By Cynical Bear | Tuesday 28 February 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I wrote about Milestone Group (MSG) back in November (HERE) highlighting it as one of the best examples of a lifestyle company on AIM. That combined with the lack of disclosure around the (lack of) funding in October suggests one should stay well clear. Today’s results for the full year to 30 September 2016 only emphasise that fact.
My last piece commented on the fact that this business has consistently made limited revenue and lost a million or so every year and in the first half of the financial year, it only generated revenue of £50,000.
Well, in the second half, it did worse, earning only about twenty grand!
The total loss for the year was £1.67 million. Congratulations, yet another year of million plus losses racked up. I’m sure 2017 is heading the same way too.
Don’t worry though, shareholders, as there’s loads of jam tomorrow to get excited about:
- Apparently there is some blockchain technology element to this business now. Hmm, sounds like someone has just thrown in something that is flavour of the month to me. Next thing you know, it’ll have discovered lithium under its office.
- The relationship with Nexstar: despite the fact that “the activation of these contracts has been slower than anticipated…..returns [are] expected to develop during Q2 2017 and with further growth throughout the year”. Of course they are
- Relaunch of a digital magazine. Guess what, revenues will start flowing in Q2 2017.
The balance sheet is a wreck. From a cash perspective, it had £123,000 at 30 September 2016 and has raised £749,000 since.
However, from the various statements about slow progress, I think it is safe to assume that H1 revenue for 2017 will be similar to H2 revenue in 2016, namely bugger all, so assuming a similar burn rate, cash levels will be fairly low again now and that’s before dealing with the significant current liabilities position of £1.34 million as at year end.
It would be great if it could get the £1.25 million it claims it is owed from the October placing but if that doesn’t arrive soon (and I’m not betting on that happening quickly, if at all) Milestone needs an equivalent sum from somewhere to fund the next twelve months.
Unsurprisingly, the auditors have included an emphasis of matter in their audit opinion relating to the uncertainty of continuing as a going concern. No shit, Sherlock!
The share price has taken a beating this morning, down 13% at 0.27p; however, that still values the business at around £3 million.
Three million quid for a business that generates almost no revenues; has an estimated net current liabilities of approximately £1 million, despite the recent funding; is in desperate need for new funding and has an assorted mix of jam tomorrow businesses units.
Personally, I can see the share price dropping much further from here.
Tom has commented on Milestone a number of times on his Bearcast (and written about it HERE) making the valid point that Deborah White’s position as CEO is untenable due to the fact that she sat on the price-sensitive information about the non-receipt of funds in the October placing. Well, putting that to one side, I believe her position is untenable simply because she has overseen such an appalling performance as CEO of this business, failing year after year to generate anything of value and at some point shareholders need to say enough is enough.
However, it could be too late now as I imagine Milestone is going to find it much harder to raise funds going forward despite all the promises about blockchain and digital payments – one can only “Cry Wolf” for so long.
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