Milestone Group PLC: Final Results

MILESTONE GROUP PLC

"Milestone" or the "Company"

Final Results

Milestone, the AIM quoted (AIM: MSG) provider of digital media and technology solutions, announces its final results for the year ended 30 September 2012.

Highlights

• Group revenues increased 391% to £766,391 (2011: £155,987)
• Increase in balance sheet value of investments held of £808,889 recognised in the year
• Launch of the Passion Project - a social engagement programme to help young people find vocational training, education tools and access to employment opportunities. The programme will include a number of revenue generating elements
• OnSide, the mobilised risk assessment tool, redevelopment complete and in use with Charlton Athletic Community Trust
• Trial of modified SFK educational materials going into 50 UK primary schools
• Key personnel appointed:
• Tony Sanders as Technical and Development Director in December 2011
• Jim Brown as Group Finance Director in July 2012
• Paul Elliott CBE as Sports and CSR Ambassador in August 2012
• Ximo Peris as Youth Development Director for the Passion Project, post period end.

Deborah White, CEO and Interim Chairman, commented:

"2012 has been a year of integrating the acquisitions made in the last period and building a stronger team to deliver the Company's vision. We believe that the Group is now well positioned to leverage its core capabilities to enhance and build new revenue opportunities across the media and technology sector.

"The vision for the Group is to create significant shareholder value through the innovative use of media and technology in new and emerging marketplaces and, wherever possible, contributing to positive social change via the design of its products and services. Combining our expanding in-house team and key industry contacts with a proven track record, poses for an exciting year to come."

For further information:

Milestone Group PLC Deborah White, Chief Executive	Tel: [phone]
Cairn Financial Advisers LLP, Nominated Adviser Liam Murray / Avi Robinson	Tel: [phone]
Hybridan LLP, Broker Claire Louise Noyce / Deepak Reddy	Tel: [phone]

Chairman's Statement

Foreword

It is a pleasure to deliver this report on behalf of the Board and management team. 2012 has been a year of integrating the acquisitions made in the last period and building a stronger team to deliver the Company's vision.

The Company is firmly focused on building a brand at the cutting edge of the converging digital media marketplace. We have concentrated on promoting our in-house production capabilities, developing our proprietary software and assembling the necessary partnerships to launch our social media programme in 2013.

The programme will incorporate social media, games, apps, entertainment and education, and will act as a showcase for the Company's developing capabilities, as well as creating new and expanding revenue streams.  

Milestone aims to differentiate itself in the market in terms of both brand and service offering.

The vision for the Group is to create significant shareholder value through the innovative use of media and technology in new and emerging marketplaces and, wherever possible, contributing to positive social change via the design of its products and services.

The Board believes that the Group is now well positioned to leverage its core capabilities to enhance existing and new revenue opportunities across the media and technology sector.

Business Update

Milestone continues to focus on revenue generation and expansion whilst also using its development strategy to further promote the brand.

Generating a brand that is synonymous with the smart use of emerging and social media with the shift in social awareness and the advocacy for social good has been key to the development of our recent strategic relationships.

The developments in the Information Technology, telecommunications, entertainment and consumer electronics marketplace partnered with the convergence of networks, applications, devices and content offer Milestone access to a large number of new ecosystems and value chains.

The opportunities offered by gaining early access to these marketplaces which when further leveraged by our partners offer the Group an exciting opportunity for significant growth over the coming years.

Developments

Passion Project

Throughout 2012, Milestone has been working towards the launch of the Passion Project, aimed at inspiring young people to explore their passions and skills which are then matched with vocational and employment opportunities. The underlying process will offer access to vocational training, apprenticeships, mentoring and employment opportunities via key strategic partners and their initiatives on both a local and a national level.

The programme will look to use sport, digital media and a number of competition based initiatives channels to engage and build an audience. A digital media platform offers the potential for viral marketing to take audience and participation numbers into the millions. The project will showcase Milestone's creative skills and technical ability which when combined with its strategic contacts, offers an exciting opportunity to engage with a large audience of young people and a national network of professional partnerships.

