Milestone Group PLC: Half-yearly report

MILESTONE GROUP PLC

"Milestone" or the "Company"

HALF YEARLY REPORT

Milestone Group PLC ("Milestone" or the "Company"), the AIM quoted (AIM: MSG) provider of digital media and technology solutions, announces its half yearly report for the six months ended 31 March 2013.

HIGHLIGHTS

• Net loss for period £487,589 (six months to March 2012: £549,621) and net liabilities £188,838 (31 March 2012: 311,786);
   
• Launch of the Passion Project, Milestone's social engagement programme focused on helping young people match interest and skills with vocational training and employment opportunities;
   
• MOU signed with 10 London football clubs' community trust schemes to deliver a pan London focused community football tournament in 2013;
   
• Definitive Agreement signed with Spirituality for Kids ("SfK") to deliver materials that meet the standards within the UK Curriculum for the teaching of Spiritual, Moral, Social and Cultural Education - product trialled in UK primary schools and now ready for 2013/14 academic year;
   
• Appointment of Ximo Peris as Youth Development Director for the Passion Project and Darren Groucutt as Creative Director;
   
• Post period end, Appointment of Kevin Everett to the Board as Non Executive Director;
   
• Post period end, release of Milestone's Social Impact Report which is available for download on the Company's website www.milestonegroup.co.uk/csr/social-impact-report;
   
• £357,500 of new funds raised by way of placing's during the period and a further £50,000 raised post period end. These funds were raised at a significant premium to existing market price; and
   
• Realisation of value from the sale of investments during and after the period.

Deborah White, Chief Executive, said:

"The launch of the Passion Project, our flagship social engagement programme, combined with the new additions to the creative team mark the start of an exciting forthcoming period for Milestone. The project gives us the opportunity to develop something unique within the marketplace that we believe has enormous potential and significant social value. The recent additions to our media team bring proven skill sets and business relationships to the Group. We are pleased with the support we have received from our partners and the interest generated in the project. We are looking forward to monitoring the progress resulting from the engagement activities we have planned later this year."

For further information:

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

CHIEF EXECUTIVE'S STATEMENT

This period has seen the launch of several key projects for the Group along with the arrival of new important members of the team.

One of the main focuses during this half-year period has been the rebranding of Oil Productions and the launch of what we believe will become a major flagship initiative for the Company; the Passion Project, which was announced on 29 January 2013. The Passion Project is a social engagement programme that looks to help young people identify their skills and interests and match them with vocational training and employment opportunities. We have collaborated with our target audience to ensure we build a product that is acceptable for young people, as well as offering relevant services and desirable content.

The project uses a combination of bespoke physical events and digital media tools which, when combined with a number of existing strategic partner initiatives, aim to encourage young people to enrol in the programme and engage with the initiatives on offer.

Milestone expects to generate revenues from this project through corporate sponsorship of events, advertising, merchandising, placement fees, revenue shares, micro-transactions (a financial transaction involving a small sum of money and usually one that occurs online) and virtual goods. The company is not looking to monetise the target audience, but rather those around them who are benefiting from having access to their target audience combined with the efficiencies and economies of scale offered by the platform.

One of the first engagement activities planned to supplement the launch is a football tournament. We were delighted to sign an MOU in March this year with ten London football clubs' community schemes to deliver a pan London community football tournament in September 2013. The final details of which are expected to be agreed and announced shortly.

The tournament requires a digital sign up to the Passion Project to participate in the physical playing of the tournament. The competition will also look to engage additional audience numbers through a mobile application featuring a football game incorporating aspects of the competition combined with a series of mini games which will run in parallel to the competition. This audience will be encouraged to register on the site and to attend and participate in future events and competitions including music, dance, fashion, food, photography and journalism.

To assist in ensuring that the project meets the needs of the target audience, Ximo Peris has been appointed as Youth Development Director of 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 imagery and film sequences that communicated the Olympic vision to a global audience. Subsequently, he worked as part of the team that delivered the digital content for the London 2012 Olympic and Paralympic games.

One of Ximo's first tasks as Youth Development Director has been to establish and organise a number of focus groups for the Passion Project formed across a broad spectrum of diverse young people from across London. The aim of engaging with focus groups is to collaborate and elicit feedback on the Project's development to ensure it meets the target audience's needs and expectations. The Project will also provide and engage them in relevant job related training in media skills and interviewing techniques.

