Final Results

Cheerful Scout PLC
17 October 2006





             CHEERFUL SCOUT PLC ('Cheerful Scout' or 'the Company')
                                  FINAL RESULTS

Cheerful Scout plc, the AIM listed multi media specialist, announces its results
for the year ended 30 June 2006. 

Overview:

-    Inaugural pre-tax profit of £259,032 before goodwill amortisation and 
     reorganisation costs (2005: loss £219,865 before goodwill amortisation 
     and impairment) 
-    Turnover up 142% to £2,173,163 (2005: £898,492) 
-    Strengthened portfolio of blue-chip clients
-    Solid pipeline of new business from both old and new clients
-    Enhanced technology and service offering - primarily through the launch of 
     nVision
-    Events division established to work in tandem with nVision Presenter, 
     organising and executing live events
-    Targeted expansion into new markets, principally The Business Intelligence
     Market with nVision Strategy 
-    Co developing nVision strategy with a visualisation company that deals in 
     strategy for large retail corporates
-    Consolidation of share capital being recommended to reduce trading costs 
     for shareholders without having an adverse effect on liquidity
-    Several prestigious awards won in the UK and Europe




CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2006
________________________________________________________________________________

It gives me great pleasure to report on Cheerful Scout's progress and I believe
your Company has much to celebrate in its tenth year. The period under review
has been extremely positive resulting in an exciting turnaround in our core
business of corporate programming and DVD production. Several prestigious awards
have been won - CIB and IVCA in UK and recently at the FEIFA Grand Prix awards
in Vienna, which underline our commitment to quality and the use of innovation
and further solidify our position and reputation in our market place.
Importantly, we have strengthened our portfolio of blue-chip clients, secured a
solid pipeline of new business and enhanced our technology and service offering
- primarily through the launch of nVision. I therefore believe we have a healthy
business that will now be in a position to deliver value to shareholders and
realise our full potential.

Financial Results

As confirmation of our improvement and ongoing success, I am delighted to report
an inaugural pre-tax profit of £259,032 before goodwill amortisation and
reorganisation costs (2005: loss £219,865 before goodwill amortisation and
impairment) on a turnover of £2,173,163 (2005: £898,492).Cash balances stand at
£885,559. We are encouraged that our existing core business has made the most
significant impact on the numbers and as we anticipate an increased potential
contribution from our new divisions - we can look forward to the future with
keen anticipation.
No Dividend will be payable this year, but the Directors will continue to review
this position closely as our financial situation improves.

Operations

Cheerful Scout is a multidisciplinary creative consultancy that specialises in
devising and delivering corporate communications solutions. Its business is
divided into three areas; (1) film and video programme production; (2) DVD
Authoring; (3) nVision Technology - which incorporates the events division.

(1) Programme Production
The programme productions division - which builds entire projects from initial
ideas through to implementation - continues to perform well. While much of our
work has traditionally been from long standing contracts with clients such as
Allen & Overy and Deloitte, we have now secured a number of new contracts with
other leading organisations. In particular we recently won two branding
contracts, the first a project with the Health, Work and Wellbeing Strategy
Department and the second a project to create the imagery and characters for the
new Tesco Direct service. This increase in client base not only bodes well for
the future but underlines that our attention to detail, creativity and quality
of work is paying off, as new business increases from both old and new clients.

(2) DVD
In the same vein, our DVD division is also performing well. We have been an
active participator in the DVD market for several years and have worked on a
number of major features as well as many well known television series such as
Spooks and Life On Mars. Our customers recognise our consistently high standard
of work, enabling us to build an extensive and loyal customer base which
includes 2 Entertain, Contender Entertainment Group and Fremantle. This high
standard has once again been endorsed by our DVD department being singled out by
Televisual for its menu designs as some of the best for 2006.

(3) nVision
Cheerful Scout is building a name for itself as a developer of pioneering
technologies and for pushing the boundaries of on-screen visual communication.
nVision technology is our latest development, of which there are two versions:
nVision Presenter, a unique communications product targeted at organisers of
live events, and nVision Strategy, a high end product directed at organisations
requiring complex problem solving tools.
nVision Presenter was the first to launch in 2006 and is establishing itself in
the market place. With such a unique offering, we decided that your Company
could increase the business potential and benefits of nVision Presenter by
establishing an events division to help organise and execute live events. We
have subsequently organised a number of events both in the UK and in Europe
which I am happy to report, were very well received.

