Milestone, the AIM quoted (AIM: MSG) provider of digital media and technology solutions, announces its final results for the year ended 30 September 2016.
The independent auditor's report for the year ended 30 September 2016 contains an emphasis of matter 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.
Deborah White, CEO and Interim Chairman, commented:
"The last 12 months have been about consolidation. Milestone's business model is to use social initiatives and technology to generate value for its shareholders and create social impact. This involves a number of products and services, some that are using Blockchain technology, that are now ready for market."
"Although this past year has been challenging, the continued support of the Company's shareholders, network of partnerships and its staff has meant that the Group remains wholly focused on ensuring that all parts of the business are revenue generating or are ready to drive sales during the coming months."
The last 12 months have been about consolidation
Milestone's business model is to use social initiatives and technology to generate value for its shareholders and create social impact. This involves a number of products and services that are now ready for market.
This important period of development has been underpinned by an expansion of the company's technology capabilities, including a move towards using Blockchain as the foundation for some of our digital products and services. This innovative technology is now being integrated into Nexstar's media and commerce product offerings, with additional services such as artist IP rights and secure document tracking under review.
The ability to provide Blockchain technology into a rapidly growing marketplace is a key differentiator for Milestone and one we will be actively promoting over the coming months.
Our continued focus on social initiatives is a commercial decision founded on proven societal values and market trends. Evidence supports the theory that consumers want to associate with those companies and brands that add value to others and our company structure has been established to deliver as such.
In April 2016, Milestone achieved a key goal of being accepted as a member of the Social Stock Exchange. A listing on the Social Stock Exchange reaffirms Milestone's status as an established company combining initiatives for social benefit as well as shareholder value.
This was further reinforced post year-end, with the signing of a strategic partnership between Milestone and the Social Stock Exchange. This partnership allows for the cross promotion of each other's products and services in line with our shared vision regarding the role business can play in creating community and social value.
Our Flagship Initiative - Passion Project
The Milestone Foundation plays a key role in the operation and ultimate commercialisation of the Passion Project initiative, which is operated by the Foundation under a commercial licence from the company.
Following its launch at the House of Lords in October 2015, the Milestone Foundation is now fully staffed with operations being overseen by Kevin Everett, Non-Executive Director of the Company and Chairman of the Sir John Cass Foundation, who has considerable experience in both the profit and not-for-profit sectors.
The launch of the Foundation was followed during the year by the formalisation of a number of distribution and support network relationships needed for the delivery and promotion of the Passion Project, which included, amongst others, the Green Skills Partnership - a network of 44 member organisations, comprising of over 2 million employees collectively - and Apprenticeships 4 England, which has a member network of over 30,000 businesses.
During the year, the Milestone Foundation and the Passion Project worked with the Metropolitan Police and its Divert programme. Divert is a new programme created by the Metropolitan Police Service, aimed at addressing a gap in statutory provision for young adults aged 18-25 entering police custody by demonstrating and establishing an improved framework for handling young offenders.
By working with the Milestone Foundation and the Passion Project, Divert is now equipped to offer emotional intelligence training and mentoring, aimed at guiding young people into sustainable employment and reduce reoffending. The pilot programme held in Brixton resulted in a reduction of the reoffending rate from 29% to 7% during the 12-month period.
After the year-end, the Foundation was successful in a number of grant funding applications that will be used to fund its activities. Its strategy of attracting funding for key projects is beginning to see results, which will result in a reduction in Milestone's operational responsibilities and development costs.
Launch of Alchemy
As part of the Company's vision of using media and technology for good, Nexstar developed a fundraising and marketing platform for the Foundation; this new platform is called Alchemy. Alchemy allows customers to:
The Foundation will use the platform to raise awareness and funding for its initiatives, whilst also attracting support and attention from the corporate marketplace and celebrity endorsements. The platform provides the company with a useful marketing tool for showcasing its products and services to the Foundation's growing distribution network.
Nexstar has undergone a period of substantial development, streamlining of process and signing of contracts. The activation of these contracts has been slower than anticipated with returns expected to develop during Q2 2017 and with further growth throughout the year.
This part of the business can now be split into three key areas:
Throughout the past year, Nexstar has developed strategic relationships with partners needed to deliver these services, including an agreement in September 2016 to distribute independent film and video to the Amazon Prime global streaming service. This was followed in October 2016, with the announcement of the distribution of the first independent film, Brash Young Turks, to the service.