At the end of March 2013 Mike Bennett, Oil Productions' Creative Director left the company in order to concentrate on his other business activities. Mike was replaced by Darren Groucutt. Darren was previously employed at Crystal CG International as the Creative Director responsible for film and animation. During which time, he worked on the concept, delivery and direction of extensive high-level digital content for the London 2012 Olympic and Paralympic games.

Finally, post-period end, Kevin Everett was appointed to the Board of Milestone as a Non Executive Director. Kevin is currently Treasurer and Chairman of the Board of the Sir John Cass Foundation. During his career, Kevin has balanced professional and charitable careers, particularly focusing on business and education. He has vast experience in connecting foundations with the corporate sector, a model now used by industry to bring education and employers closer together.

One of the projects that Kevin is now assisting with is the development and roll out of the SfK programme. In November 2012, Milestone announced that it had signed a definitive agreement with SfK Inc to deliver UK curriculum approved content to meet the new 2013 curriculum requirements for the teaching of Social, Cultural, Moral and Spiritual Education. SFK is an educational approach to developing better emotional intelligence leading to lifelong good relationships and improved self-esteem.

Milestone has worked for the past nine months with Prospects Improve, a leading education, employment and training company, to modify the SFK materials into a format that meets both Government's expectations and OFSTED requirements. The programme has now been successfully trialled in a variety of UK primary schools generating very positive feedback. The materials are now being finalised for a commercial roll out on an annual licence fee basis to UK schools for the 2013/14 academic year.

Milestone's subsidiary, Oil Productions is now trading as "Relative". The rebranded company has been restructured and, as previously mentioned, is now headed by Darren Groucutt as the creative lead with Mac Morrison as the Technical Creative Director. Mac is an established member of the development community. In his 13 years as a creative developer, Mac has built a reputation for authoring engaging web content and advertising, specialising in viral game development.

The new trading name was launched in May 2013 with the release of Panna Paint, a bespoke piece of motion tracking software designed by the in house team, which allows a digital image to be created during the process. At the launch event, this technology was developed into an interactive freestyle football app. The custom developed motion tracking technology was set to follow the movement of a football to create shapes that were recorded as images creating an original piece of artwork.

Relative continues to engage and service a range of external clients as well as working on Milestone's internal projects including the build of the Passion Project portal and associated game.

In the last financial year, a major Oil Productions' contract completed. Although this was a high value contract, the margins were relatively low. The reduction in levels of revenue in this period reflect the impact of the completion of this major contract and also the impact of the restructuring of Relative during the first quarter of 2013.

Whilst these factors have had an impact on the Group's revenues, the financial results have been improved on the equivalent period last year through strong cost control, a reduced amortisation charge on the Group's intangible assets and a revision to the level of deferred consideration now payable by the Group. The Group has also committed additional resources to start the development of the platform required by the Group to deliver the Passion Project and other initiatives that are expected to deliver sustainable revenues and profits to the Group in the future.

As noted in the Year-End accounts, the Group recognised the need to raise funds from the placing of shares and through the realisation of the value in some of its held for sale investments. During the period and since the period end, good progress has been made in these areas. The Company raised £357,500 of new funds raised by way of placings in the period and a further £50,000 has been raised post period end. These funds were raised at a significant premium to the existing market price and have been used for working capital purposes, as well as for the development of the business.

To supplement the fund-raisings, Milestone has also been realising funds from the sale of investments, as discussed in the Year-End report to 30 September 2012. During the period, the Company sold approx. 20% of its holdings in Ve Interactive. Since the period end, a further 30% of the holding has been sold at the same price.

The Directors continue to monitor the cash position of the business and further fundraises are expected to be used to support the Company's growth profile as revenues give rise to profitability rise to self-sustainability.