The Business Intelligence Market is growing rapidly and I am delighted that
nVision Strategy provides an entry point into what is an entirely new market for
Cheerful Scout. We believe that nVision Strategy will provide considerable
opportunities for us in the future. Furthermore, to develop the product further,
we are co developing with a
visualisation company that deals in strategy for large retail corporates. We
believe by working with partners we can increase both the value of our
proposition as well as the uptake.

Our People

Our people are crucial to the success of Cheerful Scout. We have 18 full time
people all who are well trained, able to adapt to the changing needs of our
clients and who understand the Cheerful Scout ethos. The culture of Cheerful
Scout remains as solid today as it did when it was founded by Gary and Peter 10
years ago. It remains flexible, innovative and creative and offers the best
service possible at all times to all clients. We understand the importance of
client relationships and will continue to employ and hopefully retain the very
best of people.

We are proud of our retention of staff, which I believe can be put down to the
management, innovative environment and the opportunities for those involved in
the business as we continue to grow. Good people are essential and I'd like to
take this opportunity to thank everyone for their hard work in building Cheerful
Scout to what it is today.

Consolidation of Share Capital

Your Board is aware that, due to the large number of shares in issue and low
unit price per share, the Company's shares have traded with a relatively wide
bid-offer spread compared to other companies of similar size. Your Board
believes that consolidating the share capital of the Company will reduce trading
costs for shareholders without having an adverse effect on liquidity, and will
result in a more appropriate number of shares in issue.

Consequently, your approval is sought for a consolidation of the ordinary shares
of 0.5p each, such that all shareholders will receive one new ordinary share of
12.5p each for every 25 ordinary shares of 0.5p. Subject to the passing of
resolution 6 of the notice of the AGM, fractions of new ordinary shares
resulting from the consolidation will not be issued to shareholders. The Board
may decide that any fractions shall be consolidated into consolidated shares
which the Board may sell for the best price that can be reasonably obtained. The
net proceeds of any such sale after deduction of expenses will be distributed in
due proportion among holders of fractional entitlements (except that any amount
due which is less than £3 may be retained for the benefit of the Company). Based
on the shareholdings at the date of this letter, it is not expected that any
fractional entitlements will be above £3 and so it is not expected that any
distribution will be made to shareholders in relation to fractional
entitlements.

Except in relation to fractional entitlements, the proportion of each
shareholder's interest in the Company will remain the same, and except for the
increase in nominal value, the new ordinary shares will be identical in all
respects to the ordinary shares. The new ordinary shares will rank pari passu in
respect of dividends.

As a result of the consolidation of ordinary shares the existing warrants to
subscribe for ordinary shares will also be consolidated such that each
consolidated warrant would entitle the holder to subscribe for one new ordinary
share of 12.5 p at 62.5 p per share.

The record date for the consolidation of both the ordinary shares and the
warrants is close of business on 23 November 2006. Crest accounts will be
credited with new ordinary shares and/or new warrants in uncertificated form on
24 November 2006. Dealings will commence in new ordinary shares and new warrants
on 24 November 2006. Persons holding ordinary shares and warrants in
certificated form will be issued with new share certificates and new warrant
certificates on 7 December 2006. Existing share certificates and warrant
certificates will remain valid pending the issue of new share certificates and
new warrant certificates. Upon receipt of new share certificates and new warrant
certificates, the existing share certificates and warrant certificates will
become invalid and should be destroyed.

Outlook

As the results demonstrate, our previous investment in both technology and a
highly experienced team has enabled us to build a strong position in a
competitive market. I am confident that our success will continue and that the
future stability and growth of the Company is in safe hands. Importantly, our
core business and nVision are beginning to interact, creating new business
prospects for each other, thus further strengthening our investment case.
Through leveraging the team's creative abilities and exploiting our unique
technology, we have created a solid platform from which to further develop the
business and in turn generate increased shareholder value and fulfil the
potential of what I believe to be a very exciting company.

