Final Results
MILESTONE GROUP PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2008
AIM listed Milestone Group PLC ("Milestone" or the "Group") announces
results for the year ended 30 September 2008.
The Group made an operating loss of £0.8m (2007: loss of £1.0m)
reflecting a turnover of £0.03m (2007: £0.05m) as the Board developed
its plans to launch new business ventures.
Milestone Chairman, John Sanderson, said:
"Milestone's strategy is to grow a portfolio of controlling and
non-controlling stakes in digital technology, content or service
companies and, over time, to develop the portfolio through organic
growth, new launches and synergistic acquisitions. The Group's
Executive Director, Deborah White, has made good progress in
identifying potential opportunities. The Board intends to assess
carefully these opportunities with its advisers and will seek to
pursue those which it believes offer the realistic prospect of
delivering value to shareholders."
The full report and financial statements for the year ended 30
September 2008 is attached as an annex to this announcement.
FOR FURTHER INFORMATION
Milestone:
Deborah White, Chief Executive Tel: 020 7929 7826
Arden Partners plc:
Richard Day / Adrian Trimmings: Tel: 020 7398 1632 /
020 7398 1640
BELOW
Milestone Group PLC report and financial statements for the year
ended 30 September 2008
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MILESTONE GROUP PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
SEPTEMBER 2008
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Board of Directors
Directors at 25 March John Sanderson, Non-Executive Chairman
2009:
appointed Non-Executive Chairman, 1 February
2006
served as Acting Finance Director, 7 March 2008
to 31 March 2008
Deborah White, Executive Director
served as Non-Executive Director, 15 January
2008 to 30 March 2008
served as Chief Executive Officer, 31 March
2008 to 23 February 2009
appointed as Executive Director (combining
functions of Chief
Executive Officer and Finance Director), 23
February 2009
Other directors during the Ian Lodwick
year:
served as Finance Director, 31 March 2008
to 23 February 2009
Jamie Bloom
served as Non-Executive Director, 15
January 2008 to 31 March 2008
Andrew Craig
served as Chief Executive Officer, 1 July
2003 to 18 May 2007
served as Non-Executive Director, 18 May
2007 to 7 March 2008
Brian Chester
served as Finance Director, 1 July 2003 to
7 March 2008
Mark Levine
served as Non-Executive Director, 1 July
2003 to 22 November 2007
Company Secretary: Graham Urquhart
appointed 1 February 2009
Timothy Eustace
resigned 31 January 2009
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COMPANY INFORMATION
Registered in England 4689130
company no:
Auditors: BDO Stoy Hayward LLP
Kings Wharf, 20-30 Kings Road, Reading,
Berkshire RG1 3EX
Nominated Adviser to Arden Partners plc
the Company:
Nicholas House, 3 Laurence Pountney Hill,
London EC4R 0EU
Broker: Arden Partners plc
Nicholas House, 3 Laurence Pountney Hill,
London EC4R 0EU
Registrars: Capita IRG plc
Northern House, Woodsome Park, Fenay Bridge,
Huddersfield,
West Yorkshire HD8 OLA
Solicitors: Lawrence Graham LLP
4 More London Riverside, London SE1 2AU
Address and registered Milestone Group PLC
office:
1st Floor, 2 Royal Exchange Steps, The Royal
Exchange,
London EC3V 3DG
Telephone: +44 (0)20 7929 7826
Fax: +44 (0)870 891 2914
Email: enquiries@milestonegroup.co.uk
Website: www.milestonegroup.co.uk
Milestone Group PLC
referred to in this document as "Milestone", the "Group" or the
"Company". Where the context so requires, references to the "Group"
include and consolidate associated companies of Milestone Group PLC.
References to "Company" refer solely to Milestone Group PLC and
exclude consolidation with the results of its associated companies.
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PAGE 1
CHAIRMAN'S STATEMENT
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Financial summary
The Group made an operating loss of £0.8m (2007: loss of £1.0m) as
the Board developed its plans to launch new business ventures. These
results are presented for the first time under Adopted International
Financial Reporting Standards ("Adopted IFRS").
Market overview
The current economic downturn appears to be accelerating the speed of
transition from the "advertising pounds" enjoyed by those media
platforms which traditionally dominated advertising revenues - TV and
newspapers - to the "advertising pennies" associated with new media
platforms in a competitive environment - web and mobile content. The
Board intends to develop the Group's exposure to the converging media
and technology sectors, growing a portfolio of interests in
synergistic businesses. Current trading activity is focused on
planning for the launch of the Nexstar-branded internet sports
platform and reviewing other business opportunities as set out below.
Milestone background
Milestone was admitted to trading on AIM in July 2003. Whilst the
Group had a strategy of developing through organic growth and
acquisition, it also had an inheritance of a number of publishing and
broadcasting businesses, the operation of which became a primary
focal point. The Group was analogue focused and the media owned
largely traditional.
Over a number of years the Board concluded that the best interests of
shareholders would be served by disposing of the traditional media
assets whilst they still retained value. This strategy was executed
but developing new opportunities has taken substantially longer than
anticipated. The process is now advancing following the appointment
of the Group's new strategy advisers, Knowledge MGI Limited
("Knowledge MGI").
Review of the year
(i) The Flex (International) Limited ("The Flex")
The Company's former Chief Executive, Andy Craig, and Finance
Director, Brian Chester, made considerable effort to seek to identify
potential acquisition opportunities for Milestone. This culminated in
January 2008 with an agreement to acquire an 80 per cent interest in
The Flex, a new talent-search website under development, for a
nominal consideration of £100. As part of this transaction Jamie
Bloom, the former major shareholder in The Flex, agreed to provide a
£0.5m loan facility to the Group.
In last year's Annual Report, I stated that development of The Flex
had been placed on hold whilst the Board reviewed its business plan
and prospects. This review concluded that The Flex had been
superseded by other platforms and investment of the Group's time and
resources would be better justified in developing other projects. It
was subsequently agreed to dispose of the Group's interests in The
Flex for a nominal consideration of £100. No significant loss or
write-offs were incurred on this disposal.
(ii) Nexstar Holdings Limited
During the second half of the financial year significant time was
invested by the Board in planning for the launch of Nexstar, a
project devised by Milestone with the intention of establishing a
youth sports tournament for the UK supported by a website with user
generated video and other rich media content. In September 2008
Nexstar Holdings Limited was formed as a trading company with its
share capital held by the Company's wholly owned subsidiary,
Milestone Media Limited.
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PAGE 2
CHAIRMAN'S STATEMENT (CONTINUED)
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(ii) Nexstar Holdings Limited (continued)
The original intention was to develop Nexstar in partnership with
another internet-based business, Enrich Social Productions Limited
("ESP"). However, the onset of the 'credit crunch' has impacted on
corporate sponsorship budgets and necessitated that timescales for
the launch of Nexstar be reviewed. Nexstar remains a wholly-owned
subsidiary of Milestone Media Limited and the Board expects that it
will now be developed by the Group (potentially with other partners),
launching to consumers as a pilot in 2010.
Nexstar forms part of Milestone's strategy to expand as a digital
media service provider, developing a portfolio of interests in the
media and communications sectors.
(iii) Oxford Broadcasting Limited trading as SIX TV ("SIX TV")
The Group's wholly owned subsidiary, SIX TV, provides a terrestrial
local TV channel for Oxford. The Southampton version of the SIX TV
service ceased broadcasting during the year primarily due to failure
to agree ongoing transmission arrangements with its suppliers.
During the year the Board explored a range of opportunities for SIX
TV including the potential to expand its studio facilities and
services income. In September 2008, SIX TV entered into an agreement
to supply studio production facilities to ESP with payments due to
commence in early 2009. However, the Board increasingly believes it
is difficult to justify the fixed costs associated with maintaining
the Oxford based operation. The Board is therefore reviewing whether
it is appropriate for SIX TV to continue to operate as an analogue TV
channel in Oxford and/or whether it should continue to provide other
services.
The communications regulator, Ofcom, has agreed in principle that it
is willing to allow SIX TV to launch on the digital terrestrial
television platform in the areas in which the Group holds broadcast
licences (Oxford, Southampton, Reading and Portsmouth). However, all
licences must be surrendered in 2011/2012 leaving only a short time
to gain a return on the investment required. As disclosed in
Milestone's previous statements, for several years the UK government
has said it will review options for local TV. Regrettably, this has
yet to result in any satisfactory policy conclusions. The Board
intends to complete a review of the local TV business in the near
future.
(iv) Board changes
During the year, three long-standing directors of the Company, Mark
Levine, Andy Craig and Brian Chester resigned to pursue other
opportunities. Three new directors were appointed: Deborah White, Ian
Lodwick and Jamie Bloom, the latter resigning after only a short time
due to ill health. In March 2008, Deborah White was promoted to Chief
Executive with the aim of returning Milestone to its original
strategy of developing through organic growth and targeted
acquisition.
In order to minimise costs, the Board has sought to operate a lean
structure for as long as possible. For much of the financial year,
fees were only paid to directors operating on a part-time basis. I am
grateful to all directors and the Company's professional advisers for
their support during this prolonged transition period. I am
particularly grateful to Deborah White who has worked tirelessly to
pursue new opportunities and put in place Milestone's development
strategy.