Careful structuring of the programme has allowed for an authentic community focused educational component to be at the heart of the project, whilst digital media combined with a games and entertainment platform will allow for multiple revenue opportunities to be made available from the aggregation, scaling and monetising of larger non-community focused audiences. Associated revenue sources include sponsorship, advertising, corporate engagement, games, apps, micro transactions, virtual goods, consultancy, placement fees and merchandise.

The project has a number of proven strategic partners whose involvement enhance the Passion Project offering and increase the likely commercial and social success of this key Group programme. This combination offers the potential for significant organic growth and scale as the project develops.

The Group plans to use the programme to direct audiences of young people into Milestone's newly formed Charitable Foundation. The Foundation will offer access, direction and support to young people via a number of National partner initiatives. At a later stage it is envisaged that the Foundation will use its industry specific connections to design a proprietary training programme aimed at nurturing and developing mentors.

Since the year end, Ximo Peris has been appointed as the Youth Development Director for the Passion Project. For further information on Ximo, please read the management changes section of this statement below.

Ximo's role will be to help scope, co-ordinate and deliver the Passion Project. He will work with key members of the Milestone team to develop the project in a way that ensures real social change within the community whilst allowing for the aggregation of larger, non-community based audiences.

SFK

The teaching of Spiritual, Moral, Social and Cultural Education has been included in school programmes for a number of years, but has been brought to the forefront by the 2011 Education Bill and is now fully integrated into the national teaching curriculum in the UK.

During the period, Milestone was in negotiations with Spirituality for Kids Inc, ("SFK") to develop their existing US focused intellectual property for the purposes of creating a curriculum approved version for delivery into UK schools.

SFK is a non-profit organisation founded in Los Angeles, California, whose programmes provide parents and children with online classes to foster spiritual awareness and dialogue. SFK currently has a wide range of content suitable for all ages from nursery through to adolescence.

In November 2012, Milestone announced that it had entered into a definitive agreement with SFK to collaborate and develop a product suitable for delivery into UK primary schools. As the UK has 17,500 primary schools, choosing a delivery partner recognised for excellence and delivery in this sector was key for the acceptance and scaling of the programme distribution post-pilot.

Milestone has therefore chosen to work in conjunction with Prospects Improve, a leading education, employment and training company. Prospects Improve won Consultants of the Year Award at the Education Investors Awards in November 2012 and remain involved in the development of both the SFK and the Passion Project initiative.

These materials are in the process of being trialled in 50 primary schools across the UK. The feedback from these trials will enable the materials to be further enhanced before commercial release which is expected later in 2013. It is anticipated that the product will carry an annual licence fee and in some cases training and consultancy fees.

Following a successful pilot Milestone will look to expand the collaboration with SFK into additional age groups.

OnSide

OnSide is a mobilised risk management solution specifically developed for sports community coaching initiatives. It enables sports clubs to monitor and manage their health and safety and duty of care obligations with respect to community coaching. OnSide provides a simple to use interface for both individual coaches and support staff to record all relevant details pertaining to coaching sessions, attendees, site assessments and coaches' certification credentials.

OnSide has been developed from the FEDS software purchased by the Company in August 2011 and now far exceeds the scope and functionality of the original electronic debriefing system.

The OnSide product started a pilot with Charlton Athletic Community Trust ("CACT") in late 2011. CACT runs football coaching sessions within the community and engages across its community programmes with almost 500,000 children on a yearly basis. Following the trial and subsequent feedback, OnSide has undergone further development including integration with various existing industry products.

In January 2013, OnSide was released to the market and is being used by CACT on an ongoing basis, not only for their community coaching work, but also for their Youth Services work which they operate on behalf of the Royal Borough of Greenwich. As a result of this release and through our work with CACT, the product is being evaluated by a number of other interested parties.

The OnSide project management and communication solutions will be a key element of the physical activities that will be involved in the Passion Project to ensure that the enjoyment, safety and learning's from this project can be realised by all those taking part.

