Interim Results

Milestone Group PLC 30 June 2006 For Immediate Release 30 June 2006 MILESTONE GROUP PLC RESULTS FOR THE SIX MONTHS ENDED 31st MARCH 2006 Milestone Group PLC ('Milestone'), the AIM-listed media group, today announces its results for the six months ended 31st March 2006. Financial Highlights •Group turnover on operating activities: £1.8m (2005: £2.4m) •Gross profit: £0.5m (2005: £0.9m) •Operating loss before goodwill: £1.2m (2005: £1.0m) •Basic and diluted loss: 6.4p (2005: 5.1p) Strategic Review & Post-Balance Sheet Events •All four Milestone radio stations disposed of for aggregate consideration of £2.3m •Board in discussion with potential new strategic partners Commenting on the strategic review, Andy Craig, Chief Executive, said: 'The Board has received indications from a number of parties that they may be interested in acquiring some or all of the group's assets, or become partners in developing the business. The Board is carefully evaluating all options and hopes to be in a position to report back to shareholders in the near future.' For further information: Milestone Group PLC Tel: 01235 547 800 Andy Craig, Chief Executive Arden Partners Limited Tel: 020 7398 1632 Richard Day Buchanan Communications Tel: 020 7466 5000 Bobby Morse/Suzanne Brocks Attached: Chairman's Statement Chief Executive's Review Unaudited Consolidated Profit & Loss Account Unaudited Consolidated Balance Sheet Unaudited Consolidated Cashflow statement Notes to the interim financial information Milestone Group PLC ________________________________________________________________________________ Results for the six months ended 31 March 2006 Chairman's Statement Since my appointment as Chairman on 31 January 2006, I have been pleased to participate in a comprehensive streamlining of the business. Following the disposal of the remainder of the radio division this month, the group is now focused on maximising value from its remaining operational businesses: •Courier Newspapers (Oxford) Limited - publishes Courier Journal, Property Weekly, Oxfordshire Living •Basingstoke Observer Limited - publishes Basingstoke Observer •Oxford Broadcasting Limited (trading as SIX TV) - operates SIX TV Oxford and SIX TV Southampton The Board is currently proceeding with constructive discussions with a number of parties who have expressed a desire in developing the group's assets. At present, there are a variety of opportunities which the Board are carefully examining. The Board hopes to be in a position to make further announcements in due course. John Sanderson Chairman 30 June 2006 Milestone Group PLC ________________________________________________________________________________ Results for the six months ended 31 March 2006 Chief Executive's Review Whilst the current trading environment remains challenging for local media operators across much of the industry, the Board strongly believes that Milestone's remaining assets are well positioned for growth. The Board recognises that the group is most likely to require additional scale and resource in order to fully achieve its growth potential. As such, the Board continues to be firmly focused on the process of reviewing all options to maximise value for shareholders. Advertising revenues from internet platforms are growing in the UK at the expense of traditional platforms. The Milestone Board is advancing with plans to use the skills and expertise of the group in local media delivery to develop digital revenue streams to complement its existing print assets. The Board feels cross media revenues obtained from the development of digital platforms are likely to substantially feed through to the bottom line over the coming year. Publishing •Division sales: £1,200,000 (2005: £1,530,000) •Division loss: £366,000 (2005: £264,000) With the Milestone radio assets transferred out of the group, the Company is better placed to focus management time and resource on the most significant contributor to annual turnover - publishing. Milestone's senior management are now directly overseeing the publishing operation, working in particular to implement new initiatives in sales at the same time as addressing costs. Property Weekly has, for a long time, been Milestone's most profitable business, providing around half of all publishing division turnover in Oxfordshire and making a positive contribution in excess of £100k profit per annum (such a conservative figure makes a number of prudent assumptions about the apportionment of distribution, premises and staffing costs within the publishing division as a whole). Milestone is committed to supporting and enhancing its Property Weekly titles: •Property Weekly launched its first ever edition for Newbury and West Berkshire on 11 May 2006. Under the direct control of the