MILESTONE GROUP PLC
("Milestone" or the "Company")
Final Results
Milestone (AIM:MSG), the AIM quoted provider of digital media and technology, announces its final results for the year ended 30 September 2017.
Key points
The independent auditor's report for the year ended 30 September 2017 contains a material uncertainty paragraph in respect of going concern. An extract taken from the text of the auditor's opinion is set out below in part 1 of the notes to this announcement.
Anthony Sanders, Interim Chief Executive and Chairman, commented:
"The last financial year has been a challenging one for the Group. The year saw a shift in the Group's management and its strategic focus. Since September 2017, we have set about streamlining our operations and revising our strategy to bring increased focus to the business. We are now in a position to prioritise our resources on products and services that utilise blockchain technology in the digital media and fintech markets and ignite the commercial potential that exists within the Group. We would like to thank our shareholders for their continued support."
For further information:
Milestone Group PLC Tony Sanders | Tel: 020 7929 7826 |
Cairn Financial Advisers LLP, Nominated Adviser Liam Murray / Jo Turner | Tel: 020 7213 0880 |
Hybridan LLP, Broker Claire Louise Noyce | Tel: 020 3764 2341 |
Walbrook PR Limited, PR Gary Middleton / Paul Cornelius | Tel: 020 7933 8780 |
CHAIRMAN'S STATEMENT
To our valued shareholders
The last financial year has been a challenging one for the Group and we would like to thank our shareholders for their continued support.
The year saw a shift in the Group's management and its strategic focus. As Interim Chief Executive Officer, it has been my responsibility to ensure these changes have transitioned smoothly. Since September 2017, we have set about streamlining our operations and revising our strategy to bring increased focus to the business. We are now in a position to prioritise our resources on products and services that utilise blockchain technology in the digital media and fintech markets and ignite the commercial potential that exists within the Group.
Transitioning and management changes
In September 2017, Deborah White resigned from her position as Chief Executive Officer after nine years with the Group. Deborah guided the Group through extensive changes and developments, overseeing our transformation from analogue broadcasting to providing digital and technology solutions. I have been appointed as Interim Chief Executive Officer following seven years on the Board as Technical and Development Director. We thank Deborah for all of her efforts and wish her every success in the future.
Also in September 2017, and with a view to building a suitable sales and marketing team, we appointed Edward "Guy" Meyer as Business Development Director. Guy brings a wealth of experience leading teams across traditional and digital media, and is the ideal person to lead our sales and marketing effort as we look to develop new revenues from our blockchain-based services.
Streamlining operations
Change provides an opportunity for reflection and growth. We have, therefore, taken time since September 2017 to review our operations, to create unity within our services, to reduce spending and to channel costs into areas of the business that align with our revised strategy.
As such, since the period end, we have ceased a number of services that were centred on delivering social good. These include the Passion Project, Alchemy, Winning in the Game of Life, and the Milestone Foundation. We also terminated our membership of the Social Stock Exchange.
Furthermore, and in light of their inability to deliver satisfactory results, we decided to cancel a number of other agreements and contracts. These include: those involving the Milestone Foundation and Passion Project; the cloud-based virtual banking and pre-paid card agreement with two London-based finance and investment companies announced in April 2016; the agreement with an Indian-focused money transfer and pre-paid card group announced in November 2016; and, a payroll contract with a UK-based entertainment payroll specialist announced in October 2016.
Our evaluation of the business determined that a number of these opportunities had failed to deliver satisfactory results in a reasonable timespan owing to poor internal and external execution. We are confident that, with our renewed focus, we will avoid such issues in future.
Fine-tuning our business model
Since the period end, in December 2017, we negotiated a software licensing agreement with Envoy Group Corp, subject to Shareholder approval. This grants us an exclusive sublicense for updated versions of previously announced products, including Backstage HD, MusicRoo, Black Cactus Music, card programmes and KYC products, and enables us to use the Black Cactus Global Blockchain platform to build bespoke solutions whilst developing our own IP.