Whilst the software has predominantly been used and trialled in a sports based environment, the underlying tools are configurable to other situations and the Group is in discussion with a number of parties about the potential to adapt and leverage the capabilities of the OnSide platform to their own specific circumstances and requirements.

Oil Productions Ltd ("Oil")

The acquisition of Oil in August 2011 created an in-house team with a proven track record in delivering creative and innovative media services to our chosen market.

In October 2011, Oil was presented with a gold award in the Lovie Awards Social Media Marketing category for the interaction, design, and technology developed for Lynx's Fallen Angel campaign. Working closely with Mind's Eye Media, Tullo Marshall Warren Ltd and Ms Kelly Brook, Oil developed a fun way to involve the user in the story using Facebook images, names of friends and integrating with Google Street View, so the Angelic Kelly can actually visit the user at their chosen address.

Throughout this year, Oil has been working with Nissan's luxury car brand, Infiniti, to develop and deliver a worldwide digital art competition to launch the brand in Europe. Originally unveiled in Stockport and Leeds, the show was then rolled out in Rolle, Switzerland, and Madrid in late 2011. Further events then took place in Luxembourg, at the Geneva International Motor Show, in Marseille and in Russia before moving on to Vienna, Hamburg and the Goodwood Festival of Speed.

In addition, Oil has worked with other brands including:

• Conran, in developing their group website strategy
• Activision, in promoting the Prototype 2 video game using a socially powered web based game
• PktMny, in developing their iPhone & Android apps as well as their introductory videos
• Angela Hartnett, in developing her digital strategy including updates to her branding, website and newsletters.

The skills and capabilities of the Oil team will form an integral part of all the digital aspects of the Passion Project. The Passion Project allows Oil to create and develop a commercial project that encapsulates a multitude of skills and service offerings. This also gives Milestone the opportunity to showcase those services currently being delivered to our existing clients.

Ve Interactive Ltd

In 2010, Milestone made a strategic investment into Ve Interactive Ltd. Ve Interactive is a technology company specialising in online efficiency and online shopping cart abandonment. Ve Interactive offers data driven solutions from a core suite of propriety software products.

Since its launch in mid-2010, Ve Interactive has grown to serve over 2,000 e-commerce clients around the world, working in 19 languages and with 8 offices worldwide. During the year the Group has recognised the progress made in Ve Interactive since the time of the Group's original investment by uplifting the value of its holding in this exciting and dynamic business from £101,111 to £910,000.

Management Changes

2012 has seen a number of key additions to the management team which the Board believe will further strengthen the Company's capacity for both development and delivery.

In December 2011, the Executive Board was joined by Tony Sanders as Technical and Development Director. Tony has over 20 years experience in IT, telecoms, new product development and business continuity. Since joining the Company, his main focus has been on the development of the OnSide, product working to fully integrate the team at Oil and assisting in the operational development of the business as a whole.

In July 2012, the Board was further strengthened by the addition of Jim Brown as Group Finance Director. Jim qualified as a chartered account in 1989 and has since worked at Andersen, Baker Tilly and most recently as a partner at BDO LLP. Since joining Milestone, Jim has been working closely with the team to enhance the profitability of the projects as well as driving growth within the Group.

Further information on Tony Sanders and Jim Brown can be found in the Directors' Report.

During the period Anthony Moss (Non-Executive Director) and Guy van Zwanenberg (Finance Director) resigned from the Board to concentrate their efforts on their other business interests. I would like to thank, on behalf of the Board and Shareholders, Anthony and Guy for their contributions to the Group during their time on the Board and wish them every success in their other ventures.

In August 2012, the team was joined by Paul Elliott CBE in the new role of Sports and Corporate Social Responsibility Ambassador, having been an ambassador of OnSide since April 2011. Paul has represented England internationally, starting his football career at Charlton and also played for Celtic, Aston Villa, Chelsea and Pisa. Paul was awarded an MBE in 2003 for his services to youth football and anti-racism initiatives and a CBE in 2012 for services to equality and diversity in football.