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PAGE 3
CHAIRMAN'S STATEMENT (CONTINUED)
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(v) Capital reorganisation and subscription
In July/August 2008 the Company implemented a capital reorganisation
and subscription for new shares and loan notes raising £300,000
(before expenses) and putting in place new authorities enabling the
Board to undertake further subscriptions to support the future
development of the Company. An additional small subscription raised
£60,000 (before expenses) at the turn of the financial year.
Post balance sheet events
(i) Management changes
There have been further recent personnel changes as the Group
positions itself for new launches. In February 2009 the Group's
Finance Director, Ian Lodwick, and Company Secretary, Tim Eustace,
resigned to focus on their respective consultancy businesses and I
thank them both for their guidance and service.
As announced in February, it gives me pleasure to welcome Graham
Urquhart as our new Company Secretary and Guy van Zwanenberg as Chief
Financial Controller initially working on a part-time basis. Guy
brings to the Company considerable experience of growing small media
businesses as the former Finance Director of GamingKing plc (now
Sceptre Leisure plc). He is already proving a valuable member of the
team and it is anticipated that his role will increase as the Group
develops.
Deborah White now serves Milestone in a near full-time capacity as
Executive Director, combining the responsibilities of Chief Executive
and Finance Director until a dedicated Finance Director is appointed.
Deborah works from Milestone's new City of London head office at the
Royal Exchange which, to minimise costs, is shared with the financial
advisory practice which she originally set up (and remains a director
of).
The Board intends to make further appointments as the business
develops.
(ii) Advisers
In November 2008 the Company announced the appointment of Knowledge
MGI as its new strategy consultants. Knowledge MGI are a management
consultancy specialising in sports, entertainment, media and
technology. Knowledge MGI is considered by the Board to be well
positioned to advise Milestone on funding and development
opportunities, complementing in-house expertise and the Company's
Nominated Adviser, Arden Partners plc ("Arden").
I am pleased to report that the Board is continuing to be well served
by all its advisers, who appreciate that Milestone is at an early
stage in its regeneration, providing support and cooperation which
Milestone is fortunate to have at this time. In recognition of this
the Company shortly intends to issue a limited number of warrants to
Arden.
(iii) Articles of Association
A resolution will be proposed at the annual general meeting ("AGM")
to amend the Company's articles of association in order to comply
with changes in company law which come into effect in October 2009.
The Board will shortly be sending out a circular to shareholders
which will include further information on this resolution and the
notice to convene the AGM.
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PAGE 4
CHAIRMAN'S STATEMENT (CONTINUED)
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Funding
In times when credit was easily available the Board adopted a
cautious approach and did not accumulate large bank debts. The
Board's cash-flow projections show a requirement for additional
funding to support Milestone's working capital and development plans
in the coming twelve months. Inevitably, the precise nature and scale
of these activities will impact the requisite level of funding.
In my Annual Report statement last year, I explained that the Group
was experiencing difficulty in drawing on the £0.5m loan facility it
had entered into with its former director, Jamie Bloom, who had been
suffering from personal health problems. I am pleased to report that
the Board has engaged in constructive dialogue with Mr Bloom and has
now drawn-down a part of this facility. The Group has also raised
further funds to provide working capital during the year and post
year end. The Board is exploring a range of options to enhance the
Group's access to supplementary sources of finance.
The directors have concluded that the combination of these
circumstances represent a material uncertainty that casts significant
doubt upon the Group's and the Company's ability to continue as a
going concern. Nevertheless after making enquiries and considering
the uncertainties described above, the directors have a reasonable
expectation that the Group and the Company will have adequate
resources to continue in operational existence for the foreseeable
future. For these reasons the Board continues to adopt the going
concern basis in preparing the annual report and accounts
Potential further subscriptions
Protecting the interests of shareholders is a priority and the
Board's strategy is to seek to raise funds on a basis which is fair
and reasonable to all. This strategy has been successfully executed
by Deborah White.
As set out in the review of the year (above), the Company undertook a
capital restructure in July/August 2008 and, since then, £0.6m
(before expenses) has been raised in a series of small subscriptions
to support the Group's working capital requirements. The Board is
pleased with the appetite which has been shown for these
subscriptions and welcomes its new shareholders.
It is likely that additional small fundraisings will be required to
enable the Group to expand and support the launch of new businesses.
The Board does not wish to unreasonably exclude existing shareholders
from the opportunity to participate in any arrangements of this
nature and any enquiries should be sent to the registered office of
the Company (without obligation) addressed to the Company Secretary,
before the end of May 2009.
Under the terms of Milestone's existing Loan Note Instrument, the
Group may issue a further £962,500 of loan notes at any time prior to
31 July 2011. There are currently no loan notes in issue.
Outlook
Milestone's strategy is to grow a portfolio of controlling and
non-controlling stakes in digital technology, content or service
companies and, over time, to develop the portfolio through organic
growth, new launches and synergistic acquisitions. The Group's
Executive Director, Deborah White, has made good progress in
identifying potential opportunities. The Board intends to assess
carefully these opportunities with its advisers and will seek to
pursue those which it believes offer the realistic prospect of
delivering value to shareholders.
There is risk involved in new ventures but the Board believes it has
the expertise and ability to operate as an incubator, launching
and/or acquiring new businesses in the media and technology sectors.
The Board intends to act prudently and manage uncertainty by adopting
a policy of minimising financial exposure and stringent cost control.
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PAGE 5
CHAIRMAN'S STATEMENT (CONTINUED)
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Outlook (continued)
It has been a challenging year but the Board's view is that Milestone
can move forward exploiting the opportunities presented by
convergence as a determined and dynamic operator. In the immediate
future, the Board intends to focus on developing Nexstar and
reviewing its TV business.
J Sanderson
Non-Executive Chairman
25 March 2009
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PAGE 6
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
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The directors present their report together with the audited
financial statements for the year ended 30 September 2008.
Results and dividends
The consolidated results of the Group for the year are set out on
page 14 of this report and shows the loss for the year.
The directors do not recommend the payment of a dividend (2007: nil).
Principal activities, review of business and future developments
The principal activity of the Company is that of a holding company.
Through its subsidiaries, the Group intends to focus on exploiting
opportunities in the converging media and technology sectors. Further
information on the Group's activities and strategy is included in the
Chairman's Statement on pages 1 to 5 of this report.
Key performance indicators ("KPIs")
In the context of its ongoing review of strategy, the Board is
focused on assessing and developing new opportunities. Given the
scaled down nature of the Group, the Board does not consider that
setting further KPIs is appropriate at the current time. If and when
making significant new investments, the Board intends to ensure
appropriate KPIs are put in place.
Financial instruments and risks
The Group had no bank loans outstanding at the year end. The Group's
modest cash reserves were held in bank current and deposit accounts
as set out in note 17 to the financial statements.
This annual 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", "expects", "plan", "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 annual 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.
Policy on the payment of suppliers
The Group recognises the importance of establishing effective
relationships with its suppliers. In certain cases, payment terms are
agreed with suppliers as part of the overall terms of the
transaction. In respect of the Group, year end creditors represent
150 days average purchases and expenses (2007: 230). For the Company,
year end creditors represent 139 days average purchases and expenses
(2007: 229).
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PAGE 7
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
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Post balance sheet events
Post balance sheets events are set out in note 26 to the financial
statements.
Going concern
The directors have satisfied themselves that the Group's facility
with Mr Jamie Bloom is adequate to enable it to continue in
operational existence for the foreseeable future. For this reason,
the directors continue to adopt the going concern basis in preparing
the financial statements.
Substantial shareholdings
Subsequent to the balance sheet date, on 18 March 2009 Milestone
announced a small subscription through the issue of 6,055,557 new
ordinary shares of 0.1 pence in the capital of the Company (the
"Subscription Shares"). The Subscription Shares are expected to be
admitted to trading on AIM on or around 24 April 2009.
The Subscription Shares, when fully paid and issued, will rank pari
passu in all respects with the existing ordinary shares of Milestone.
Post-admission, the Subscription Shares in aggregate will constitute
8.04 per cent of the enlarged issued share capital of Milestone of
75,362,126 ordinary shares (excluding deferred shares which have no
rights attached to them).
So far as the Company is aware and subject to any new notifications
received after 18 March 2009, the following persons will have a
notifiable interest in the ordinary share capital of the Company
post-admission (3 per cent or more of the Company's ordinary shares;
please note percentages are rounded):
+-------------------------------------------------------------------+
| | Ordinary Shares | Ordinary Shares |
| | held at | expected |
| | 18th March 2009 | to be held |
| | | post-admission |
|-------------------------+-------------------+---------------------|
| TRMK Estate Income Ltd | 12,690,155 | 12,690,155 (16.84%) |
| (& connected parties)* | (18.31%) | |
|-------------------------+-------------------+---------------------|
| Deborah Jane White | 7,606,698 | 7,606,698 (10.09%) |
| | (10.97%) | |
|-------------------------+-------------------+---------------------|
| Reginald John Brealey | 7,325,000 | 7,325,000 (9.72%) |
| (& connected parties)** | (10.57%) | |
|-------------------------+-------------------+---------------------|
| Magdalene Manikam (& | 5,666,667 (8.18%) | 5,666,667 (7.52%) |
| connected parties)*** | | |
|-------------------------+-------------------+---------------------|
| CMH Management Ltd | 4,261,734 (6.15%) | 4,817,290 (6.39%) |
|-------------------------+-------------------+---------------------|
| John Godfrey | 4,166,667 (6.01%) | 4,166,667 (5.53%) |
|-------------------------+-------------------+---------------------|
| Susan Auden | 4,166,667 (6.01%) | 4,166,667 (5.53%) |
|-------------------------+-------------------+---------------------|
| Compass Securities Ltd | 4,166,667 (6.01%) | 4,166,667 (5.53%) |
|-------------------------+-------------------+---------------------|
| Andrew Timms Craig (& | 2,621,838 (3.78%) | 2,621,838 (3.48%) |
| connected parties)**** | | |
|-------------------------+-------------------+---------------------|
| Anish Sharma (& | 2,500,000 (3.61%) | 2,500,000 (3.32%) |
| connected parties) | | |
+-------------------------------------------------------------------+
*of which 4,166,667 are held by Brewin Dolphin Nominees on behalf of
Martin Adrian King
**of which 6,800,000 are held by Prism Nominees
***of which 4,166,667 are held by Alliance Trust Savings Nominees
****of which 497,583 are held by MGH Investments Limited, a company
ultimately controlled by Andrew Timms Craig
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PAGE 8
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
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Communication with shareholders
The annual report and accounts and the interim statement at each half
year are the primary vehicles for communication with shareholders.
