,889
Shares issued 83,749 754,131 - - - 837,880
Share options/ warrants - - - - 32,909 32,909
Reclassification from trade and other payables - - 70,000 - - 70,000
Balance at
30 Sept 2012
372,97711,395,96170,00013,852,489(25,799,773)(108,346)
Loss for the year - - - - (980,570) (980,570)
Other comprehensive income - - - - (463,765) (463,765)
Cash received in advance of share issue 69,313 69,313
Shares issued 44,201 451,217 (30,000) - - 465,418
Share options/ warrants - - - - - -
Balance at
30 Sept 2013
417,17811,847,178109,31313,852,489(27,244,108)(1,017,950)

Notes to the financial statements

1. Basis of preparation

Milestone Group PLC is a company registered and resident in England and Wales.

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 2013 or 30 September 2012, but is derived from the 2013 Annual Report. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those of 2013 will be delivered in due course.

The consolidated statement of comprehensive income, consolidated statement of financial position, consolidated cash flow, 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 2012 and 30 September 2013 have been reported on by the Independent Auditors.

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("EU Adopted IFRSs").

The Independent Auditor's Report on the Annual Report and Financial Statements for 2012 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 requirement to manage the timing of settlement of its liabilities and raise funds in the immediate to short term and the profitability of key projects thereafter to satisfy liabilities associated with its activities. It noted that a material uncertainty remains which may cast significant doubt about the Company's ability to continue as a going concern.

The Independent Auditor's Report on the Annual Report and Financial Statements for 2013 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 requirement to manage the timing of settlement of its liabilities and raise funds in the immediate to short term and the profitability of key projects thereafter to satisfy liabilities associated with its activities. It noted that a material uncertainty 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 financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Strategic report and the Director's report. In addition note 19 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and exposures to credit risk and liquidity risk.

The net liability balance sheet position as at 30 September 2013, being the Group's financial year-end, was £1,017,950 (2012: £108,346).  Subsequent to the balance sheet date, the Board has been able to agree funding in the form of further share issues raising £258,813 in cash, exchanged £17,049 worth of shares for services received and £48,000 worth of shares as part payment of the second tranche of the acquisition of Oil Productions.

The Company is reliant upon its continuing ability to manage the timing of settlement both of its current liabilities, many of which are overdue, and future liabilities as they arise. Future 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 and from trading activities.

The future business model is based around generating revenue through it's subsidiary, Relative, as well as through its projects. The Group is already producing revenues although progress with some of the technologies has been slower than expected. 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. Should any of these factors not deliver the funding envisaged by the Directors, then alternative sources of funds would be needed, any discussions for which have not been initiated.

The Directors have concluded that the need to generate future funds from further fundraising and 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. Loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted 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 29,179,650 share options outstanding at the year-end (2012: 36,189,300). However, the figures for 2013 and 2012 have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.

20132012
Weighted Weighted
average Per shareaverage Per share
Lossnumber of AmountLossnumber of amount
£shares Pence£shares Pence
Basic and
diluted loss
per share
attributable to
shareholders
(980,570) 402,324,052 (0.24) (1,395,630) 329,982,605 (0.42)

3. Posting of Accounts

The Report and Accounts of Milestone Group PLC, including the Notice of Annual General Meeting will be posted to shareholders shortly. A further announcement will be made by the Company at such time.




This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Milestone Group PLC via Globenewswire

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