S Appleton
Chairman
16 October 2006




CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2006

                                                             2006                                       2005
               Notes   Pre goodwill     Goodwill            Total   Pre goodwill   Goodwill            Total
                       amortisation                                 amortisation
                       and              Amortisation                and            Amortisation
                       reorganisation   and                         impairment     and
                       costs            reorganisation                             impairment
                                        costs
                       
                                    £              £            £              £              £            £
Turnover           2        2,173,163              -    2,173,163        898,492              -      898,492
Cost of                    (1,308,612)             -   (1,308,612)      (631,550)             -     (631,550)
sales
                           __________       _________   __________    __________     __________     ________
Gross profit                  864,551              -      864,551        266,942              -      266,942
Administrative
expenses                     (635,581)       (50,499)    (686,080)      (504,071)      (136,415)    (640,486)
                           __________       _________    _________    __________     __________     ________
Operating
Profit/(loss)      3          228,970        (50,499)     178,471       (237,129)      (136,415)    (373,544)
Exceptional
item               4                -              -            -              -     (1,867,467)  (1,867,467)

Interest
receivable                     30,104              -       30,104         17,268              -       17,268
Interest
payable and
similar
charges            5              (42)             -          (42)            (4)             -           (4)
                            __________       ________      ________    __________     __________     ________
Profit/(Loss)
on ordinary
activities
before
taxation                      259,032        (50,499)     208,533       (219,865)    (2,003,882)  (2,223,747)

Tax on
profit/(loss)
on ordinary
activities         6                -              -      (54,000)        54,000              -       54,000
                           __________       _________    _________    __________     __________     _________
Retained
profit/(loss)
for the year      16                                      154,533                                 (2,169,747)
                                                         =========                                  =========
                                                                                            
Earnings per ordinary
shares:
Basic              8                                     0.063075p                                 (1.045661)p
                                                         =========                                  =========

Diluted            8                                     0.062814p                                 (1.045661)p
                                                         ========                                   =========


The profit and loss account has been prepared on the basis that all operations
are continuing operations.

There are no recognised gains or losses other than those passing through the
profit and loss account.


BALANCE SHEET
AS AT 30 JUNE 2006
________________________________________________________________________________

                                                                         Group
                                                            2006          2005
Fixed assets                                   Notes           £             £
Intangible assets                                  9     793,194       799,135
Tangible assets                                   10     129,678       212,152
Investments                                       11           -             -
                                                         --------      --------
                                                         922,872     1,011,287
                                                         --------      --------

Current assets
Stock                                                      2,268         1,211
Debtors                                           12     615,914       295,946
Cash at bank and in hand                                 885,559       721,757
                                                         --------      --------
                                                       1,503,741     1,018,914
Creditors: amounts falling due within one year    13    (361,621)     (119,742)
                                                         --------      --------
Net current assets                                     1,142,120       899,172
                                                         --------      --------

Total assets less current                              2,064,992     1,910,459
liabilities
                                                         --------      --------
                                                       2,064,992     1,910,459
                                                         ========      ========

Capital and Reserves
Called up share capital                     15     1,225,000         1,225,000
Share premium account                       16             -         3,360,169
Special Reserves                            16     1,747,416                 -
Profit and loss account                     16      (907,424)       (2,674,710)

Shareholders' funds - equity interests      17     2,064,992         1,910,459



CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2006
________________________________________________________________________________

                                                2006                      2005
                                       £           £            £            £

Net cash inflow/(outflow) from
operating                                    231,209                  (136,242)
activities

Returns on investments and
servicing of finance
Interest received                 30,104                   17,268
Interest paid                        (42)                      (4)
                                 --------                 --------

Net cash inflow for returns on
investments                                   30,062                    17,264
and servicing of finance

Taxation                                           -                         -

Capital expenditure and
financial investment
Payments to acquire intangible   (66,052)                (191,865)
assets
Payments to acquire tangible     (31,417)                 (52,115)
assets                           --------                 --------

Net cash outflow for capital                 (97,469)                 (243,980)
expenditure
                                              -------                  --------
Net cash inflow/(outflow) before
management                                   163,802                  (362,958)
of liquid resources and
financing