These documents are also distributed to other parties who have
expressed an interest in the Group's performance. Group results can
be viewed on the Company website (www.milestonegroup.co.uk).
Each year shareholders are invited to an annual general meeting
("AGM"). The AGM is the main shareholder event of the year and
provides an opportunity for shareholders to question the directors.
Shareholders who have any queries relating to their shareholdings or
to the affairs of Milestone generally are invited to contact the
Company Secretary at the Company's registered address.
Charitable and political donations
The Group made charitable donations of £nil during the year (2007:
£nil) and no political donations (2007: £nil).
Environmental matters
The nature of Milestone's business means that it is unlikely to be a
major polluter but the Board is mindful of the potential impact on
the environment of Group activities. The Board recognises its
responsibility to the environment in areas such as energy management,
paper usage, waste reduction and recycling, and communications.
Board of directors
The Board is responsible for formulating, reviewing and approving the
Group's strategies, budgets, major items of capital expenditure and
corporate actions.
At the end of the year the Board of the Company comprised one
Non-Executive Chairman, John Sanderson, one Chief Executive Officer,
Deborah White, and one Finance Director, Ian Lodwick. Other directors
who held office during the year are set out at the beginning of this
report, together with their appointment and resignation dates.
At 25 March 2009 the Board comprised one Non-Executive Chairman, John
Sanderson, and one Executive Director, Deborah White. Each director
has extensive and relevant business experience. Brief biographies of
the directors are set out on page 8 of this report (below).
The Board is currently of the opinion that, given the present size of
the Group, it is inappropriate to retain separate sub-committees but
intends to keep this matter under continuous review.
The Board believes that this is an appropriate structure for the
Company at its current stage of development and that there is
sufficient expertise within the Board to facilitate a sound decision
making process and control environment in the short-term. The
directors intend to make further appointments to the Board in due
course.
Details of the remuneration of the directors is included in note 5 of
the financial statements.
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PAGE 9
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
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Directors' profiles
John Sanderson, Non-Executive Chairman, aged 54
John runs the media and business consultancy JFWS Limited. In
addition he is chairman of ABN Holdings Limited and Eicom Plc and a
non-executive director of Somethin' Else Sound Directions Limited.
John is widely recognised as a leading strategy consultant advising
both listed and private media businesses in their development stages,
having begun his career as a leisure and media sector analyst.
Deborah White, Executive Director (part-time), aged 43
From 1999 to 2006 Deborah was responsible for building Inter-Alliance
City Limited leading to the creation of the Millfield Group advisory
practice. She went on to establish (and remains a director of) Silver
Planet Life Investment Taxation Solutions Limited, a specialised
financial advisory group dealing with high level investment advice
and capital raising.
Directors' shareholdings
The directors of the Company and their beneficial interests at the
end of the year (including those of their immediate family and any
company controlled by them) in the share capital of Milestone are
shown below:
+-------------------------------------------------------------------+
| | Ordinary | Deferred shares held | Ordinary |
| | shares of | at 30 September 2008 | shares of |
| | 0.1p each | (non-transferable) | 10p each |
| | held at 30 | | held at 30 |
| | September | | September |
| | 2008 | | 2007 |
|------------------+------------+----------------------+------------|
| Deborah Jane | | | |
| White | 7,606,698 | 7,606,698 | - |
| (appointed 15 | | | |
| January 2008) | | | |
|------------------+------------+----------------------+------------|
| John Frederick | | | |
| Waley Sanderson | - | - | - |
| | | | |
|------------------+------------+----------------------+------------|
| Ian David | | | |
| Lodwick | - | - | - |
| (appointed 31 | | | |
| March 2008, | | | |
| resigned 23 | | | |
| February 2009) | | | |
+-------------------------------------------------------------------+
Further information on directors' shareholdings at 18 March 2009 have
been shown in the substantial shareholdings section of this report on
page 6 (above).
No directors' share options were exercised in the year (2007: nil)
and there were no options outstanding at the end of the year.
Details of any directors' interests in transactions of the Group are
given in note 21 to these financial statements.
Qualifying third party indemnity provision for the benefit of the
directors was in place during the year and continues to remain in
place.
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PAGE 10
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
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Auditors
All of the current directors have taken all the steps that they ought
to have taken to make themselves aware of any information needed by
the Group's auditors for the purposes of their audit and to establish
that the auditors are aware of the information. The directors are not
aware of any relevant audit information of which the auditors are
unaware.
BDO Stoy Hayward LLP have expressed their willingness to continue in
office and a resolution to re-appoint them will be proposed at the
Annual General Meeting.
Directors' responsibilities
The directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Group, for safeguarding the assets of the Company,
for taking reasonable steps for the prevention and detection of fraud
and other irregularities and for the preparation of a directors'
report which complies with the requirements of the Companies Act
1985.
The directors are responsible for preparing the annual report and the
financial statements in accordance with the Companies Act 1985. The
directors are also required to prepare financial statements for the
Group in accordance with International Financial Reporting Standards
as adopted by the European Union ("IFRSs") and the rules of the
London Stock Exchange for companies trading securities on the
Alternative Investment Market. The directors have chosen to prepare
financial statements for the Company in accordance with UK Generally
Accepted Accounting Practice.
Group financial statements
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the Group's
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of transactions,
other events and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses set
out in the International Accounting Standards Board's 'Framework for
the preparation and presentation of financial statements'. In
virtually all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRSs.
A fair presentation also requires the directors to:
* consistently select and apply appropriate accounting policies;
* present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information; and
* provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the entity's financial position and financial
performance.
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PAGE 11
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
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Parent Company financial statements
Company law requires the directors to prepare financial statements
for each financial year which give a true and fair view of the state
of affairs of the Company and of the profit or loss of the Company
for that period. In preparing these financial statements, the
directors are required to:
* select suitable accounting policies and then apply them
consistently;
* prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
* make judgements and estimates that are reasonable and prudent;
and
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements.
Financial statements are published on the Company's website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and
integrity of the Company's website is the responsibility of the
directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
By order of the Board
D White
Executive Director
25 March 2009
----------------------------------------------------------------------------------------------------------
PAGE 12
REPORT OF THE INDEPENDENT AUDITORS
----------------------------------------------------------------------------------------------------------
Independent auditors' report to the shareholders of Milestone Group
PLC
We have audited the Group and parent Company financial statements
(the ''financial statements'') of Milestone Group PLC for the year
ended 30 September 2008 which comprise the consolidated income
statement, the consolidated and company balance sheets, the
consolidated cash flow statement, the consolidated statement of
changes in equity and the related notes. These financial statements
have been prepared under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the annual report and
group financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the
European Union and for preparing the parent Company financial
statements in accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting
Practice) are set out in the statement of directors'
responsibilities.
Our responsibility is to audit the financial statements in accordance
with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements
give a true and fair view and have been properly prepared in
accordance with the Companies Act 1985 and whether the information
given in the directors' report is consistent with those financial
statements. We also report to you if, in our opinion, the Company
has not kept proper accounting records, if we have not received all
the information and explanations we require for our audit, or if
information specified by law regarding directors' remuneration and
other transactions is not disclosed.
We read the Chairman's statement and the directors' report and
consider the implications for our report if we become aware of any
apparent misstatements within them.
Our report has been prepared pursuant to the requirements of the
Companies Act 1985 and for no other purpose. No person is entitled
to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of the
Companies Act 1985 or has been expressly authorised to do so by our
prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such liability.
Basis of audit opinion
We conducted our audit in accordance with International Standards on
Auditing (UK and Ireland) issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgments
made by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the Group's
and Company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance
that the financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
----------------------------------------------------------------------------------------------------------
PAGE 13
REPORT OF THE INDEPENDENT AUDITORS (CONTINUED)
----------------------------------------------------------------------------------------------------------
Opinion
In our opinion:
* the Group financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union, of the
state of the Group's affairs as at 30 September 2008 and of its
loss for the year then ended;
* the parent Company financial statements give a true and fair
view, in accordance with United Kingdom Generally Accepted
Accounting Practice, of the state of the parent Company's affairs
as at 30 September 2008;
* the financial statements have been properly prepared in
accordance with the Companies Act 1985; and
* the information given in the directors' report is consistent with
the financial statements.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not
qualified, we have considered the adequacy of the disclosures made in
note 1 to the financial statements concerning the Group's and
Company's ability to continue as a going concern. The Group and
Company are reliant on the continuing support of its funders. The
current loan facility expires in 2011 and, although the directors
expect to be able to draw down further on the facility, they have had
difficulty in doing so to date. These conditions along with other
matters disclosed in note 1 to the financial statements, indicate the
existence of a material uncertainty which may cast significant doubt
about the Group's and Company's ability to continue as a going
concern. The financial statements do not include the adjustments
that would result if the Group and Company was unable to continue as
a going concern.