After the year-end we announced an agreement between Nexstar joint venture partner, Black Cactus Holdings Pty Ltd ("Black Cactus"), and Benefits on Madison, Inc. ("Madison") which appointed Nexstar as an independent sales organisation (ISO) allowing it to issue prepaid and debit cards, as well as promote, market and solicit orders for Madison's extensive range of stored-value card services.
Following this announcement, Nexstar entered into agreements to provide prepaid cards to a number of partners including a UK-based entertainment organisation for their payroll and an international money transfer group. Nexstar is now poised to take advantage of the structure that has been put in place and will continue to play a significant role in the development of the group.
Relaunch of Disorder Magazine
In April 2016, Oliver Horton was appointed as the Editorial Director of Milestone's wholly owned subsidiary, Disorder UK Magazine. Under his direction Disorder Magazine was relaunched in November 2016, with a clear focus on music, fashion and the championing of young talent. This was accompanied by a new distribution plan, allowing Disorder's new quarterly publication to be featured within creative colleges and universities across the country with plans to sell the magazine digitally, commencing in Q2 2017.
Winning in the Game of Life(TM)
Our curriculum-based educational programme, which is designed to build young people's emotional intelligence, is currently undergoing a pilot in 100 primary school classes across the country. The results of the pilot will support applications for funding via the Foundation, and provide evidence for educational partners as part of the Company's sales and marketing campaign. It will also be used to demonstrate the proof of concept for expansion and integration into the Passion Project and its associated initiatives.
In January 2016, Patrick Vigors was appointed as Interim Chief Financial Officer, joining the management team. Patrick replaced Jim Brown, who resigned following three years of service to the business to allow him to focus more on his other business interests.
In February 2017, David Hill resigned from his position as Non-Executive Director following six years with the Company. The Board are in the process of appointing Sean Sydenham as his replacement.
During the year, the Group's net loss was £1,667,270 (2015: £1,402,542). Revenues were £71,359 (2015: £318,035) and net liabilities at the period end were £1,019,656 (2015: £1,706,090). During the year, the Directors agreed to write off a total of £704,347 of contingent liability and Directors' trade payables.
These results are presented under European Union Adopted International Financial Reporting Standards ("EU Adopted IFRS").
During the year, the Company issued 191,911,950 new ordinary shares for a total consideration of £1,919,120 of which £1,823,794 was received in cash and £95,326 was in exchange for goods or services received.
Since the year-end, the Company has issued 298,143,429 new ordinary shares, raising £748,720 in cash and exchanging £45,701 worth for services received. As announced on 9November 2016, a further £1,250,000 of cash was due to have been received for these shares from the Company's placee and this amount remains outstanding. The Company is working with the subscriber to find a solution. Funds from this placing were expected to facilitate investment into marketing, key staff hires and additional development of the Passion Project.
The Company continues to carefully manage its working capital position and will need to raise further monies through subscriptions for new shares in the short term to continue to support its business activities until the Company is fully revenue generating.
The Company remains firmly focused on generating revenue through all of its activities, as well as developing further opportunities. 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.
Although this past year has been challenging, the continued support of the Company's shareholders, network of partnerships and its staff has meant that the Group remains wholly focused on ensuring that all parts of the business are revenue generating or are ready to drive sales during the coming months.