Since joining the team, Paul has focused on introducing and promoting the Company's community and sports based initiatives to key stakeholders in relevant marketplaces, locally and nationally, and has been playing an active role in the scoping and delivery of key elements of the Passion Project.  

Post year end, Ximo Peris joined the team as Youth Development Director on the Passion Project.

Ximo previously worked with the London 2012 bid team to deliver the Computer generated imagery ("CGI"), as well as co-ordinating an extensive team, to create the images and film sequences that communicated the Olympic vision to a global audience. Ximo later worked with Crystal CG as part of the team used to deliver the digital content for the London 2012 Olympic and Paralympic games.  

Since the Olympics he has a spent the majority of his time lecturing at a number of conferences, schools and educational facilities, both nationally and internationally. He has conducted mentoring workshops and has worked with young people of all ages to help them develop the confidence and knowledge to find careers in the creative and media sector.

In his new role within Milestone's Passion Project, Ximo will be able to combine his knowledge of delivering large projects through the use of digital media and interactive social platforms, with his passion for inspiring and mentoring young people.

Financial Summary

During the year, the Group increased revenues by 391% to £776,391 (2011: £155,987). The Group made a loss for the year of £1,395,630 (2011: £1,198,552), after amortisation charges of £248,779 (2011: £50,866) and tax credit of £65,590 (2011: £nil). The Group has incurred costs in relation to integrating Oil, in the development of its software products and in the planning and preparation of the Passion Project. Foundations are now in place for the Group to leverage and scale its business and operations going forwards as well as launching new revenue generating projects.

Net liabilities at the period end were £108,346 (2011: £462,394). The significant reduction is due to the revaluation of the Ve Interactive investment which increased Group net assets by £808,889. Trade receivables were reduced to £26,215 (2011: £115,242), mainly due to better cash flow management, while the trade payables reduced to £407,777 (2011: £477,678). The Company's short term borrowings increased to £422,114 (2011: £283,007).

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

Funding

During the year, the Company issued 83,749,351 new ordinary shares for a total consideration of £837,494 of which £812,000 was received in cash and the remainder being issued in exchange for goods or services received.

Since the year end, the Company has issued 23,997,553 new ordinary shares, raising £255,000 in cash, exchanging £30,000 worth for services received and paying the second tranche of the FEDS / LIMIT purchase of £30,000. The Company continues to carefully manage its working capital position and will need to raise further monies through subscriptions for new shares in the immediate to short term to continue to develop and commercialise the Passion Project and other initiatives being undertaken within the Group.

The Company is firmly focused on generating revenue through a number of developing revenue streams including Oil, the Passion Project, OnSide and SFK. The new projects offer opportunities for revenue from licence fees, advertising and sponsorship as well as traditional media income.

Protecting the interests of the Company's current shareholders is a priority and the Board's strategy is to seek to raise funds on a basis which is fair to all.

Outlook

The Directors believe that Milestone has the foundations and vision to deliver its most inspiring projects to date, which will generate both financial return and a positive social impact. Combining our expanding in-house team and industry contacts with a proven track record, poses for an exciting year to come.

On behalf of the Board, I would like to take this opportunity to thank our shareholders, business partners and staff for their continued support and hard work. I look forward to seeing the business develop with the materialisation of both new and enhanced revenues culminating as a result of the groundwork laid over recent years.

Deborah White
Chief Executive Officer and Interim Chairman

26 February 2013

Consolidated statement of comprehensive income for the year ended 30 September 2012

				2012	2011
				£	£
Revenue				776,391	155,987
Cost of sales				(429,345)	(106,021)
Gross profit				347,046	49,966
Other operating income				2,500	14,034
Administrative expenses				(1,641,338)	(1,214,448)
				(1,638,838)	(1,200,414)
Loss from operations				(1,291,792)	(1,150,488)
Finance expense				(169,522)	(48,170)
Finance income				94	66
Loss before taxation				(1,461,220)	(1,198,552)
Taxation credit				65,590	-
Net loss for the year				(1,395,630)	(1,198,552)
Other items of comprehensive income and expense
Adjustment in carrying value of available for sale investments				808,889	-
Total comprehensive loss for the year				(586,741)	(1,198,552)
Attributable to owners of the parent				(586,741)	(1,198,552)
Basic and diluted loss per share (pence)				(0.42)	(0.56)