Financing
Net proceeds from issue of
ordinary share                         -                  525,000
capital
Expenses relating to issue of          -                  (26,250)
share capital
                                 --------                 --------

Net cash inflow from financing                     -                   498,750
                                              -------                  --------
Increase in cash in the year                 163,802                   135,792
                                              =======                  ========





NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2006
________________________________________________________________________________

1 Reconciliation of operating profit/(loss) to net cash inflow/(outflow)from
  operating activities

                                                            2006          2005
                                                               £             £

Operating profit/(loss)                                  178,471      (373,544)
Depreciation of tangible assets                          113,891       134,099
Amortisation of intangible assets                         71,993       136,415
Increase/(decrease) in debtors                          (373,968)      (15,577)
Decrease/(increase) in creditors within one year         241,879       (17,896)
Decrease/(increase) in stock                              (1,057)          261
                                                        ---------     --------
Net cash inflow/(outflow) from operating activities      231,209      (136,242)
                                                        =========     ========


2  Analysis of net funds

                                1 July 2005     Cash flow           30 June 2006
                                        £               £                    £
Net cash:
Cash at bank and in hand                -         158,916              158,916
                                  ---------       ---------           ----------
Liquid resources:
Bank deposits                     721,757           4,886              726,643
                                  ---------       ---------           ----------

Net funds                         721,757         163,802              885,559
                                  =========       =========           ==========


3  Reconciliation of net cash flow to movement in net funds

                                                            2006          2005
                                                               £             £
Increase in cash in the year                             158,916        26,087
Cash inflow from movement in liquid resources              4,886       109,705
                                                         ---------    ----------

Change in net funds resulting from cash flows            163,802       135,792
                                                         ---------    ----------

Movement in net funds in the year                        163,802       135,792

Opening net funds                                        721,757       585,965

                                                         ---------    ----------
Closing net funds                                        885,559       721,757
                                                         =========    ==========



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2006
________________________________________________________________________________

1   Accounting policies


1.1 Accounting convention

The financial statements are prepared under the historical cost convention.

1.2 Compliance with accounting standards

The financial statements are prepared in accordance with applicable accounting
standards.

1.3 Basis of consolidation

The consolidated profit and loss account and balance sheet include the financial
statements of the company and its subsidiary undertakings made up to 30 June
2006. The results of subsidiaries sold or acquired are included in the profit
and loss account up to, or from the date control passes. Intra-group sales and
profits are eliminated fully on consolidation.

1.4 Turnover

Turnover represent amounts receivable for goods and services, net of VAT and
trade discounts and has been derived from its principal activity.

1.5 Goodwill and impairment

Goodwill arising on acquisition is written off in equal annual instalments over
its estimated useful economic life of 20 years.

The carrying value of goodwill is reviewed for impairment in periods if events
or changes in circumstances indicate the carrying value may not be recoverable.
These reviews assess the recoverable amount by reference to the net present
value of expected future cash flows of the relevant income generating unit at a
discount rate of 2.8%. Impairment losses are recognised in the period in which
they are identified.

1.6 Development costs

Development expenditure is written off to the profit and loss account in the
year in which it is incurred, unless the directors are satisfied as to the
technical, commercial and financial viability of individual projects. In this
situation, the expenditure is deferred and amortised over the period during
which the company is expected to benefit. Development costs of current projects
will be amortised over 4 years.

1.7 Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less estimated residual value
of each asset over its expected useful life, as follows:

Leasehold land and buildings         straight line over the life of the lease
Fixtures, fittings and equipment     25% straight line

1.8 Leasing

Rentals payable under operating leases are charged against income on a straight
line basis over the lease term.

1.9 Investments

Fixed asset investments are stated at cost less provision for diminution in
value.

1.10 Stock

Stock is valued at the lower of cost and net realisable value.

1.11 Deferred taxation

The accounting policy in respect of deferred tax reflects the requirements of
FRS19 - Deferred tax. Deferred tax is provided in full in respect of taxation
deferred by timing differences between the treatment of certain items for
taxation and accounting purposes. Deferred tax is measured on a non-discounted
basis.