BDO STOY HAYWARD LLP
Chartered Accountants
and Registered Auditors
Reading
Date: 25 March 2009
----------------------------------------------------------------------------------------------------------
PAGE 14
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
Note 2008 2007
£ £
Revenue 3 34,300 51,328
Cost of sales (51,296) (50,059)
Gross (loss) / profit (16,996) 1,269
Other operating income 4 38,736 87,530
Administrative expenses:
Other administrative
expenses (822,237) (886,651)
Restructuring costs - (179,054)
(822,237) (1,065,705)
Loss from operations 3, 4 (800,497) (976,906)
Finance expense 6 (407) (2,361)
Finance income 3,433 27,421
Loss before taxation (797,471) (951,846)
Taxation expense 7 - -
Loss from continuing operations (797,471) (951,846)
Profit / (loss) on discontinued
operations net of tax 25 - -
Loss for the year (797,471) (951,846)
Attributable to equity shareholders of the
parent (797,471) (951,846)
The notes on pages 18 to 38 form part of these financial statements
----------------------------------------------------------------------------------------------------------
PAGE 15
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
Note 2008 2007
£ £
Non-current assets
Goodwill 10 - -
Property, plant & equipment 11 - 7,664
- 7,664
Current assets
Trade and other receivables 12 71,152 81,942
Cash and cash equivalents 18,141 102,443
89,293 184,385
Current liabilities
Bank overdrafts 14 (3,260) -
Trade and other payables 13 (596,687) (265,544)
(599,947) (265,544)
Net assets (510,654) (73,495)
Capital and reserves attributable to
equity holders of the Company
Share capital 18 2,790,795 2,760,510
Share premium account 8,023,012 7,692,985
Merger reserve 11,119,585 11,119,585
Retained losses (22,444,046) (21,646,575)
Total Equity (510,654) (73,495)
The financial statements were approved by the Board and authorised
for issue on 25 March 2009
D White
Executive Director
The notes on pages 18 to 38 form part of these financial statements
----------------------------------------------------------------------------------------------------------
PAGE 16
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
Cash flow from operating activities Note
2008 2007
£ £
Loss for the year (797,471) (951,846)
Adjustments for:
Depreciation of tangible assets 8,834 7,003
Profit on disposal of property, plant
and equipment - (11,442)
Net bank and other interest charges (3,026) (25,060)
Profit on sale of discontinued
operations net of tax (36,408) -
Recognition of negative goodwill (24,212) -
Net loss before changes in working
capital (852,283) (981,345)
Decrease/(increase) in trade and other
receivables 4,875 92,800
(Decrease)/increase in trade and other
payables 341,639 (111,400)
Cash from operations (505,769) (999,944)
Interest received 3,433 27,421
Interest paid (407) ( 2,361)
Net cash flows from operating
activities 3,026 (974,934)
Investing activities
Acquisition of subsidiary
undertakings,
net of cash and overdrafts acquired 25 56,314 -
Sale of subsidiary undertakings 25 (3,539) -
Purchase of property, plant and
equipment 11 (1,170) (7,882)
Sale proceeds of property, plant and
equipment - 1,193
Net cash flows used in investing
activities 51,605 (6,689)
Financing activities
Issue of ordinary share capital 322,816 -
Repayment of loan - (3,063)
New loans raised 37,500 -
Net cash flows from financing
activities 360,316 (3,063)
Net decrease in cash (90,822) (984,636)
Cash and cash equivalents at beginning
of period 102,443 1,087,079
Cash and cash equivalents at end of
period 24 11,621 102,443
The notes on pages 18 to 38 form part of these financial statements
----------------------------------------------------------------------------------------------------------
PAGE 17
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30
SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
Share Share Merger Retained Total
capital premium reserve Earnings equity
£ £ £ £ £
Balance at 30
September 2006 2,760,510 7,692,985 11,119,585 (20,694,729) 878,351
Total
recognised
income
and expense
for the year - - - (951,846) (951,846)
Shares issued - - - - -
Balance at 30
September 2007 2,760,510 7,692,985 11,119,585 (21,646,575) (73,495)
Total
recognised
income
and expense
for the year - - - (797,471) (797,471)
Shares issued 30,285 330,027 - - 360,312
Balance at 30
September 2008 2,790,795 8,023,012 11,119,585 (22,444,046) (510,654)
----------------------------------------------------------------------------------------------------------
PAGE 18
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008
----------------------------------------------------------------------------------------------------------
The principal activity of Milestone Group PLC and its subsidiaries
(the Group) is to hold and operate businesses in the media and
technology sectors.
Milestone Group PLC is the Group's ultimate parent company, and it is
incorporated and resident in Great Britain. The address of Milestone
Group PLC's registered office is 1st Floor, 2 Royal Exchange, London
EC3V 3DG, and this is its principal place of business.
Milestone Group PLC's shares are listed on the AIM market of the
London Stock Exchange.
Milestone Group PLC's consolidated financial statements are presented
in Pounds Sterling (£), which is also the functional currency of the
parent Company.
These consolidated financial statements have been approved for issue
by the Board of Directors on 25 March 2009.
1 Principal accounting policies
The principal accounting policies adopted in the preparation of the
financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The Group financial statements have been prepared in accordance with
International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs) issued by the
International Accounting Standards Board (IASB) as adopted by
European Union ("Adopted IFRSs"), and with those parts of the
Companies Act 1985 applicable to companies preparing their financial
statements under Adopted IFRSs. This is the first time the group has
prepared its financial statements in accordance with Adopted IFRSs,
having previously prepared its financial statements in accordance
with UK accounting standards. Details of how the transition from UK
accounting standards to Adopted IFRSs affects the financial
statements are shown in note 27.
Going concern
The Group's business activities, together with the factors likely to
affects 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 directors' report. In addition note 17 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 its exposures to
credit risk and liquidity risk.
The Board's cash flow projections show a requirement for additional
funding to support the Company's working capital and development
plans in the coming twelve months in order to meet its liabilities as
they fall due. The Company has previously experienced difficulty
drawing down on the £0.5m loan facility it had entered into with its
former director. The Company has managed to successfully draw down a
part of this facility and raise other funds to provide working
capital. The Board is also exploring a range of options to enhance
the Group's access to supplementary sources of finance to fund its
future activities.
The directors have concluded that the combination of these
circumstances represent a material uncertainty that casts significant
doubt upon the Group's and the Company's ability to continue as a
going concern. Nevertheless after making enquiries and considering
the uncertainties described above, the directors have a reasonable
expectation that the Group and the Company will have adequate
resources to continue in operational existence for the foreseeable
future. For these reasons they continue to adopt the going concern
basis in preparing the annual report and accounts.
----------------------------------------------------------------------------------------------------------
PAGE 19
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Basis of consolidation
The Group financial statements consolidate those of the Company and
of its subsidiary undertakings drawn up to 30 September 2008.
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain benefits
from its activities. The Group obtains and exercises control through
voting rights.
Amounts reported in the financial statements of subsidiaries have
been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the acquisition
method. The acquisition method involves the recognition at fair value
of all identifiable assets and liabilities, including contingent
liabilities of the subsidiary, at the acquisition date, regardless of
whether or not they were recorded in the financial statements of the
subsidiary prior to acquisition. On initial recognition, the assets
and liabilities of the subsidiary are included in the consolidated
balance sheet at their fair values, which are also used as the bases
for subsequent measurement in accordance with the Group's accounting
policies. Goodwill is stated after separating out identifiable
intangible assets. Goodwill represents the excess of acquisition cost
over the fair value of the Group's share of the identifiable net
assets of the acquired subsidiary at the date of acquisition.
The trading results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
All intra-Group transactions, balances, income and expenditure are
eliminated on consolidation.
The Group has elected not to apply IFRS 3 Business Combinations
retrospectively to business combinations prior to 1 October 2006.
Accordingly the treatment of the acquisitions prior to that date
remains unchanged from that used under UK GAAP. Assets and
liabilities are recognised at the date of transition and are measured
using their UK GAAP carrying amount immediately post-acquisition as
deemed cost under IFRS. Deferred tax is recognised on fair value
adjustments.
Revenue and attributable profit
Revenue represents sales to external customers at invoiced amount
less value added tax.
Revenue represents advertising and other income from the Group's
television division. Advertising income is recognised on the date of
broadcast.
Revenue relating to invoices raised in advance of the airing are
treated as deferred income and are carried forward on the balance
sheet
----------------------------------------------------------------------------------------------------------
PAGE 20
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at cost net of depreciation
and any provision for impairment. Depreciation is calculated to write
down the cost less estimated residual value by equal annual
instalments over their expected useful lives. The rates generally
applicable are:
Short leasehold property improvements 10-20% or over the life of the
lease or licence
Production and studio equipment 20% on cost
Fixtures, fittings, computer and 10-50% per annum or over the
period of the licence
office equipment &
machinery
The assets' residual values and useful lives are reviewed at each
balance sheet date and adjusted if appropriate.