Chief Executive Officer and Interim Chairman
27 February 2017
|Cost of sales||(13,856)||(140,214)|
|Other operating income||1,738||-|
|Loss from operations||(1,761,411)||(1,395,950)|
|Net finance (expense) / income||(2,104)||(6,592)|
|Loss before taxation||(1,763,515)||(1,402,542)|
|Total comprehensive loss for the year||(1,667,270)||(1,402,542)|
|Attributable to owners of the parent||(1,667,270)||(1,402,542)|
|Basic and diluted loss per share (pence)||(0.25)||(0.25)|
|Trade and other receivables||187,836||63,477|
|Cash and cash equivalents||128,462||92,495|
|Trade and other payables||(1,201,928)||(1,774,449)|
|Interest bearing loans||(134,027)||(106,527)|
|Capital and reserves attributable to
owners of the Company
|Share premium account||15,073,350||13,395,669|
|Shares to be issued||63,081||502,848|
|Capital redemption reserve||2,732,904||2,732,904|
|Cash flow from operating activities||2016||2015|
|Loss for the year||(1,667,270)||(1,402,542)|
|Amortisation of intangible assets||18,913||37,814|
|Net bank and other interest charges||2,104||(6,592)|
|Services settled by the issue of shares||45,799||30,619|
|Issue of share options and warrants charge||883,878||18,235|
|Net cash before changes in working capital||(716,576)||(1,322,466)|
|(Increase) / decrease in trade and other receivables||(124,358)||51,507|
|(Decrease) / increase in trade and other payables||(572,523)||444,743|
|Cash outflow from operations||(1,413,457)||(826,216)|
|Net cash flows from operating activities||(1,414,061)||(826,208)|
|Issue of ordinary share capital||1,424,028||809,848|
|Repayment of loan||(65,000)||(73,500)|
|New loans raised||91,000||106,500|
|Net cash flows from financing activities||1,450,028||842,848|
|Net increase in cash||35,967||16,640|
|Cash and cash equivalents at beginning of year||92,495||75,855|
|Cash and cash equivalents at end of year||128,462||92,495|
|Share Capital||Share Premium||Shares to be issued||Other Reserves||Retained Earnings||Total Equity|
30 Sept 2014
|Loss for the year||-||-||-||-||
|Cash received in advance of share issue||-||-||462,848||-||
30 Sept 2015
|Loss for the year||-||-||-||-||
|Cash received in advance of share issue||-||-||63,081||-||
|Contingent consideration written off||-||-||(40,000)||-||
30 Sept 2016
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 2016 or 30 September 2015, but is derived from the 2016 Annual Report. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those of 2016 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 2015 and 30 September 2016 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 ("EU Adopted IFRSs")
The Independent Auditor's Report on the Annual Report and Financial Statements for 2015 and for 2016 was unqualified, but did draw attention to matters by way of emphasis relating to the basis of preparation, which is reproduced below.
In forming the Auditor's opinion on the financial statements, which is not modified, the Auditor's have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the group's ability to continue as a going concern. The going concern status of the group is dependent upon the management of the timing of settlement of its liabilities and the raising of further funds in the immediate to short term and thereafter on the forecast profitability of new strategic partnerships and joint ventures which have recently commenced and for which the degree of success cannot yet be reliably demonstrated.
Forecasts prepared by management indicate that if they are unable to manage the group's liabilities as planned or the external fundraising does not occur in the immediate term and, subsequently, the future projects do not prove as profitable as forecast the group would have an immediate requirement to seek alternative sources of funding. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.
The basis of preparation is reproduced below.
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 and below. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial statements. In addition note 15 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 2016, being the Group's financial year-end, was £1,019,656 (2015: £1,706,090). Subsequent to the balance sheet date, the Board has been able to agree funding in the form of further share issues raising £748,720 in cash and exchanged £45,701 worth of shares for services received. In addition, and as discussed in the Chairman's statement, a further £1,250,000 was agreed in the form of further share issue, with the Company's placee, however this has not been received by the Company. The Board is continuing to seek a resolution. The funding received to date will go part way to cover year-end liabilities and the Company will be dependent upon future funding and revenues to meet the remaining obligations, as discussed below.
The Company continues to be reliant upon its continuing ability to manage the timing of settlement both of its current liabilities and future liabilities as they arise. There is also a need for successful on-going equity fundraises and / or loans in the immediate to short term thereafter, while sales plans and projections come into effect, especially in relation to revenues generated from new strategic partnerships and joint ventures and from the Passion Project. The Board has prepared forecasts to reflect the revenues expected to be generated by the Group and partnerships. The Company is fully focused on ensuring that sales plans are followed to ensure that the business becomes self-sustaining in the near future.
The Directors have concluded that the need to generate future funds from further fundraising and from trading activities to satisfy the settlement of its on-going 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 174,189,116 share options and 110,931,460 share warrants outstanding at the year-end (2015: 104,522,000 and nil). However, the figures for 2016 and 2015 have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.
|average||Per share||average||Per share|
|Loss||number of||amount||Loss||number of||amount|
|Basic and diluted loss per share attributable to shareholders||(1,667,270)||653,810,277||(0.25)||(1,402,542)||572,401,922||(0.25)|
3. Posting of Accounts
The Report and Accounts of Milestone Group PLC, including the Notice of Annual General Meeting will be posted to shareholders shortly.
A further announcement will be made by the Company at such time.
For further information:
Milestone Group PLC
Tel: 020 7929 7826
Cairn Financial Advisers LLP, Nominated Adviser
Liam Murray/Sandy Jamieson
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