1.12 Pensions

The pension costs charged in the financial statements represent the
contributions payable by the company during the year in accordance with FRS17.

1.13 Financial instruments

The group does not enter into derivative transactions and does not trade in
financial instruments. For the purpose of note 22, short term debtors and
creditors are not treated as financial assets or financial liabilities.

1.14 Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. All differences are taken to profit and loss account.

2 Turnover

Geographical market
                                                     2006                 2005
                                                        £                    £
United Kingdom                                  2,008,332              678,335
Europe                                            144,061              220,157
Rest of the world                                  20,770                    -

                                                2,173,163              898,492


3 Operating profit/(loss)

                                                           2006           2005
                                                              £              £
Operating profit /(loss) is stated after charging:
Amortisation of intangible assets                         71,993       136,415
Depreciation of tangible assets                          113,891       134,099
Auditors' remuneration (company £4,750)                   13,000        12,250
Operating leases                                          83,545        75,950
                                                         ========      ========


4 Exceptional item

                                                   2006                   2005
                                                      £                      £

Impairment of goodwill                                -              1,867,467
                                                 --------             --------
                                                      -              1,867,467
                                                 ========             ========

5 Interest payable

                                                   2006                   2005
                                                      £                      £

Other interest                                       42                      4
                                                 ========               ========

6 Taxation

                                                          2006            2005
                                                             £               £
Current year tax                                             -               -
                                                        ========        ========
Deferred tax
Deferred tax charge/(credit) for the year               54,000         (54,000)
                                                        ========        ========

Factors affecting the tax charge for the year
Profit/(loss) on ordinary activities before
taxation                                               208,533      (2,223,747)
                                                        ========        ========

Profit/(loss) on ordinary activities before
taxation multiplied by standard rate of UK
corporation tax of 19% (2005 - 19%)                     39,621        (422,512)

Effects of:
Non deductible expenses                                    232             181
Depreciation add back                                   21,683          25,478
Capital allowances                                     (12,140)        (14,984)
Research and development allowances                    (20,825)              -
Other tax adjustments                                  (28,571)        411,837
                                                        --------        --------

                                                       (39,621)        422,512
                                                        --------        --------
Current tax charge                                           -               -
                                                        ========        ========

The group has estimated losses of £154,329 (2005: £363,079) available for carry
forward against future trading profits.


7 Loss for the financial year

As permitted by section 230 of the Companies Act 1985, the holding company's
profit and loss account has not been included in these financial statements. The
loss for the financial year is made up as follows:-

                                                          2006            2005
                                                             £               £

Holding company's loss for the financial year          (53,453)     (1,504,702)
Transfer to special reserves (See Note 16)              32,241               -
                                                        --------       --------
Retained loss for the year                             (21,212)     (1,504,702)
                                                        ========       ========

This figure is stated after an exceptional charge for permanent diminution in
the value of the investment in the subsidiary undertaking of £ nil (2005:
£1,444,213).


8 Earnings per ordinary share

Basic earnings per share are calculated by dividing the profit attributable to
ordinary shareholders of £154,533 (2005: £2,169,747) using a weighted average of
245,000,000 (2005: 207,500,000) ordinary shares in issue during the year.

Diluted earnings per share are adjusted for warrants and share options granted
to employees where the exercise price is less than the price of the Company's
ordinary shares during the year. These adjustments give rise to an increase of
1,015,804 ordinary shares.


9 Intangible fixed assets

Group
                             Goodwill           Development               Total
                                                     Costs
                                    £                     £                  £
Cost

At 1 July 2005              2,728,292               370,291          3,098,583
Additions                           -                66,052             66,052
                             ---------             ---------           --------

At 30 June 2006             2,728,292               436,343          3,164,635
                             ---------             ---------           --------

Amortisation

At 1 July 2005              2,299,448                     -          2,299,448
Charge for the year            25,476                46,517             71,993
                             ---------             ---------           --------

At 30 June 2006             2,324,924                46,517          2,371,441
                             ---------             ---------           --------

Net book value

At 30 June 2006               403,368               389,826            793,194
                             =========             =========           ========

At 30 June 2005               428,844               370,291            799,135
                             =========             =========           ========