Deborah White
Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Unaudited six months ended 31 March 2013 £	Unaudited six months ended 31 March 2012 £	Audited year ended 30 Sept 2012 £
Revenue	111,941	544,686	776,391
Cost of sales	(6,162)	(377,859)	(429,345)
Gross profit	105,779	166,827	347,046
Other operating income	(16,445)	-	2,500
Administrative expenses	(555,070)	(700,545)	(1,641,338)
	(571,515)	(700,545)	(1,291,792)
Loss from operations	(465,736)	(533,718)	(1,291,792)
Finance expense	(21,856)	(15,921)	(169,522)
Finance income	3	18	94
Loss before taxation	(487,589)	(549,621)	(1,461,220)
Taxation credit	-	-	65,590
Net loss for period	(487,589)	(549,621)	(1,395,630)
Other items of comprehensive income and expense
Adjustment in carrying value of available for sale investments	-	-	808,889
Total comprehensive loss for the year	(487,589)	(549,621)	(586,741)
Attributable to equity shareholders of the parent	(487,589)	(549,621)	(586,741)
Total basic and diluted loss per share	(0.13)	(0.19)	(0.42)

There were no comprehensive income and expense items (2012: nil) other than those reflected in the above income statement. All results relate to continuing activities.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	Unaudited six months ended 31March 2013 £	Unaudited six months ended 31March 2012 £	Audited year ended 30 Sept 2012 £
Non-current assets
Property, plant & equipment		-	8,293	-
Intangible fixed assets		521,435	782,215	540,342
Investments		791,813	222,222	971,713
		1,313,248	1,012,731	1,512,055
Current assets
Trade and other receivables		88,826	69,787	87,195
Cash and cash equivalents		24,391	313,828	40,409
		113,217	383,615	127,604
Current liabilities
Trade and other payables		(1,210,789)	(1,213,635)	(1,165,891)
Interest-bearing loans		(404,514)	(295,907)	(422,114)
		(1,615,303)	(1,509,542)	(1,588,005)
Non Current Liabilities
Deferred tax liabilities		-	(65,590)	-
Other payables		-	(133,000)	(160,000)
		-	(198,590)	(160,000)
Net (Liabilities)		(188,838)	(311,786)	(108,346)
Capital and reserves attributable to equity holders of the company
Share capital	4	410,577	347,119	372,977
Share premium account		11,795,458	11,163,249	11,395,961
Shares to be issued		40,000	-	70,000
Merger reserve		11,119,585	11,119,585	11,119,585
Capital Redemption Reserve		2,732,904	2,732,904	2,732,904
Retained losses		(26,287,362)	(25,674,643)	(25,799,773)
Total Equity		(188,838)	(311,786)	(108,346)

CONSOLIDATED STATEMENT OF CASH FLOWS

	Unaudited six months ended 31 March 2013 £	Unaudited six months ended 31 March 2012 £	Audited year ended 30 Sept 2012 £
Loss for the period	(487,589)	(549,621)	(1,395,630)
Adjustments for:
Amortisation of intangible assets	18,907	49,272	248,779
Loss on disposal of held for sale investments	20,945	-	-
Depreciation of tangible assets	-	-	8,293
Net bank and other interest charges	41,854	15,903	169,428
Issue of share options / warrant charge	-	-	32,909
Services settled by the issue of shares	30,000	-	25,495
Adjustment to deferred consideration payable	(159,450)	-	(45,025)
Release of deferred tax provisions	-	-	(65,590)
Net loss before changes in working capital	(535,333)	(484,446)	(1,021,341)
(Increase)/decrease in trade and other receivables	(1,631)	187,071	169,516
Increase/(decrease) in trade and other payables	22,803	(27,337)	(38,844)
Cash from operations	(514,161)	(324,712)	(890,669)
Interest received	3	18	94
Interest paid	(21,857)	(1,521)	(5,035)
Net cash flows from operating activities	(536,015)	(326,215)	(895,610)
Investing Activities
Net proceeds from sale of held for sale investments	160,500	-	-
Net cash flows used in investing activities	160,500	-	-
Financing Activities
Issue of ordinary share capital	377,097	553,430	812,386
Repayment of loan	(17,600)	(1,500)	(3,500)
New loans raised	-	-	39,020
Net cash flows from financing activities	359,497	551,930	847,906
Net increase in cash	(16,018)	225,715	(47,704)
Cash and cash equivalents at beginning of period	40,409	88,113	88,113
Cash and cash equivalents at end of period	24,391	313,828	40,409

NOTES TO THE HALF YEARLY REPORT

1. General information

The principal activity of Milestone Group PLC ("Milestone" or "the Company") and its subsidiaries (together "the Group") is the provision of multimedia and technology solutions.