Consolidated statement of financial position at 30 September 2012    Company No: 04689130

					2012	2011
					£	£
Non-current assets
Intangible assets					540,342	789,121
Property, plant and equipment					-	8,293
Available for sale investments					971,713	162,824
					1,512,055	960,238
Current assets
Trade and other receivables					87,195	256,710
Cash and cash equivalents					40,409	88,113
					127,604	344,823
Current liabilities
Trade and other payables					(1,165,891)	(1,285,858)
Interest bearing loans					(422,114)	(283,007)
					(1,588,005)	(1,568,865)
Non-current liabilities
Deferred tax liabilities					-	(65,590)
Other payables					(160,000)	(133,000)
					(160,000)	(198,590)
Net liabilities					(108,346)	(462,394)
Capital and reserves attributable to owners of the Company
Share capital					372,977	289,228
Share premium account					11,395,961	10,641,830
Shares to be issued					70,000	-
Merger reserve					11,119,585	11,119,585
Capital redemption reserve					2,732,904	2,732,904
Retained losses					(25,799,773)	(25,245,941)
Total Equity					(108,346)	(462,394)

Consolidated statement of cash flows for the year ended 30 September 2012

Cash flow from operating activities	2012	2011
	£	£
Loss for the year	(1,395,630)	(1,198,552)
Adjustments for:
Amortisation of intangible assets	248,779	50,866
Depreciation of tangible assets	8,293	365
Net bank and other interest charges	169,428	48,104
Issue of share options / warrants	32,909	9,336
Services settled by the issue of shares	25,495	-
Adjustment to deferred consideration payable	(45,025)	-
Release of deferred tax provisions	(65,590)	-
Net loss before changes in working capital	(1,021,341)	(1,089,881)
Decrease / (increase) in trade and other receivables	169,516	(31,909)
(Decrease) / increase in trade and other payables	(38,844)	431,402
Cash from operations	(890,669)	(690,388)
Interest received	94	66
Interest paid	(5,035)	(1,841)
Net cash flows from operating activities	(895,610)	(692,163)
Investing activities
Net of cash and overdraft acquired	-	(2,347)
Net cash flows used in investing activities	-	(2,347)
Financing activities
Issue of ordinary share capital	812,386	765,467
Repayment of loan	(3,500)	(26,000)
New loans raised	39,020	43,908
Net cash flows from financing activities	847,906	783,375
Net (decrease) / increase in cash	(47,704)	88,865
Cash and cash equivalents at beginning of year	88,113	(752)
Cash and cash equivalents at end of year	40,409	88,113

Consolidated statement of changes in equity for the year ended 30 September 2012

	Share Capital	Share Premium	Shares to be issued	Other Reserves	Retained Earnings	Total Equity
	£	£	£	£	£	£
Balance at 30 Sept 2010	127,067	9,050,141	-	13,852,489	(24,056,728)	(1,027,031)
Total comprehensive income	-	-	-	-	(1,198,552)	(1,198,552)
Shares issued	162,161	1,591,689	-	-	-	1,753,850
Share options granted	-	-	-	-	9,339	9,339
Balance at 30 Sept 2011	289,228	10,641,830	-	13,852,489	(25,245,941)	(462,394)
Profit / (loss) for the year	-	-	-	-	(1,395,630)	(1,395,630)
Other comprehensive income	-	-	-	-	808,889	808,889
Shares issued	83,749	754,131	-	-	-	837,880
Share options/ warrants	-	-	-	-	32,909	32,909
Reclassification from trade and other payables	-	-	70,000	-	-	70,000
Balance at 30 Sept 2012	372,977	11,395,961	70,000	13,852,489	(25,799,773)	(108,346)

Notes to the financial statements

1. Basis of preparation

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

The financial information set out in this announcement does not constitute the Group's statutory accounts, as defined in Section 435 of the Companies Act 2006, for the years ended 30 September 2012 or 30 September 2011, but is derived from the 2012 Annual Report. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered in due course.