group's senior management, Newbury Property Weekly has been profitable from week one and demonstrates the power of the resource available to the group when fully exploited. •Property Weekly now operates websites in Oxfordshire, West Berkshire and North Hampshire, offering significant 'added value' to estate agent clients Management expect the continued decline in revenue across all titles to impact on the results for the financial year. Management are focused on exploring all opportunities to reduce costs and to return the division to profitability. Radio •Rugby FM sales to 28/02/06: £181,000 (2005 half-year: £236,000) •Rugby FM loss to 28/02/06: £37,000 (2005 half-year profit of £8,000) •Kestrel FM sales to 17/02/06: £204,000 (2005 half-year: £279,000) •Kestrel FM loss to 17/02/06: £7,000 (2005 half-year loss of £383) •Kick FM sales to 17/02/06: £100,0000 (2005 half-year: £194,000) •Kick FM loss to 17/02/06: £60,000 (2005 half-year loss of £47,000) •Passion 107.9 sales: £75,000 (2005 half-year: £79,000) •Passion 107.9 loss: £156,000 (2005 half-year loss of £123,000) Following a comprehensive review of strategy, the Board realistically concluded that the group's analogue radio assets, despite achieving good audience levels, were nevertheless likely to require substantial additional investment to further grow. Over the past four months, Milestone has disposed of its entire radio division, successfully achieving an aggregate consideration for its four stations (only one of which was wholly-owned) of £2.3m. This consideration is in addition to the £1.8m secured by the Company for the disposal of its interests in three other small scale radio stations in the last two financial years. The Board believes that the disposal of the group's loss making radio division represents the best interests of shareholders and, furthermore, that the consideration achieved reflects well given the current depressed media market. The Board has used the proceeds from the strategic disposal of its non-core radio assets, as set out below, to substantially assist in paying down existing borrowing and providing for general working capital purposes of the group. Disposals this financial year: Company Station Coverage Milestone Consideration achieved for Date of Name Area beneficial disposal of Milestone disposal ownership shares and loans (approx.) prior to disposal Passion Radio (Oxford) Passion Oxford / 100 per £300,000 07/06/06 Limited* 107.9 south cent. Oxfordshire Rugby Broadcasting Company Limited Rugby Rugby, 52 per £645,000 28/02/06 FM Warwickshire cent. West Berkshire Kick FM Newbury, 55 per £658,000 17/02/06 Radio Berkshire cent. Limited Kestrel FM Limited Kestrel Basingstoke, 54 per £704,000 17/02/06 FM Hampshire cent. *Passion Radio (Oxford) Limited was disposed of following the end of the period in June 2006 Disposals in previous financial years: Reading Broadcasting Company Limited Reading 107 Reading, Berkshire 37 per cent. £514,000 24/08/05 FM Time FM Time FM Thamesmead, SE 100 per £625,000 15/01/04 Limited London cent. Fusion 107.3 FM Limited Fusion 107.3 Lewisham, SE London 100 per cent. £625,000 15/01/04 Television •Division sales: £76,000 (2005: £111,000) •Division loss: £97,000 (2005: £169,000) Management are pleased with the progress being made in the division. In particular, losses have fallen further in recent weeks following the implementation of a comprehensive review of all costs. Over the coming months the Company expects to further enhance revenues from the launch of new shopping and quiz programming initiatives. Milestone remains at the forefront of the long-term lobbying for digital terrestrial licences for local television services. Milestone is contributing to Ofcom's digital dividend review assessing the options for the use of spectrum released by the UK-wide switchover to digital TV transmissions. With home broadband connections set to become the norm, new Internet Protocol Television services are widely expected to further develop. Milestone is advanced in discussions with a wireless internet provider in Oxfordshire to provide a 'SIX TV' branded IPTV channel, available to anyone with a broadband connection in the county. The Board believes that services from existing traditional TV brands will be in the strongest position to market themselves to consumers and direct traffic to their new broadband services. Developing Digital Platforms A cross media model serving discreet local markets provides the building blocks for a comprehensive local broadband internet platform. With digital moving pictures and digital print content in abundance, Milestone intends to develop prime local sites for news, information and local commerce. As a major content producer in its markets, Milestone will cautiously seek to exploit