Intangible assets
Goodwill
Goodwill arising on consolidation is recorded as an intangible asset
and is the surplus of the cost of acquisition over the Group's
interest in the fair value of identifiable net assets acquired.
Goodwill is not amortised and is reviewed annually for impairment.
Any impairment identified as a result of the review is charged in the
income statement.
On disposal of a subsidiary the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to
Adpoted IFRSs is recorded at their carrying value at the date of
transition to Adpoted IFRSs, and is subject to annual impairment
reviews.
Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated income statement
on the acquisition date.
Leased assets
Property, plant and equipment acquired under finance leases or hire
purchase contracts are capitalised and depreciated in the same manner
as other property, plant and equipment, and the interest element of
the lease is charged to the income statement over the period of the
finance lease. The related obligations, net of future finance
charges, are included in liabilities.
Rentals payable under operating leases are charged to the income
statement on a straight line basis over the period of the lease.
----------------------------------------------------------------------------------------------------------
PAGE 21
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Impairment of non-current assets
For the purposes of assessing impairment, assets are grouped into
separately identifiable cash-generating units. Goodwill is allocated
to those cash-generating units that have arisen from business
combinations.
At each balance sheet date, the Group reviews the carrying amounts of
its non-current assets, to determine whether there is any indication
that those assets have suffered an impairment loss. If any such
indication exists the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any).
Goodwill is tested for impairment annually. Goodwill impairment
charges are not reversed.
An impairment loss is recognised for the amount by which the asset's
or cash-generating unit's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value and value
in use based on an internal discounted cash flow evaluation.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits.
Bank overdrafts that are repayable on demand and form an integral
part of the Group's cash management are included as a component of
cash and cash equivalents. Bank overdrafts are shown in current
liabilities on the balance sheet.
Equity
Equity comprises the following:
* Share capital represents the nominal value of issued Ordinary
shares and Deferred shares.
* Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue.
* Merger reserve represents the excess over nominal value of the
fair value of consideration received for equity shares issued on
acquisition of subsidiaries, net of expenses of the share issue.
* Retained earnings represents retained profits and losses.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying
amount of an asset or liability in the balance sheet differs from its
tax base, except for differences arising on:
* the initial recognition of goodwill;
* the initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the
transaction affects neither accounting or taxable profit; and
* investments in subsidiaries and jointly controlled entities where
the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances
where it is probable that taxable profit will be available against
which the difference can be utilised. The amount of the asset or
liability is determined using tax rates that have been enacted or
substantively enacted by the balance sheet date and are expected to
apply when the deferred tax liabilities/(assets) are
settled/(recovered).
----------------------------------------------------------------------------------------------------------
PAGE 22
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Deferred taxation (continued)
Deferred tax assets and liabilities are offset when the Group has a
legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
* the same taxable Group company; or
* different Group entities which intend either to settle current
tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax assets or
liabilities are expected to be settled or recovered.
Financial instruments
Financial assets and financial liabilities are initially recognised
in the Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument at their fair value and
thereafter at amortised cost.
Trade receivables
Trade receivables are initially recorded at fair value and then
carried at their amortised cost less any provision for doubtful
debts. Trade receivables due in more than one year are discounted to
their present value.
Impairment provisions are recognised when there is objective evidence
(such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the
Group will be unable to collect all of the amounts due under the
terms receivable, the amount of such a provision being the difference
between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable. For
trade receivables, which are reported net, such provisions are
reported in a separate allowance account with the loss being
recognised within administrative expenses in the income statement. On
confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the
associated provision.
Convertible loan notes
Convertible loan notes are regarded as compound instruments,
consisting of a liability component and an equity component. At the
date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for similar non-convertible
debt. The difference between the proceeds of issue of the
convertible loan note and the fair value assigned to the liability
component, representing the embedded option to convert the liability
into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity
components of the convertible loan notes based on their relative
carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity.
The interest expense of the liability component is calculated by
applying the effective interest rate for similar non-convertible
debts to the liability component of the instrument. The difference
between this amount and the interest paid is added to the carrying
amount of the convertible loan note.
Trade payables
Trade payables are initially recorded at fair value and then carried
at their amortised cost.
----------------------------------------------------------------------------------------------------------
PAGE 23
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Financial instruments (continued)
Equity instruments
Equity instruments issued by the Group are recorded as the proceeds
received, net of direct costs.
Share based payments
When share options are awarded to employees, the fair value of the
options at the date of grant is charged to the income statement over
the vesting period. Non-market conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options
that eventually vest. Market conditions are factored into the fair
value of the options granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether
the market vesting conditions are satisfied. The cumulative expense
is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they
vest, the increase in fair value of the options, measured immediately
before and after the modification, is also charged to the income
statement over the remaining vesting period. Where equity instruments
are granted to persons other than employees, the income statement is
charged with the fair value of goods and services received.
The share options are exercisable from the grant date. Upon exercise
of share options, the proceeds received net of attributable
transaction costs are credited to share capital, and where
appropriate share premium.
Retirement benefits
The Group operated pension schemes for the benefit of two directors
in the prior year. The schemes were defined contribution schemes and
the contributions were charged against profits as they accrued.
Standards issued by the International Accounting Standards Board
(IASB) not effective for the current year and not adopted by the
Group
The following standards and interpretations have been issued by the
IASB. They become effective after the current year and have not been
early adopted by the Group:
Effective date To be adopted
commencing by the Group
during years
International Financial Reporting
Standards (IFRS)
IFRS 8 Operating Segments 01.01.2009 30.06.2010
IAS 23 Amendment - Borrowing Costs 01.01.2009 30.06.2010
International Financial Reporting
Interpretations Committee (IFRIC)
IFRIC 12 Service concession agreements 01.01.2008 30.06.2009
IFRIC 13 Customer loyalty programmes 01.07.2008 30.06.2009
IFRIC 14 IAS 19 - The limit on a Defined 01.01.2008 30.06.2009
Benefit Asset, Minimum
Funding Requirements and their
interaction
IFRIC 15 Agreements for the Construction 01.01.2009 30.06.2010
of Real Estate
IFRIC 16 Hedges of a Net Investment in a 01.10.2008 30.06.2010
Foreign Operation
----------------------------------------------------------------------------------------------------------
PAGE 24
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Retirement benefits (continued)
The impact on the Group's financial statements is not expected to be
material.
There are a number of other standards that have been drafted,
primarily as a result of the IASB improvement programme, that have
yet to be endorsed by the EU. These are not listed here as they have
not yet been endorsed by the EU. The Directors have reviewed these
standards and do not believe that the impact on the Group's financial
statements are material.
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
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of
estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
discussed below.
Recoverability of receivables
During the year, management reconsidered the recoverability of its
receivables that are included in its balance sheet. Management have
provided for £579,836 against receivables and consider the carrying
amount will be recovered in full.
----------------------------------------------------------------------------------------------------------
PAGE 25
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
3 Segment analysis
The Group's primary format for segment reporting is based on business
segments. All of the Group's current operations are carried out in
the UK. The Group therefore only has one geographical segment.
Loss for Loss for
Revenue the year Revenue the year
2008 2008 2007 2007
£ £ £ £
Analysis by
class of
business:
Television
Division 16,212 (75,336) 51,328 (109,301)
Head office 18,088 (722,135) - (842,545)
34,300 (797,471) 51,328 (951,846)
Other
segment Capital Depreciation Capital Depreciation
information Expenditure Expenditure
2008 2008 2007 2007
Television
Division 1,170 1,683 - 2864
Head office - 7,151 7,882 4,139
Total Total Net Total Total Net
Assets Liabilities Liabilities Assets Liabilities Liabilities
2008 2008 2008 2007 2007 2007
£ £ £ £ £ £
Television
Division 29,570 (52,907) (23,337) 43,237 (52,783) (9,546)
Head office 59,723 (547,040) (487,317) 148,812 (212,761) (63,949)
89,293 (599,947) (510,654) 192,049 (265,544) (73,495)
---------------------------------------------------------------------------------------------------------
PAGE 26
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
4 Loss from operations
The loss on ordinary activities before taxation is stated after
charging/(crediting):
2008 2007
£ £
Auditors' remuneration:
Fees payable to the Company's auditor:
For the audit of the Company's
annual accounts 15,000 8,000
For the audit of other
Group companies 10,000 37,000
Fees for taxation
compliance services 6,000 5,900
Operating lease rentals:
Plant and machinery 50,352 50,058
Other 29,750 28,567
Depreciation, amortisation and impairment:
Intangible assets - -
Property, plant and equipment 8,834 7,003
Staff costs (note 5) 302,307 580,193
Restructuring costs (see below) - 179,054
Other income (rent receivable) (38,736) (87,530)
The restructuring item in the year ended 30 September 2007 relates to
the costs associated with a reorganisation and restructuring
following a strategic review in the prior year.
5 Directors and staff
Staff costs during the year, including directors, were as follows:
2008 2007
£ £
Wages and salaries 300,685 531,573
Social security costs 1,622 26,354
Other pension costs - 22,266
302,307 580,193
Other pension costs include contributions totalling £nil (2007:
£22,266) to money purchase pension schemes in respect of two
directors.