The consolidated statement of comprehensive income, consolidated statement of financial position, consolidated cash flow, consolidated statement of changes in equity (above) and associated notes are extracts from the financial statements and do not constitute the Group's statutory accounts.

Statutory accounts for the year to 30 September 2011 and 30 September 2012 have been reported on by the Independent Auditors.

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

The Independent Auditors' Report on the Annual Report and Financial Statements for 2011 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation. This emphasis drew attention to the Company's ability to raise funds and generate sales to satisfy liabilities associated with its activities. It noted that a material uncertainty remains which may cast significant doubt about the company's ability to continue as a going concern.

The Independent Auditors' Report on the Annual Report and Financial Statements for 2012 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation which is reproduced below. This emphasis drew attention to the Company's requirement to manage the timing of settlement of its liabilities and raise funds in the immediate to short term and the profitability of key projects thereafter to satisfy liabilities associated with its activities. It noted that a material uncertainty remains which may cast significant doubt about the company's ability to continue as a going concern.

The basis of preparation is reproduced below.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement.  The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Director's report.  In addition note 19 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and exposures to credit risk and liquidity risk.

The net liability balance sheet position as at 30 September 2012, being the Group's financial year-end, was £108,346 (2011: £462,394).  Subsequent to the balance sheet date, the Board has been able to agree funding in the form of further share issues raising £255,000 in cash, exchanged £30,000 worth of shares for services received and used shares to pay for the second tranche due on the acquisition of FEDS/LIMIT. The Company is reliant upon its continuing ability to manage the timing of settlement both of its current liabilities, many of which are overdue, and future liabilities as they arise. Future fundraising will be required in the immediate to short term thereafter.   As such, the Directors intend to strengthen the Company's financial position through a combination of further fundraises in the immediate to short term and from proceeds generated from the sale of trade investments and trading activities.

The future business model is based around generating revenue through technology enabled collaboration using mobile, digital and technical solutions. The Group is already producing revenues although progress with some of the technologies has been slower than expected. As a result the Board has prepared forecasts to reflect this and the agreements that have or are expected to be entered into.  These forecasts show the business being profitable and cash generative in the future.  However, achieving these forecasts will be dependent upon achieving sales, realising proceeds from the sale of investments and obtaining sufficient funding to settle existing and future obligations. Should any of these factors not deliver the funding envisaged by the Directors, then alternative sources of funds would be needed, any discussions for which have not been initiated.

The Directors have concluded that the need to generate future funds from either further fundraising, the sale of investments and from trading activities to satisfy the settlement of its ongoing and future liabilities represents a material uncertainty, which may cast significant doubt upon the Group's and the Company's ability to continue as a going concern.  Nevertheless after making enquiries and considering this uncertainty and the measures that can be taken to mitigate the uncertainty, the Directors have a reasonable expectation that the Group and the Company will have adequate resources to continue in existence for the foreseeable future.  For these reasons they continue to adopt the going concern basis in preparing the annual report and accounts.  The financial statements do not include any adjustments that would result if the Group and Company was unable to continue as a going concern.

2. Loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted loss per share is based on the basic loss per share, adjusted to allow for the issue of shares and the post tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.

There were 36,189,300 share options outstanding at the year-end (2011: 41,689,300). However, the figures for 2012 and 2011 have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.

			2012			2011
		Weighted			Weighted
		average	Per share		average	Per share
	Loss	number of	Amount	Loss	number of	amount
	£	shares	Pence	£	shares	Pence
Basic and diluted loss per share attributable to shareholders	(1,395,630)	329,982,605	(0.42)	(1,198,552)	214,766,652	(0.56)

3. Posting of Accounts

The report and accounts of Milestone Group PLC, including a Notice of the Annual General Meeting of this Company will be posted to shareholders shortly - a further announcement will be made by the Company at such time.

---

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Milestone Group PLC via Thomson Reuters ONE

HUG#1681001