new digital delivery channels providing greater penetration and value for advertisers wherever this can be seen to improve yield and profitability for the group. Strategic Review The original intention, in floating Milestone, was to develop a listed media vehicle that could be attractive to both existing and new investors seeking to expand in UK media. We have received what appears to be strong interest in recent weeks from a number of parties seeking to either acquire Milestone and/or its assets, or to form a strategic partnership to significantly develop the business. The Board will be appraising these preliminary interests as a priority. Milestone retains a number of unique selling points: •Well established local newspapers based in and around Oxford and Basingstoke •An AIM listed vehicle with expertise in exploiting intellectual property across multiple channels of delivery including new media •Southern England's only terrestrial truly local TV operator with popular and well established channels in Oxford and Southampton (the latter now making a positive cash contribution) In view of current ongoing discussions with potential strategic partners in relation to valuation of the group's businesses, the Board has reviewed the goodwill carrying values and decided that no further impairment is appropriate within the publishing division at this stage. Finance On 31 January 2006, the group entered into a funding arrangement with Manchester Securities Corporation, a connected company of Elliott International L.P. and Elliott Associates L.P., substantial shareholders in the Company. The proceeds from the radio asset sales were used in part to repay the group's debts to Manchester Securities. Outlook Whilst the Company is starting to make significant cost savings from the disposal of the group's loss-making radio assets, deteriorating revenues in publishing will impact on the bottom line results for the year. The Board intends to seek to reduce the Company's continued dependence on finance from shareholders or asset disposals to provide working capital. Consequently, the Board is exploring all opportunities to maximise shareholder value. The Board is in discussion with a number if interested parties and hopes to be in a position to report back to shareholders on the outcome of these discussions in the near future. Andy Craig Chief Executive 30 June 2006 Milestone Group PLC Interim Report Consolidated profit and loss account for the six month period ended 31 March 2006 ----------------- ------ ---------- --------- ---------- Unaudited Unaudited Audited Six months Six months Year ended Ended Ended 30 September Note 31 March 2006 31 March 2005 2005 £ £ £ Turnover 1,762,883 2,358,732 4,469,261 Cost of sales (1,300,897) (1,448,537) (2,925,009) --------- ---------- Gross Profit 461,986 910,195 1,544,252 Distribution costs (55,295) (61,203) (118,375) Administrative expenses: ---------- --------- ---------- Impairment of goodwill (557,138) - (3,316,960) Other administrative expenses (1,817,229) (2,167,010) (3,956,054) ---------- --------- ---------- (2,374,367) (2,167,010) (7,273,014) --------- ---------- (1,967,676) (1,318,018) (5,847,137) Other operating income 445 10,340 13,826 ---------- Group operating loss (1,967,231) (1,307,678) (5,833,311) Share of operating loss in associated undertakings - (98,239) (171,253) Profit/(Loss) on disposal of group operations 2 180,796 - (365,360) Loss on ordinary activities before interest (1,786,435) (1,405,917) (6,369,924) Interest receivable -group 457 15,097 26,093 Interest receivable associated undertakings 285 354 Interest payable - group (45,854) (22,258) (102,998) Interest payable - associated undertakings (12,552) (23,042) Loss on ordinary activities before taxation (1,831,832) (1,425,345) (6,469,517) Taxation on loss from ordinary activities 3 - - - Loss on ordinary activities after (1,831,832) (1,425,345) (6,469,517) taxation Minority interest 47,852 17,489 49,902 --------- ---------- Loss for the financial period (1,783,980) (1,407,856) (6,419,615) ========== ========= ========== Basic and diluted loss per 4 (6.4) p (5.16) p (25.6)p share ========== ========= ========== Apart from the activities disclosed in note 12 all activities are continuing. All recognised gains and losses are included in the profit and loss account. Milestone Group PLC Interim Report Consolidated balance sheet at 31 March 2006 -------------- ----- ---------------- ---------------- -------------- Unaudited Unaudited Audited 31 March 2006 31 March 2005 30 September 2005 Note £ £ £ £ £ £ Fixed assets Intangible 5 2,475,212 8,390,484 4,777,799 assets Tangible 496,679 912,302 752,594 assets Fixed asset investments 22,529 962,306 22,529 ---------- --------- -------- 2,994,420 10,265,092 5,552,922 Current assets