Milestone is the Group's ultimate parent company and is incorporated in the United Kingdom with registration number 4689130. Milestone is domiciled in the United Kingdom and has its registered office at 1^st Floor, 2 Royal Exchange, London EC3V 3DG, and this is its principal place of business.

Milestone's shares are quoted on the AIM market of the London Stock Exchange.

Milestone's consolidated financial statements are presented in Pounds Sterling (£).

This consolidated financial information has been approved for issue by the Board of Directors on  27June 2013.  

2. Basis of preparation

The financial information in the half yearly report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the half yearly report are those the Group expects to apply in its financial statements for the year ending 30 September 2013 and are unchanged from those disclosed in the Group's Directors' Report and consolidated financial statements for the year ended 30 September 2012.

The financial information for the six months ended 31 March 2013 and the six months ended 31 March 2012 is unaudited and does not constitute the Group's statutory financial statements for those periods. The comparative financial information for the full year ended 30 September 2012 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies.

While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

Going concern

As stated in the accounts for the year to 30 September 2012, the future business model of the Group is based around the generation of sustainable revenues and profits through technology enabled collaboration using mobile, digital and technical solutions. As described in the Chief Executive's statement, progress has been and continues to be made to develop the Group's activities and associated revenues. However, as also noted in the 30 September 2012 accounts, the Group needed to raise further funds from the placing of shares and from the realisation of the value of its held for sale investments whilst the revenues and profits from these solutions are fully developed.

During the period the Group has raised funds through the placing of shares and the sale of held for sale investments of £357,500 and £160,500 respectively. Since the period end further funds of £301,000 have also been raised through a combination of further share placements and asset disposals.

In line with the plans and projections prepared by the Board, the Group's activities continue to build, however in accordance with those plans, in the short term the Group needs to continue to raise funds from a combination of trading, placement of shares and asset realisations to fund its activities.

3. Loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the average weighted number of shares in issue during the period. 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 19,765,000 share options outstanding at 31 March 2013 (2012: 18,500,000), however the figures have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.  

Loss for 6 months to 31 March 2013 £	Weighted average number of shares	Per share amount (pence)	Loss for 6 months to 31 March 2012 £	Weighted average number of hares	Per share amount (pence)
(487,589)	389,816,518	(0.13)	(549,621)	294,332,542	(0.19)

4. Share Capital

			31 March 2013		30 Sept 2012
		Number	£	Number	£
Authorised
Ordinary shares of 0.1p		2,267,095,595	2,267,096	2,267,095,595	2,267,096
		2,267,095,595	2,267,096	2,267,095,595	2,267,096
Allotted, called up and fully paid
Ordinary shares of 0.1p		410,578.253	410,578	372,977,376	372,977
		410,578,253	410,578	372,977,376	372,977

On 26October 2012, the Company issued 434,782 ordinary shares at a price of 1.15 pence per share by way of a placing raising £5,000.

On 29 October 2012, the Company issued 3,000,000 ordinary shares at a price of 1 penny per share to certain creditors in lieu of £30,000 payable in respect of services provided to the Company.

On 26 November 2012, the Company issued 16,666,667 ordinary shares at a price of 1.5 pence per share by way of a placing raising £250,000.

On 28 January 2013, the Company issued 3,896,104 ordinary shares at a price of 0.77 pence per share to BGP Global Services in respect of the second tranche of shares due for purchase of the FEDS software.

On 26 February 2013, the Company issued 3,353,324 ordinary shares at a price of 0.75 pence per share as part of the second tranche of shares due for the purchase of Oil Productions.  

On 25 March 2013, the Company issued 10,250,000 shares at a price of 1 penny per share by way of a placing raising £102,500.  

5. Availability of the Half Yearly Report

Copies of the half yearly report are available to shareholders on the Company's website at www.milestonegroup.co.uk and from Milestone's registered office: 1^st Floor, 2 Royal Exchange Steps, London EC3V 3DG.

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Source: Milestone Group PLC via Thomson Reuters ONE

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