The average number of staff of the Group during the year was as
follows:
2008 2007
no. no.
Sales and
distribution 1 1
Directors and administration 2 2
3 3
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PAGE 27
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
5 Directors and staff (continued)
Remuneration in respect of the directors, who are the key management
personnel of the Group, was as follows:
Money
Redundancy value
and of
compensation non-cash
for Pension benefits 2008 2007
Salary
and loss of
fees office Contributions received Total Total
£ £ £ £ £ £
John
Sanderson 28,440 - - - 28,440 21,000
Deborah
White 60,000 - - - 60,000 -
Jamie
Bloom - - - - - -
Andrew
Craig 18,750 - - - 18,750 265,065
Brian
Chester 19,425 - - - 19,425 211,765
Mark
Levine - - - - - -
Ian
Lodwick 18,800 - - - 18,800 -
2008 145,415 - - - 145,415
2007 357,009 116,095 22,266 2,460 497,830
6 Finance expenses
2008 2007
£ £
Bank overdraft 95 229
Other 312 2,132
407 2,361
7 Tax on loss on ordinary activities
2008 2007
£ £
Loss on ordinary activities before tax (797,471) (951,846)
Loss on ordinary activities at the
standard rate of
corporation tax in the UK of 29% (231,267) (285,554)
Effects of:
Expenses not deductible for tax
purposes 59,666 7,308
Capital allowances in excess of depreciation 2,562 (1,272)
Unutilised tax losses 169,039 279,518
Utilisation of brought forward losses - -
- -
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PAGE 28
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
7 Tax on loss on ordinary activities (continued)
Deferred tax assets of approximately £2.0m (Group) and £1.1m
(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 £7.2m (Company
£3.5m) available to carry forward against future profits from the
same activity, subject to agreement by HM Revenue & Customs.
8 Dividend
No dividends have been paid or proposed in the year (2007: nil).
9 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.
2008 2007
Weighted Weighted
Per Per
Average share average share
Loss number of amount Loss number of amount
£ shares pence £ shares pence
Basic and
diluted
loss per
share
Loss
attributable
to ordinary
shareholders (797,471) 42,331,041 (1.8) (951,846) 27,605,095 (3.4)
There were no share options or convertible loan notes outstanding at
the end of the year (2007: nil).
The Company issued a number of shares subsequent to the balance sheet
date as disclosed in note 26.
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PAGE 29
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
10 Goodwill and intangible assets
Positive
Goodwill
£
Deemed Cost
At 1 October 2006 and -
At 30 September 2007 and -
At 30 September 2008 -
Amortisation and impairment
At 1 October 2006 and -
At 30 September 2007 and -
At 30 September 2008 -
Net book value
At 30 September 2008 -
At 30 September 2007 -
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.
The cost at the date of IFRS transition on 30 September 2006 was
therefore deemed to be nil.
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PAGE 30
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
11 Property, plant and equipment
Short
leasehold Fixtures and Production
property Fittings and Studio
improvements equipment Equipment Total
£ £ £ £
Cost
At 1 July 2006 65,197 183,341 568,395 816,933
Additions - 7,882 - 7,882
Disposals - (857) (275,000) (275,857)
At 30 September 2007 65,197 190,366 293,395 548,958
At 1 October 2007 65,197 190,366 293,395 548,958
Additions - 1,170 - 1,170
Disposals - - - -
At 30 September 2008 65,197 191,536 293,395 550,128
Depreciation
At 1 October 2006 65,197 177,621 566,580 809,398
Provided in year - 5,248 1,755 7,003
Disposed in year - (107) (275,000) (275,107)
At 30 September 2007 65,197 182,762 293,335 541,294
At 1 October 2007 65,197 182,762 293,335 541,294
Provided in year - 8,774 60 8,834
Disposed in year - - - -
At 30 September 2008 65,197 191,536 293,395 550,128
Net book value
At 30 September 2008 - - - -
At 30 September 2007 - 7,604 60 7,664
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PAGE 31
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
12 Trade and other receivables
2008 2007
£ £
Trade receivables 15,293 28,268
Other receivables 32,748 25,761
Prepayments and accrued income 23,111 27,913
71,152 81,942
The average credit period taken on sales of goods is 163 days (2007:
201 days). No interest is charged on receivables within the agreed
credit terms. Thereafter, interest may be charged.
An allowance for impairment is made where there is an identified
event which, based on previous experience, is evidence of a reduction
in the recoverability of the outstanding amount. The Group provides,
in full, for any debts it believes have become non recoverable. The
figures shown above are after deducting specific provision for bad
and doubtful debts of £579,836 (2007: £435,388). No amounts included
within trade and other receivables are expected to be recovered in
more than one year (2007: nil).
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable set out above.
The ageing of trade receivables that have not been provided for are:
2008 2007
£ £
Not due yet
0 - 29 days 5,830 10,776
Overdue
30 - 59 days 9,463 17,492
59+ days - -
15,293 28,268
13 Trade and other payables
2008 2007
£ £
Trade creditors 431,498 122,328
Taxation and social security 452 2,404
Other payables 673 -
Accruals and deferred income 164,064 140,812
596,687 265,544
Included in trade creditors and accruals are amounts of £69,125 and
£3,000 respectively (2007: £nil and £21,625) relating to unpaid
directors' remuneration. This has been accrued in accordance with the
payments agreed between the Company and directors.
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PAGE 32
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
14 Interest bearing loans and borrowings - due within one year
2008 2007
£ £
Bank overdrafts (unsecured) 3,260 -
15 Interest bearing loans and borrowings - due after more than
one year
To provide working capital to the Group, the Company issued loan
notes of £37,500 on 31 July 2008 under the terms of its loan note
instrument. The loan notes were repayable by 31 July 2011, subject to
any conversion rights exercised prior to that date and incurred
interest at 3 per cent above the Bank of England base rate.
The convertible loan notes were valued as a compound instrument, and
a calculation has been made to separate the equity element from the
liability element of the loan. The directors concluded that the
equity element of the loan was not material at inception.
The loan notes holders gave notice to convert the loan notes to
ordinary shares of the Company on 8 September 2008 and the shares
were allotted on 26 September 2008.
The interest charge in the income statement for the period was £312
(2007: £nil)
16 Deferred tax assets and liabilities
A deferred tax asset of £2.2m, arising principally from losses in the
Group, has not been recognised (2007: £2.0m). These losses can be
offset against future trading profits generated. The directors
believe at this stage that it is prudent not to recognise the
deferred tax asset within the financial statements.
There was no movement in the deferred tax liability in the prior
year.
17 Financial instruments and risk management
Financial risk factors
The Group's financial instruments comprise cash, including short term
deposits, trade and other receivables and trade and other payables
that arise directly from its operations. The main risks arising from
the group's financial instruments are liquidity risk, credit risk and
interest rate risk. The Board has reviewed and agreed policies for
managing each of these risks and they are summarised below. The Group
has no financial assets other than trade receivables and cash at
bank. The Balance Sheet values for the financial assets and
liabilities are not materially different from their fair values.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. The Group's policy is to ensure there
are sufficient cash reserves to meet liabilities during such periods.
These are incorporated into rolling twelve month Group cash flow
forecasts, which are reviewed by the Board monthly, and the cash
flows are monitored at Group level by weekly cash reports from each
operating entity. Short term flexibility is provided through the
availability of cash facilities.
----------------------------------------------------------------------------------------------------------
PAGE 33
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
Financial risk factors (continued)
Credit risk
The Group's principal financial assets are bank balances, cash and
trade and other receivables. The Group's credit risk is primarily
attributable to its trade receivables. As far as possible the Group
operates to ensure that the payment terms of customers are matched to
the Group's own contractual obligations.
Interest rate risk
The Group finances its operations at present through funds raised on
share placings and loan facilities provided by individuals. The Group
manages its exposure to interest rate fluctuations by mixing the
duration of its deposits and borrowings to reduce the impact of
interest rate fluctuations.
Currency risk
The Group does not operate in overseas markets and is not subject to
exposures on transactions undertaken during the year. The Group's
exposure to exchange rate fluctuations is therefore nil.
Capital risk management
The capital structure of the Group consists of debt which includes
the facility to Mr Bloom noted above and the shareholders' equity
comprising issued share capital and reserves. The capital structure
of the Group is reviewed on an ongoing basis with reference to the
costs applicable to each element of capital, future requirements of
the group, flexibility of capital drawdown and availability of
further capital should it be require.
The Group had no material borrowings at the year end nor at the prior
year end.
Interest rate and liquidity risk
Interest rate sensitivity
The sensitivity analysis has been based on the average exposure to
floating rate debt during the period. It has been assumed that
floating interest rates were 50 basis point higher than those
actually incurred.
The effect of such a change would not have affected the loss before
tax for the year (2007: nil affect).
Liquidity and interest risk
The Group's remaining financial liabilities represented a bank
overdraft and trade payables at the year end. All the liabilities
were repayable on demand. No interest was payable on the trade and
other payables outstanding.