10 Tangible fixed assets

Group
                       Leasehold land and        Fixtures, fittings and    Total
                               buildings                 equipment
                                     £                             £         £
Cost

At 1 July 2005                 142,218                       695,725   837,943
Additions                            -                        31,417    31,417
                               ---------                     ---------  --------
At 30 June
2006                           142,218                       727,142   869,360
                               ---------                     ---------  --------
Depreciation

At 1 July 2005                  78,319                       547,472   625,791
Charge for the
year                            26,442                        87,449   113,891
                               ---------                     ---------  --------
At 30 June
2006                           104,761                       634,921   739,682
                               ---------                     ---------  --------
Net book
value
At 30 June
2006                            37,457                        92,221   129,678
                               ---------                     ---------  --------

At 30 June
2005                            63,899                       148,253   212,152
                               =========                     =========  ========


11 Fixed asset investments

Company
                                                           Shares in subsidiary
                                                                             £
Cost
At 1 July 2005 and 30 June 2006                                      3,144,213

Impairment
At 1 July 2005 and 30 June 2006                                     (1,444,213)
                                                                       --------
Valuation as at 30 June 2006                                         1,700,000
                                                                       ========

In the opinion of the directors, the aggregate value of the company's investment
in subsidiary undertakings is not less than the amount included in the balance
sheet.

Holdings of more than 20%
The company holds more than 20% of the share capital of the following companies:


Company                         Country of registration        Shares held
                                or incorporation               Class         %
Subsidiary undertakings
Centralfix Limited              England and Wales              Ordinary    100
nVision Technology Limited      England and Wales              Ordinary    100

The principal activity of these undertakings for the last relevant financial
year was as follows:

                               Principal activity
Centralfix Limited             Provision of business communication services
nVision Technology Limited     Dormant



12 Debtors

                                      Group                    Company
                                 2006         2005         2006         2005
                                    £            £            £            £

Trade debtors                 516,023      113,942            -            -
Amounts owed by group
undertakings                        -            -      511,681      534,167
Other debtors                  39,014       38,464            -            -
Prepayments and accrued
income                         60,877       89,540        7,988        7,890
Deferred tax asset (see note
14)                                 -       54,000            -            -

                               --------     --------     --------     --------
                              615,914      295,946      519,669      542,057
                               ========     ========     ========     ========

Other debtors include £35,473 (2005: £35,473) rental deposit which is secured by
a charge in favour of the landlords.


13  Creditors: amounts falling due within one year

                                                Group                   Company
                                    2006         2005        2006        2005
                                       £            £           £           £

Trade creditors                  170,593       59,456           -           -
Amounts due to group
undertakings                           -            -           1           1
Taxes and social security costs   76,126       13,510           -           -
Accruals and deferred income     114,902       46,776      11,275       7,850
                                  --------     --------    --------    --------

                                 361,621      119,742      11,276       7,851
                                  ========     ========    ========    ========


14 Provisions for liabilities and charges

The deferred tax asset (included in debtors, note 12) is made up as follows:-

                                                              2006        2005
                                                                 £           £

Tax losses and accelerated capital allowances                    -      54,000
                                                            ========    ========



15 Share capital

                                                          2006            2005
Authorised                                                   £               £

700,000,000 Ordinary shares of 0.5p each             3,500,000       3,500,000
                                                       ========        ========
Allotted, called up and fully paid

245,000,000 Ordinary shares of 0.5p each             1,225,000       1,225,000
                                                       ========        ========


On 1 May 2002 34,500,000 warrants were issued at the time of the company's
listing on the Alternative Investment Market.

Each warrant entitles the warrant holder to subscribe for an ordinary share at
the issue price of 2.5p per share. The warrants are exercisable at any time
until the expiry of 5 years from 1 May 2002.

The company has entered into a scheme to provide share option incentives for
staff. A total of 1,800,000 ordinary shares of 0.5p each have been offered at an
option price of 2.5p per share exercisable between 3 and 10 years after the date
of grant, which was 1 May 2002.

An additional 6,105,000 ordinary shares of 0.5p each have been offered at an
option price of 0.75p per share exercisable between 3 and 10 years after the
date of grant, which was 28 October 2004.