Debtors 770,369 1,313,096 1,023,910 Cash at bank and in 718,066 1,499,257 680,815 hand --------- --------- -------- 1,488,435 2,812,353 1,704,725 Creditors: amounts falling due Within one (1,321,513) (2,932,706) (2,138,448) year --------- --------- -------- Net current assets/ 166,922 (120,353) (433,723) (liabilities) ---------- --------- -------- Total assets less 3,161,342 10,144,739 5,119,199 current liabilities Creditors: amounts falling due (4,192) (137,862) (133,970) after more than one year Provisions for liabilities and (22,523) - (22,523) charges ---------- --------- -------- 3,134,627 10,006,877 4,962,706 ========== ========= ======== Capital and reserves Called up share 6 2,760,510 2,760,510 2,760,510 capital Share premium account 7 7,692,985 7,692,985 7,692,985 Merger reserve 7 11,119,585 11,119,585 11,119,585 Profit and loss 7 (18,438,453) (11,642,713) (16,654,472) account ---------- --------- -------- Equity shareholders' 3,134,627 9,930,367 4,918,608 funds Minority - 76,510 44,098 interests ---------- --------- -------- 3,134,627 10,006,877 4,962,706 ========== ========= ======== Milestone Group PLC Interim Report Consolidated cash flow statement for the six month period ended 31 March 2006 ---------------- ------ -------------- -------------- -------------- Unaudited Unaudited 31 Audited March 2005 31 March 2006 30 Sept 2005 Note £ £ £ £ £ £ Net cash outflow from operating 8 (931,465) (828,491) (1,599,691) activities Returns on investments and servicing of finance Interest 457 15,097 26,093 received Interest paid (45,854) (22,258) (102,998) -------- ------- --------- Net cash (outflow) from returns on (45,397) (7,161) (76,905) investment and servicing of finance Taxation UK corporation - - - tax Capital expenditure Purchase of tangible fixed (1,738) (10,796) (15,166) assets Receipts from sale of 500 - - tangible fixed assets Net cash (outflow) from the purchase and (1,238) (10,796) (15,166) disposal of fixed assets Acquisitions and disposals Proceeds from disposal of 1,947,175 - 514,768 group operations Cash disposed of with group (98,667) operations Cost of disposal of group (174,611) - - operations. -------- ------- --------- Net cash inflow from 1,673,897 - 514,768 acquisitions and -------- -------- -------- disposals Cash Inflow (outflow) 695,797 (846,448) (1,176,994) before financing Financing Issue of share - 1,100,000 1,100,000 capital Cost of issuing share - (79,250) (79,250) capital Loan repayments (1,208) (1,135) (2,501) Capital element of finance (4,676) (5,629) (15,815) leases repaid Repayments/ advances under invoice (276,883 ) - 283,321 discounting agreements -------- -------- -------- Cash (outflow)/ inflow from (282,767) 1,013,986 1,285,755 financing ======== ======== ======== Increase in cash in the 9,10 413,030 167,538 108,761 period ======== ======== ======== Milestone Group PLC Interim Report Notes to the Interim financial information for the six month period ended 31 March 2006 1 Basis of preparation The Interim Report was approved by the Board of Directors on 30 June 2006. The financial information contained in this Interim Report has been prepared on the basis of the accounting policies set out in the Group's audited accounts for the year ended 30 September 2005. The financial information for the six months ended 31 March 2006 and 31 March 2005 is un-audited. The financial information for the Group set out above does not constitute 'statutory accounts' within the meaning of Section 240 of the Companies Act 1985. The comparatives for the full year ended 30 September 2005 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts had reference to a fundamental uncertainty in respect of going concern but was unqualified and did not contain a statement under section 237(2)-(3) of the Companies Act 1985. 2 Profit on disposal of group operations On 17th February 2006 Milestone completed the disposal of its 54 per cent. beneficial interest in Kestrel FM Limited ('Kestrel FM') and assignment of related shareholder loans; and its 55 per cent. beneficial interest in West Berkshire Radio Limited ('Kick FM') and assignment of related shareholder loans. Consideration was £1,362,214 with an initial sum of £1,302,214 received and a retention of £60,000 to be held until 30th September 2006. On 28th February 2006 Milestone completed the disposal of its 52 per cent. beneficial interest in Rugby Broadcasting Company Limited ('Rugby FM'). The Company received gross proceeds from the sale of its controlling shareholdings of approximately £645,000. The total profit on disposal of operations recognised in the period ended 31 March 2006 was £180,796. During the period ended 31 March 2005 there was no disposal of Group Operations. 3 Taxation Deferred tax assets have not been recognised on the basis that their future economic benefit is not certain. 