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Milestone Group PLC – How long before it must call in the administrators?

By Tom Winnifrith, The Sheriff of AIM | Friday 30 June 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.

Milestone’s (MSG) interim results today were truly appalling as it racked up a loss of £1.1 million. The statement about the "progress" of its range of sub scale crap businesses is - as ever - upbeat. Read the words and you think this company must have done brilliantly. And then you look at the P&L buried beneath the acres of spin and you see that sales in the six months to March 31 2017 were just £22, 237. Down by 56% on the prior year and just pitiful. The ice cream van parked in my street just now generates more sales than this POS which has no right to be on the AIM Casino at all. It gets worse...

Milestone stated it had negative liabilities of £124,305 but this included £1,250,000 as a debtor in respect of the failed 20 October 2016 placing. As previously highlighted on this site the bucket shop for the placing, City of London Markets is a tiny loss-making company with net assets of under £50,000. Given it is over 6 months since the failed placing surely Milestone should have made a provision against the entire debtor balance due because it is never going to receive the money.

Instead it treats the £1.25 million as a current asset, in other words it tells you that it will be converted into cash by March 31 2018. There is not a fucking chance in hell of that happening. None. These accounts are sheer fantasy. There is no way that full year audited numbers will be allowed to perpetuate that fantasy. But will Milestone be around at the full year stage?

Given an administrative cost burden of circa £180,000 per month versus pitiful revenue of just under £4,000 a month, Milestone will have sent another £540,000 to money heaven in the 3 months since its interim period end of 31 March 2017. It did manage to raise £305,000 since the period end but this only covers just over half of the cash burn. So current net liabilities must now be close to £1.6 million.

In its last placing at 0.2 pence per share Milestone raised a pitiful £40,000 before costs about a week’s cash burn. With a nominal value of 0.1 pence per share and a bid price of 0.11 pence per share that means that it realistically won’t be able to achieve anymore placings without a share reconstruction since the only fools who will back this are bucket shop spivs who will demand a big discount.

If one ignores the fantastic idea that it will get its £1.25 million from the placing, Milestone surely has negative net assets and is burning cash. Since its plummeting share price means it cannot get a placing away surely it is trading whilst insolvent which, as rule breaker Deborah White should know, is a criminal offence.

The shares are a sell with a target of 0p or suspended pending clarification and that could happen very soon indeed.

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