In February 2018, we signed a memorandum of understanding to enter into a joint venture (Trust In Media Ltd) with Seed Media Ltd and Martin Heath, specifically to develop GDPR compliant payment and IP protection solutions for the music industry, utilising both private and public blockchain technology. The joint venture will augment our music and media publishing capabilities.
These developments form the first steps of our revised strategy, providing the ability to market ready-made products and ensuring we can utilise this disruptive technology to create new products for the digital media and fintech markets going forward. We look forward to expanding our portfolio of products and services, while aiming to work with best-of-breed strategic partners.
In other business areas, the revenues for the resource management and reporting platforms, OnSide and OnGuard continue to grow, with all current clients renewing or expanding their agreements both during and post period. This area of the business will receive increased marketing exposure to take advantage of forthcoming GDPR legislation given the products' ability to validate individuals and access to data. Disorder Magazine continues to flourish under the media publishing division, and we are also exploring a number of opportunities to monetise content produced.
Working capital, fund raisings and other matters
During the year, the Company issued 994,770,335 new ordinary shares for a total consideration of £3,862,421, of which £2,516,220 was received in cash during the year, £37,500 was received in cash prior to the previous year end (held within the shares to be issued reserve), £58,701 was in exchange for goods and services, and, as announced in November 2016, £1.25m was not received. As announced in January 2018, the Board has reached a settlement with the counterparty, which included them waiving the rights to the shares. It is now the Company's intention to dispose of the shares in due course. Since the year-end, the Company has issued 30,000,000 new ordinary shares following a shareholder exercising their warrants and raising £150,000 in cash.
The Company continues to carefully manage its working capital position while the changes in strategy take effect and will need to raise further monies through subscriptions for new shares in the short term. The Company remains firmly focused on generating revenue through developing its activities. Protecting the interest of the Company's shareholders is a priority and the Board's strategy is to seek to raise funds on a basis that is fair to all.
Results for the year
Despite the Group's net loss for the year of £2,257,524 (2016: £1,667,270) and revenues of £29,395 (2016: £71,359), of which £4,755 (£2016: £34,104) relates to discontinued operations, the Group has an improved statement of financial position at the year-end, showing net liabilities of £645,884 (2016: £1,019,656).
These results are presented under European Union Adopted International Financial Reporting Standards ("EU Adopted IFRS").
Shaping the future
Our vision for the future places our operations in harmony, encouraging stability and stimulating revenue. We are now primed to take advantage of the potential it offers in our identified markets.
As always, thank you for your support.
Anthony Sanders
Interim Chief Executive Officer and Chairman
21 February 2018
Consolidated statement of comprehensive income for the year ended 30 September 2017
2017 | 2016 | ||||
£ | £ | ||||
Revenue | 24,640 | 37,255 | |||
Cost of sales | (1,964) | (13,856) | |||
Gross profit | 22,676 | 23,399 | |||
Other operating income | - | 1,738 | |||
Realised gain on disposal | 1 | - | |||
Administrative expenses | (2,261,107) | (1,790,794) | |||
(2,261,106) | (1,789,056) | ||||
Loss from operations | (2,238,430) | (1,765,657) | |||
Net finance expense | (2,961) | (2,104) | |||