16 Statement of movements on reserves

Group
                       Share premium          Special           Profit and loss
                       account                Reserves                  account
                                  £                 £                        £
Balance at 1
July 2005                 3,360,169                 -               (2,674,710)
Transfer in
respect of the
cancellation
of share
premium
account                  (3,360,169)        3,360,169                        -
Transfer in
respect of
accumulated
losses to 30
November 2005                     -        (1,612,753)               1,612,753
Retained
Profit for the
year                              -                 -                  154,533
                           ---------         ---------                 --------

Balance at 30
June 2006                         -         1,747,416                 (907,424)
                           =========         =========                 ========

Company
                       Share premium          Special           Profit and loss
                       account                Reserves                  account
                                  £                 £                        £
Balance at 1
July 2005                 3,360,169                 -               (1,580,512)
Retained loss
for the year                      -                 -                  (53,453)
Transfer in
respect of the
cancellation
of share
premium
account                  (3,360,169)        3,360,169                        -
Transfer in
respect of
accumulated
losses to 30
November 2005                     -        (1,612,753)               1,612,753
                           ---------         ---------                 --------

Balance at 30
June 2006                         -         1,747,416                  (21,212)
                           =========         =========                 ========



The company successfully applied to the High Court of Justice to transfer to a
special reserve the sum of £3,360,169 being the balance of the share premium
account. In addition accumulated losses of £1,612,753 to 30 November 2005 were
also transferred to the special reserves with the approval of the High Court of
Justice.


17 Reconciliation of movements in shareholders' funds

Group
                                                                          2006
                                                                             £

Profit for the financial year                                          154,533

Opening shareholders' funds                                          1,910,459
                                                                        --------

Closing shareholders' funds                                          2,064,992
                                                                        ========

Company
                                                                          2006
                                                                             £

Loss for the financial year                                            (53,453)

Opening shareholders' funds                                          3,004,657
                                                                        --------

Closing shareholders' funds                                          2,951,204
                                                                        ========



18 Financial commitments

At 30 June 2006 the group had annual commitments under non-cancellable operating
leases as follows:

                                                   Land and buildings
                                         2006                             2005
                                            £                                £
Expiry date:
In over five years                     83,545                           75,950
                                       ========                         ========



19 Directors' emoluments

                                                          2006           2005
                                                             £              £

Emoluments for qualifying services                     127,500        106,800
                                                      ========       ========

Directors remuneration includes £12,750 (2005: £48,555) which has been
capitalised as development costs.


20  Related party transactions

During the year, £21,715 (2005: £15,155) was charged by Harris & Trotter LLP in
respect of professional services. N J Newman is a member of that firm.

Cheerful Scout Plc is a guarantor for the lease entered into by Centralfix
Limited, its subsidiary undertaking.


21 Employees

Number of employees
The average monthly number of employees (including directors) during the year
was:

                                                   2006                   2005
                                                 Number                 Number

Production                                           13                     11
Administration                                        4                      3
                                                 --------               --------

                                                     17                     14
                                                 ========               ========

Employment costs
                                                         £                   £

Wages and salaries                                 498,535             392,568
Social security costs                               53,091              36,612
Pension costs                                          172                 172
                                                  --------            --------

                                                   551,798             429,352
                                                  ========            ========


22 Treasury activities and financial instruments

The group's financial instruments comprise cash and liquid resources.
The main risks arising from the group's financial instruments are the interest
rate risks. The Board reviews and agrees policies for managing these risks.

Interest rate risk profile of financial assets

The interest rate profile of the financial assets of the group at 30 June 2006
is as follows:

                                    Financial assets    Floating rate       Total
                                    on which no         financial
                                    interest is         assets
                                    earned
                                                  £               £             £
Sterling                                      5,000         880,559       885,559
                                            =======        ========       =======

The floating rate financial assets comprise cash deposits on money market
deposits at monthly rates.

Fair value of financial assets

The group's book value of the financial assets equates to their fair values.


23 Pension costs

Defined contribution

The group makes pre-defined contributions to employees' personal pension plans.

Contributions payable by the group for the year were £172 (2005: £172).




                      This information is provided by RNS
            The company news service from the London Stock Exchange