----------------------------------------------------------------------------------------------------------
PAGE 34
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
18 Share capital
2008 2007
£ £
Authorised
2,267,095,595 (2007: 50,000,000) ordinary
shares of 0.1p (2007: 10p) each 2,267,096 5,000,000
27,605,095 (2007: nil) deferred shares of
9.9p each 2,732,904 -
5,000,000 5,000,000
Allotted, called up and fully paid
52,890,329 (2007: 27,605,095) ordinary shares
of 0.1p (2007: 10p) each 57,891 2,760,510
27,605,095 (2007: nil) deferred shares of
9.9p each 2,732,904 -
2,790,795 2,760,510
On 31 July 2008 the ordinary shares in issue were divided into one
ordinary shares of 0.1p and one deferred share of 9.9p.
The deferred shares, which are not listed have no rights attached,
are valueless, non transferable and have no effect on the economic
interest of the shareholders.
Each of the unissued authorised ordinary shares were divided into 100
new ordinary shares of 0.1p each.
On 31 August 2008 the Company issued 21,875,001 ordinary shares of
0.1p each for cash consideration of £262,500.
On 26 September 2008 the Company issued 3,410,233 ordinary shares to
the holders of £37,500 of convertible loan notes for consideration of
£37,812.
On 29 September 2008 the Company issued 4,999,999 ordinary shares of
0.1p for cash consideration of £60,000.
No transaction costs of were recorded against the share premium in
the year.
19 Capital commitments
There were no capital commitments at 30 September 2008 or 30
September 2007.
20 Share based payment
There were no share options in issue at either 30 September 2007 or
30 September 2008. All option holders waived their rights to
participate in the option scheme in the prior year.
----------------------------------------------------------------------------------------------------------
PAGE 35
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
21 Transactions with directors and other related parties
Loans from directors
At 30 September 2008 there were no loans due to directors.
As stated in note 13 to the accounts a total of £72,125 (2007:
£21,625) is due to the directors as unpaid remuneration.
Related Party Type of Balance owing /
relationship Transaction Transaction amount owed
2008 2007 2008 2007
£ £ £ £
Companies in
which
directors or
their
immediate family
have a
significant
controlling
interest Sales to group 73,784 107,000 50,857 29,730
22 Retirement benefit schemes
The Group operated a defined contribution pension schemes for the
benefit of two directors in the prior year. The assets of the scheme
are administered by trustees in funds independent from those of the
Group.
The total cost charged to income of £nil (2007: £22,266) represents
contributions payable to the schemes by the Group according to the
rules of the schemes
23 Operating lease rental commitments
At 30 September 2008 the Group had operating lease rental commitments
as follows:
2008 2007
£ £
Leases expiring within one year:
Land and buildings 29,750 29,750
Office refurbishment and equipment 50,352 50,352
80,102 80,102
Leases expiring after more than one year but less
than five years:
Land and buildings - -
Office refurbishment and equipment - -
- -
----------------------------------------------------------------------------------------------------------
PAGE 36
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
24 Notes supporting the cash flow statement
Cash and cash equivalents for the purposes of the cash flow statement
comprises:
2008 2007
£ £
Bank overdrafts (3,260) -
Cash available on demand 14,881 102,443
11,621 102,443
25 Acquisition of subsidiaries
The Flex (International) Limited ("The Flex")
With effect from 15 January 2008 the Company acquired 80% of the
entire share capital of The Flex.
The transaction has been accounted for by the acquisition method of
accounting in accordance with IFRS 3 (Business Combinations).
The following assets and liabilities were acquired at the date of
acquisition:
Book value Fair value
£ £
Intangible assets 97,155 -
Cash and cash equivalents 56,414 56,414
Trade and other payables (26,024) (26,024)
Deferred tax - -
127,545 30,390
Minority interest (6,078)
Excess (negative goodwill) (see below) (24,212)
Total consideration 100
Satisfied by:
Cash 100
100
An excess of acquirer's interest in net fair value of acquiree's
indentifiable assets, liabilities and contingent liabilities over
cost ("excess" ("negative goodwill")) of £24,212 was recognised on
acquisition
The loss after tax of The Flex since the acquisition date included in
the group income statement at 30 September 2008 is £60,620. A gain on
disposal of £36,408 was recognised on disposal of The Flex for £100.
These items are disclosed in the income statement as a net figure of
nil as Profit / Loss on discontinued operations net of tax.
The nil result has no effect on the earnings per share for the year.
It is not practicable to present the results of The Flex for the
period from 30 September 2007 to 15 January 2008 as the directors do
not have access to the books and records of the company.
----------------------------------------------------------------------------------------------------------
PAGE 37
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
26 Post balance sheet events
(i) Subscriptions
Subsequent to the balance sheet date the Company has announced two
small subscriptions to support the short-term working capital
requirements of the Group. On 27 November 2008 the Company announced
a small subscription to raise £132,870 (before expenses) through the
issue of 11,416,251 new ordinary shares. On 18 March 2009, the
Company announced a small subscription to raise £109,000 (before
expenses) through the issue of 6,055,557 new ordinary shares which
are expected to be admitted to trading on AIM on or around 24 April
2009.
(ii) Corporate
In November 2008 the Company announced the appointment of Knowledge
MGI to assist it in a review of strategy. In February 2009 the
Company announced the appointment of Graham Urquhart as Company
Secretary and a change in the role of Deborah White to Executive
Director, incorporating the role of finance director until such time
as a dedicated person is appointed to this position. The Company
further announced the appointment of Guy van Zwanenberg FCA C Dir as
Chief Financial Officer initially working on a part-time basis.
27 Reporting under International Financial Reporting Standards
(IFRS)
This annual report is the first to be prepared under IFRS. The
comparative figures have been prepared on the same basis and have
therefore been restated from those previously prepared under UK GAAP.
The commentary below details the key changes that have arisen due to
the transition to reporting under IFRS. The Group's date of
transition is 30 September 2006, which is the beginning of the
comparative period for the 2006/2007 financial year. Therefore the
opening balance sheet for IFRS purposes is that reported at 30
September 2006 as amended for changes due to IFRS.
To explain the impact of the transition, reconciliations are included
below that show the changes made to the statements previously
reported under UK GAAP. The following reconciliation is included:
1 Reconciliation of Group balance sheet at 30 September 2006 from
UK GAAP to IFRS;
A reconciliation of Group balance sheet at 30 September 2007 from UK
GAAP to IFRS, and a reconciliation of Group income statement for the
year ended 30 September 2007 from UK GAAP to IFRS have not been
presented as there is no impact upon these items, except for
presentational items in the transition to IFRS.
The transition from UK GAAP to IFRS does not affect the cash flows
generated by the Group. The IFRS cash flow statement is presented in
a different format than that required under UK GAAP. The reconciling
items between the UK GAAP format and the IFRS format have no net
impact on the cash flows generated and accordingly reconciliations
have not been presented.
Under the provisions of IFRS 1 'First time adoption of International
Financial Reporting Standards', specific exemptions are either
mandatory or permitted in certain areas. The Group has taken
advantage of the following options:
* Business combinations completed prior to 30 September 2006 have
not been restated under IFRS 3 'Business combinations'. Business
combinations completed since that date have been restated with
adjustments to goodwill and other intangible fixed assets.
* The opening fair values of other non-current assets have been
deemed to be their accounting values as at 1 October 2007, after
reviewing for impairment as appropriate.
----------------------------------------------------------------------------------------------------------
PAGE 38
NOTES TO THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
2008 (CONTINUED)
----------------------------------------------------------------------------------------------------------
27 Reporting under International Financial Reporting Standards
(IFRS) (continued)
The presentational formats of IFRS financial statements differ from
those under UK GAAP in a number of areas. The majority of changes
relate to detailed disclosure in the notes to the accounts and are
therefore not dealt with specifically. However, the structure and
descriptions on the face of the primary statements have been
changed. A restatement of the UK GAAP balance sheet and P&L account
to reflect the format changes are shown in the IFRS reconciliations
below.
Reconciliation of the Group balance sheet & total equity under UK
GAAP to IFRS at 30 September 2006
UK GAAP
under
IFRS
presentation
and IFRS.
£
Non-current assets
Goodwill -
Property, plant & equipment 7,535
7,535
Current assets
Trade and other receivables 163,743
Cash and cash equivalents 1,221,181
1,384,924
Current liabilities
Bank overdrafts (134,101)
Trade payables (89,039)
Other payables (287,905)
(511,045)
Non-current liabilities
Other payables (3,063)
(3,063)
Net assets 878,351
Equity
Share capital 2,760,510
Share premium account 7,692,985
Merger reserve 11,119,585
Retained earnings (20,694,729)
878,351
----------------------------------------------------------------------------------------------------------
PAGE 39
COMPANY BALANCE SHEET AT 30 SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
Note 2008 2007
£ £
Fixed assets
Tangible assets 4 - 7,151
Investments in subsidiaries 5 - -
- 7,151
Current assets
Debtors 6 41,582 39,218
Cash at bank and in hand 18,141 102,443
59,723 141,661
Creditors: amounts falling due
within
one year (547,040) (212,761)
Net current assets (487,317) (71,100)
Total net assets (487,317) (63,949)
Capital and reserves
Called up share capital 9 2,790,795 2,760,510
Share premium account 10 8,023,012 7,692,985
Profit and loss account 10 (11,301,124) (10,517,444)
Shareholders' funds (487,317) (63,949)
The financial statements were approved by the Board and authorised
for issue on 25 March 2009
D White
Executive Director
The notes on pages 40 to 45 form part of these financial statements.