Loss before taxation | (2,241,391) | (1,767,761) | |||
Taxation charge | - | 96,245 | |||
Loss from continuing operations | (2,241,391) | (1,671,516) | |||
(Loss) / profit from discontinuing operations net of tax | (16,133) | 4,246 | |||
Total comprehensive loss for the year | (2,257,524) | (1,667,270) | |||
Attributable to owners of the parent | (2,257,524) | (1,667,270) | |||
Basic and diluted loss per share (pence) | (0.20) | (0.25) |
Consolidated statement of financial position at 30 September 2017
2017 | 2016 | ||||
£ | £ | ||||
Non-current assets | |||||
Intangible assets | 1 | 1 | |||
1 | 1 | ||||
Current assets | |||||
Trade and other receivables | 77,137 | 187,836 | |||
Cash and cash equivalents | 749,972 | 128,462 | |||
827,109 | 316,298 | ||||
Current liabilities | |||||
Trade and other payables | (1,179,967) | (1,201,928) | |||
Interest bearing loans | (293,027) | (134,027) | |||
(1,472,994) | (1,335,955) | ||||
Net (liabilities) | (645,884) | (1,019,656) | |||
Capital and reserves attributable to owners of the Company | |||||
Share capital | 1,778,768 | 783,998 | |||
Share premium account | 17,954,376 | 15,073,350 | |||
Shares to be issued | - | 63,081 | |||
Share reserve | (1,250,000) | - | |||
Merger reserve | 11,119,585 | 11,119,585 | |||
Capital redemption reserve | 2,732,904 | 2,732,904 | |||
Retained losses | (32,981,517) | (30,792,574) | |||
Total Equity | (645,884) | (1,019,656) |
Consolidated statement of cash flows for the year ended 30 September 2017
Cash flow from operating activities | 2017 | 2016 |
£ | £ | |
Loss for the year | (2,257,524) | (1,667,270) |
Adjustments for: | ||
Amortisation of intangible assets | - | 18,913 |
Net bank and other interest charges | 2,961 | 2,104 |
Services settled by the issue of shares | 45,326 | 45,799 |
Issue of share options and warrants charge | 68,581 | 883,878 |
Net cash outflow before changes in working capital | (2,140,656) | (716,576) |
Decrease / (Increase) in trade and other receivables | 110,700 | (124,358) |
(Decrease) in trade and other payables | (20,793) | (572,523) |
Cash outflow from operations | (2,050,749) | (1,413,457) |
Interest received | 14 | 19 |
Interest paid | (1,475) | (623) |
Net cash flows from operating activities | (2,052,210) | (1,414,061) |
Financing activities | ||
Issue of ordinary share capital | 2,516,220 | 1,424,028 |
Repayment of loan | (155,000) | (65,000) |
New loans raised | 312,500 | 91,000 |
Net cash flows from financing activities | 2,673,720 | 1,450,028 |
Net increase in cash | 621,510 | 35,967 |
Cash and cash equivalents at beginning of year | 128,462 | 92,495 |
Cash and cash equivalents at end of year | 749,972 | 128,462 |
Consolidated statement of changes in equity for the year ended 30 September 2017
Share Capital | Share Premium | Shares to be issued | Other Reserves | Retained Earnings | Total Equity | |
£ | £ | £ | £ | £ | £ | |
Balance at 30 Sept 2015 | 592,086 | 13,395,669 | 502,848 | 13,852,489 | (30,049,182) | (1,706,090) |
Loss for the year | - | - | - | - | (1,667,270) | (1,667,270) |
Cash received in advance of share issue | - | - | 63,081 | - | - | 63,081 |
Contingent consideration written off | - | - | (40,000) | - | 40,000 | - |
Shares issued | 191,912 | 1,677,681 | (462,848) | - | - | 1,406,745 |
Share options | - | - | - | - | 883,878 | 883,878 |
Balance at 30 Sept 2016 | 783,998 | 15,073,350 | 63,081 | 13,852,489 | (30,792,574) | (1,019,656) |
Loss for the year | - | - | - | - | (2,257,524) | (2,257,524) |
Shares issued | 994,770 | 2,881,026 | (63,081) | (1,250,000) | - | 2,562,715 |
Share options | - | - | - | - | 68,581 | 68,581 |
Balance at 30 Sept 2017 | 1,778,768 | 17,954,376 | - | 12,602,489 | (32,981,517) | (645,884) |
2017 | 2016 | |||||
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 | (2,257,524) | 1,115,347,198 | (0.20) | (1,667,270) | 653,810,277 | (0.25) |