4 Loss per share Basic loss per share has been calculated in accordance with FRS 22. Basic loss per share has been calculated by dividing the loss on ordinary activities before taxation by the weighted average number of ordinary shares in issue during the period. The weighted average number of equity shares in issue was 27,605,095 and the loss was £1,783,980. The effect of all potential ordinary shares is antidilutive. Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 March 2006 31 March 2005 30 September 2005 Basic and diluted loss per share: Continuing activities (5.4) p (4.6) p (24.0) p Discontinued activities (1.0) p (0.56) p (1.6) p Milestone Group PLC Interim Report Notes to the Interim financial information for the six month period ended 31 March 2006 (continued) 5 Intangible assets Goodwill on Consolidation £ Cost At 1 October 2005 14,347,031 Disposals (10,625,711) ---------- At 31 March 2006 3,721,320 ========== Amortisation and Impairment At 1 October 2005 9,569,232 Provided for the period 730,568 Disposals (9,053,692) ---------- At 31 March 2006 1,246,108 ========== Net book value At 31 March 2006 2,475,212 ========== At 30 September 2005 4,777,799 ========== 6 Share capital Group and company Group and company 2006 2006 2005 2005 £ Number £ Number Authorised Ordinary shares of 10p each 5,000,000 50,000,000 5,000,000 50,000,000 ========== ========== ========== ======== Group and company Group and company 2006 2006 2005 2005 £ Number £ Number Allotted, called up and fully paid Ordinary shares of 10p each 2,760,510 27,605,095 2,760,510 27,605,095 ========== ========== ========== ======== Milestone Group PLC Interim Report Notes to the Interim financial information for the six month period ended 31 March 2006 (continued) 7 Reserves Share Profit premium Merger and loss account reserve Account £ £ £ Group At 1 October 2005 7,692,985 11,119,585 (16,654,473) Loss for the period - - (1,783,980) --------- --------- ---------- At 31 March 2006 7,692,985 11,119,585 (18,438,453) ========= ========= ========== 8 Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 £ £ Operating loss (1,967,231) (5,833,311) Amortisation and impairment of intangible assets 730,568 3,908,410 Depreciation 127,918 283,933 Profit/ (loss) on disposal of fixed assets (500) 791 (Increase)/decrease in debtors (123,330) 368,150 (Increase)/decrease in creditors 301,110 (327,664) ----------- ----------- Net cash outflow from operating activities (931,465) (1,599,691) =========== =========== 9 Reconciliation of net cash outflow to movement in net debt 2006 2005 £ £ Increase in cash in the period 413,030 108,761 Cash outflow from decrease in debt and lease 282,767 (265,005) financing Inception of Finance leases - (11,084) ----------- ------------ Movement in the period 695,797 (167,328) Net debt at 1 October 2005 (374,185) (206,857) ----------- ------------ Net debt at 31 March 2006 321,612 (374,185) =========== ============ Milestone Group PLC Interim Report Notes to the Interim financial information for the six month period ended 31 March 2006 (continued) 10 Analysis of net debt At At 1 October Cash 31 March 2005 Flow 2006 £ £ £ Cash at bank and in hand 680,815 37,251 718,066 Bank overdrafts (754,397) 375,779 (378,618) --------- -------- ---- ---------- (73,582) 413,030 339,448 Debt due after one year (5,400) 1,208 (4,192) Finance leases (11,882) 4,676 (7,206) (283,321) 276,883 (6,438) --------- --------- -------- --------- ---------- Advances under invoice discounting arrangements --------- --------- -------- --------- ---------- Total (374,185) 695,797 321,612 ========= ========= ======== ========= ========== 11 Post Balance Sheet Events On 8th June 2006 Milestone completed the disposal of its entire issued share capital in Passion (Radio) Oxford Limited for a cash consideration of £300,000. The period ended 31 March 2006 includes an amount of £472,000 impairment of goodwill on account of this transaction 12 Discontinued activities The following activities represent those that were discontinued following the disposal of the radio division (including Passion Radio (Oxford) Limited). Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 March 2006 31 March 2005 30 September 2005 £ £ £ Turnover 560,308 787,238 1,502,997 Cost of sales (156,173) (195,192) (391,337) ----------- ----------- ----------- Gross profit 404,135 592,046 1,111,660 Distribution costs (55,295) (61,203) (118,375) Administrative expenses (602,965) (685,276) (1,383,650) ----------- ----------- ----------- Operating loss (254,125) (154,433) (390,365) =========== =========== =========== This information is provided by RNS The company news service from the London Stock Exchange

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