----------------------------------------------------------------------------------------------------------
PAGE 40
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies
These financial statements have been prepared in accordance with the
historical cost convention and applicable accounting standards, and
on a going concern basis. The principal accounting policies have
remained consistent with those adopted in the previous year.
Tangible fixed assets and depreciation
Depreciation is provided at rates calculated to write off the cost or
valuation of fixed assets, less their estimated residual value, over
the expected useful economic lives on the following bases:
Short leasehold property improvements
straight line over the life of the lease
Office and technical equipment
25-33% straight line
Financial instruments
Financial assets are recognised in the balance sheet at the lower of
cost and net realisable value. Provision is made for diminution in
value where appropriate. Income and expenditure arising on financial
instruments is recognised on the accruals basis, and credited or
charged to the income statement in the financial period to which it
relates.
Deferred taxation
Deferred tax is recognised on all timing differences where the
transactions or events that give the company an obligation to pay
more tax in the future, or right to pay less tax in the future, have
occurred by the balance sheet date. Deferred tax assets are
recognised when it is more likely than not that they will be
recovered. Deferred tax is measured using rates of tax that have been
enacted or substantively enacted by the balance sheet date. Deferred
tax balances are not discounted.
Leasing
Rentals payable under operating leases are charged to the income
statement on a straight line basis over the period of the lease.
Pension costs
The Company operated pension schemes for the benefit of two directors
in the prior year. The schemes were defined contribution schemes and
the contributions were charged against profits as they accrued.
----------------------------------------------------------------------------------------------------------
PAGE 41
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
----------------------------------------------------------------------------------------------------------
1 Principal accounting policies (continued)
Convertible debt
The proceeds received on issue of the Company's convertible debt are
allocated into their liability and equity components and presented
separately in the balance sheet.
The amount initially attributed to the debt component equals the
discounted cash flows using a market rate of interest that would be
payable on a similar debt instrument that did not include an option
to convert.
The difference between the net proceeds of the convertible debt and
the amount allocated to the debt component is credited direct to
equity and not subsequently remeasured. On conversion, the debt and
equity elements are credited to share capital and share premium as
appropriate.
Transaction costs that relate to the issue of the instrument are
allocated to the liability and equity components of the instrument in
proportion to the allocation of proceeds.
Share based payments
When share options are awarded to employees, the fair value of the
options at the date of grant is charged to the income statement over
the vesting period. Non-market conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options
that eventually vest. Market conditions are factored into the fair
value of the options granted. As long as all other vesting conditions
are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they
vest, the increase in fair value of the options, measured immediately
before and after the modification, is also charged to the income
statement over the remaining vesting period.
Where equity instruments are granted to persons other than employees,
the income statement is charged with the fair value of goods and
services received.
The share options are exercisable from the grant date.
2 Loss for the financial year
Milestone has taken advantage of section 230 Companies Act 1985 and
has not included its own income statement in these financial
statements. The Company's loss for the year after tax was £783,680
(2007: £996,721).
3 Dividends
No dividends have been paid or proposed in the year (2007: nil).
----------------------------------------------------------------------------------------------------------
PAGE 42
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
----------------------------------------------------------------------------------------------------------
4 Property, plant and equipment
Short
Leasehold Fixtures and Office and
property fittings and technical
improvements equipment equipment Total
£ £ £ £
Cost
At 1 October 2007 - 12,759 139,440 152,199
Additions -
Disposals - - -
At 30 September 2008 - 12,759 139,440 152,199
Depreciation
At 1 October 2007 - 12,759 132,289 145,048
Provided in year 7,151 7,151
Disposed in year - - -
At 30 September 2008 - 12,759 139,440 152,199
Net book value
At 30 September 2008 - - - -
At 30 September 2007 - - 7,151 7,151
5 Fixed asset investments
Shares in subsidiary
undertakings
£
Cost
At 1 October 2007 2,645,384
At 30 September 2008 2,645,384
Amounts written off
At 1 October 2007 2,645,384
At 30 September 2008 2,645,384
Net book value
At 30 September 2008 -
At 30 September 2007 -
The principal operating subsidiary companies, which are all wholly
owned, are as follows:
* Oxford Broadcasting Limited
* The Milestone Television Company Limited
* Milestone Media Limited
* Nexstar Holdings Limited
Oxford Broadcasting Limited is involved in television broadcasting.
Nexstar Holdings Limited is developing a sports entertainment
venture. The Milestone Television Company Limited and Milestone
Media Limited are holding companies.
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PAGE 43
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
----------------------------------------------------------------------------------------------------------
6 Debtors
2008 2007
£ £
Trade debtors 5,738 4,140
Other debtors 29,233 25,761
Prepayments and accrued income 6,611 9,317
41,582 39,218
7 Creditors: amounts falling due within one year
2008 2007
£ £
Trade creditors 396,450 104,493
Amounts owed to group undertakings - 108,268
Accruals and deferred income 150,590 -
547,040 212,761
Included in trade creditors and accruals are amounts of £69,125 and
£3,000 respectively (2007: £nil and £21,625) relating to unpaid
directors' remuneration. This has been accrued in accordance with
agreements entered into between the Company and the directors.
8 Creditors: amounts falling due after more than one year
To provide working capital for the Group, the Company issued loan
notes of £37,500 on 31 July 2008 under the terms of its loan note
instrument. The loan notes were repayable by 31 July 2011, subject to
any conversion rights exercised prior to that date and incurred
interest at 3 per cent above the Bank of England base rate.
The convertible loan notes were valued as a compound instrument, and
a calculation has been made to separate the equity element from the
liability element of the loan. The directors concluded that the
equity element of the loan was not material at inception.
The loan notes holders gave notice to convert the loan notes to
ordinary shares of the Company on 8 September 2008 and the shares
were allotted on 26 September 2008. The interest charge in the income
statement for the period was £312 (2007: £nil)
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PAGE 44
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
----------------------------------------------------------------------------------------------------------
9 Share capital
2008 2007
£ £
Authorised
2,267,095,595 (2007: 50,000,000) ordinary
shares of 0.1p (2007: 10p) each 2,267,096 5,000,000
27,605,095 (2007: nil) deferred shares of
9.9p each 2,732,904 -
5,000,000 5,000,000
Allotted, called up and fully paid
52,890,329 (2007: 27,605,095) ordinary shares
of 0.1p (2007: 10p) each 57,891 2,760,510
27,605,095 (2007: nil) deferred shares of
9.9p each 2,732,904 -
2,790,795 2,760,510
On 31 July 2007 the ordinary shares in issue were divided into one
ordinary shares of 0.1p and one deferred share of 9.9p.
Each of the unissued authorised ordinary shares were divided into 100
new ordinary shares.
The deferred shares, which are not listed have no rights attached,
are valueless, non transferable and have no effect on the economic
interest of the shareholders.
On 31 August 2008 the Company issued 21,875,001 ordinary shares of
0.1p each for cash consideration of £262,500.
On 26 September 2008 the Company issued £3,410,233 ordinary shares to
the holders of £37,500 of convertible loan notes for consideration of
£37,812.
On 29 September 2008 the Company issued 4,999,999 ordinary shares of
0.1p for cash consideration of £60,000.
No transaction costs of were recorded against the share premium in
the year.
10 Share premium account and reserves
Share Profit and loss
Share Capital premium account Total
£ £ £ £
At 1 October
2007 2,760,510 7,692,985 (10,517,444) (63,949)
Loss for the
year - - (783,680) (783,680)
Share capital
issued 30,285 330,027 - 360,312
At 30 September
2008 2,790,795 8,023,012 (11,301,124) (487,317)
11 Capital commitments
There were no capital commitments at 30 September 2008 or 30
September 2007.
----------------------------------------------------------------------------------------------------------
PAGE 45
NOTES TO THE COMPANY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
(CONTINUED)
----------------------------------------------------------------------------------------------------------
12 Share based payment
The Company operated two equity-settled share based remuneration
schemes for employees: a long term incentive scheme and an unapproved
scheme for non-executive directors and certain senior management. The
options are awarded by the Board and are governed by written rules.
13 Transactions with directors and other related parties
Details of related party transactions for the Company are as
disclosed for the Group in note 21 to the consolidated accounts.
14 Pension costs
The Group operated defined contribution pension schemes for the
benefit of two directors. The assets of the scheme were administered
by trustees in funds independent from those of the Group.
The total cost charged to income of £nil (2007: £22,266) represents
contributions payable to the schemes by the Group according to the
rules of the schemes
15 Post balance sheet events
(i) Subscriptions
Subsequent to the balance sheet date the Company announced two small
subscriptions to support the short-term working capital requirements
of the Group. On 27 November 2008 the Company announced a small
subscription to raise £132,870 (before expenses) through the issue of
11,416,251 new ordinary shares. On 18 March 2009, the Company
announced a small subscription to raise £109,000 (before expenses)
through the issue of 6,055,557 new ordinary shares which are expected
to be admitted to trading on AIM on or around 24 April 2009.
(ii) Corporate
In November 2008 the Company announced the appointment of Knowledge
MGI to assist it in a review of strategy. In February 2009 the
Company announced the appointment of Graham Urquhart as Company
Secretary and a change in the role of Deborah White to Executive
Director, incorporating the role of finance director until such time
as a dedicated person is appointed to this position. The Company
further announced the appointment of Guy van Zwanenberg FCA C Dir as
Chief Financial Officer initially working on a part-time basis.
---END OF MESSAGE---
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