Final Results

RNS Number : 2239W
Cheerful Scout PLC
16 November 2010
 



Cheerful Scout Plc / Index: AIM / Epic: CLS / Sector: Media

16 November 2010

Cheerful Scout Plc ('Cheerful' or 'the Company')

Final Results

 

Cheerful Scout Plc, the AIM-traded multi-media specialist, announces its results for the year ended 30 June 2010.

 

Overview

 

·    Successfully established a new corporate events division to broaden current corporate communications offering

·    Strengthened blue-chip client base and client sharing across divisions having recruited key team members from Twentyfirst Century Communications Limited

·    Increased turnover of £1.8 million (2009: £1.3 million) and healthy cash position of £632,200 (2009: £831,491)

·    Building reputation as innovative provider of corporate communications solutions particularly within the financial sector having won awards from IVCA and New York Festival

·    Integration of DVD subsidiary into On Screen division to streamline offering and facilitate digital delivery to corporate clients

 

Chairman's Statement

 

Cheerful has made encouraging progress over the period, with an increased turnover of £1.8 million and a small operating profit from trading, further to acquiring assets from Twentyfirst Century Communications Limited ('Twentyfirst') in January 2010.  We continue to maintain close relationships with our clients and have established a new corporate Events division enabling us to broaden our offering to both new and existing clients.  We have been successful in implementing our core strategy focused on delivering high quality and innovative brand and corporate communications through our On Screen and Events divisions, something which has been recognised over the year through the winning of industry awards.

 

Our Events and On Screen divisions have been working together very effectively since the beginning of 2010, enabling us to successfully extend the scope of the Company.  The relationship between the two has been highly productive and we are now able to offer a well-rounded service which combines events and on-screen communications to project our clients' brand and corporate message.  Importantly, our On Screen division has been able to benefit from the Events division's strong established relationships with a range of blue-chip clients.  We have been able to co-ordinate a range of projects for clients that have included input from both divisions, such as a leading mobile telecom company and an oil and gas major.

 

The On Screen division has continued to gain recognition for its work as a dedicated provider of cutting edge communications solutions.  We continue to build upon our reputation, particularly amongst the financial services sector.  Cheerful was recognised for its ingenuity and quality at both the IVCA and New York Festival Awards, winning gold for an internal communications video designed and produced for a leading international investment bank. 

 

Importantly, Cheerful has successfully maintained strong relationships with its existing clients.  We continue to work closely with government organisations including the Central Office of Information ('COI') and the Directorate of Optometric Continuing Education and Training ('DOCET') as training programmes and internal communications continue to be of high importance to these bodies.

 

I am pleased to report that our increased activities over the past year have strengthened our financials.  We remain cash positive with reserves of £632,200.  Importantly, the addition of the Twentyfirst Events division revenue, together with our increased client base and cost sharing, has enabled us to improve our operating performance.  Revenue has increased to £1,809,757 with pre tax profits of £1,144.

 

From July 2010, we have integrated the DVD side of our business into the On Screen division of the Company.  This has enabled us to offer digital delivery to our corporate clients.  We continue to streamline our On Screen offering to evolve our business in line with the fast-moving media industry.  The Board is of the opinion that market conditions are stabilising and that our focus on two operating divisions, On Screen and Events, together with our recognised creativity and innovation and our strong client relationships, will position us for further growth.  In addition, we continue to assess various opportunities to complement our existing business, accelerate growth, and improve our financial performance.

 

Finally, I would like to thank the team for their hard work and dedication to the Company and to shareholders for their continued support. 

 

S Appleton

Chairman

 

15 November 2010

 

 

For further information contact:

Gary Fitzpatrick

Cheerful Scout Plc

Tel: 020 7291 0444

Mark Percy

Seymour Pierce

Tel: 020 7107 8030

Catherine Leftley

Seymour Pierce

Tel: 020 7107 8030

Elisabeth Cowell

St Brides Media & Finance Ltd

Tel: 020 7236 1177

 

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2010

 

 Continuing operations

Notes

2010

2009



£ 

£ 





Revenue

2

1,809,757

1,269,788

Cost of sales


 

(1,132,142)

 

(820,026)

Gross profit


677,615

449,762

Administrative expenses


(695,275)

 (718,648)

Operating loss

3

(17,660)

(268,886)

Finance income

 

Other income

4

 

5

1,883

 

16,921

23,408

 

-

Profit / (loss) before taxation


1,144

(245,478)

Taxation

6

49,082

(475)

Total comprehensive income / (expense) for the year attributable to owners of the parent


50,226

(245,953)

 

Earnings / (loss) per ordinary share:




Basic

9

0.63098p

(2.51451)p

Diluted

9

0.63098p

(2.51451)p

 

There were no other comprehensive income items.

 

Statement of Financial Position

As at 30 June 2010

 


Notes

Group


Company




2010

2009

2010

2009



£

£

£

£

Non-current assets






Intangible assets

10

365,154

365,154

-

-

Property, plant and equipment

11

133,375

165,484

-

-

Investments in subsidiaries

12

-

-

1,000,000

1,402,600

Deferred taxation

7

39,832

-

-

-



538,361

530,638

1,000,000

1,402,600

Current assets






Inventories


2,252

2,033

-

-

Trade and other receivables

13

506,592

209,894

187,443

45,201

Cash and cash equivalents

14

632,200

831,491

515,947

788,846



1,141,044

1,043,418

703,390

834,047







Total assets


1,679,405

1,574,056

1,703,390

2,236,647







Current liabilities






Trade and other payables

15

(386,226)

(300,378)

(37,636)

(175,867)







Net assets


1,293,179

1,273,678

1,665,754

2,060,780

Equity






Share capital

16

979,688

1,054,688

979,688

1,054,688

Special reserves


-

-

-

-

Capital redemption reserve


257,812

170,312

257,812

170,312

Retained earnings


55,679

48,678

428,254

835,780

Equity attributable to owners of the parent


1,293,179

1,273,678

1,665,754

2,060,780

 

Statement of Changes in Equity

As at 30 June 2010

 

Group

Share capital

Special reserves

Capital redemption reserve

Retained earnings

Total equity

 

£

£

£

£

£

At 1 July 2008

1,225,000

1,747,416

-

(1,325,263)

1,647,153

Comprehensive expense for the year

-

-

-

(245,953)

(245,953)

 

Transfer of special reserves to retained earnings

 

Purchase of own shares

-

 

 

(170,312)

(1,747,416)

 

 

-

-

 

 

170,312

1,747,416

 

 

(127,522)

-

 

 

(127,522)

At 30 June 2009

1,054,688

-

170,312

48,678

1,273,678

At 1 July 2009

1,054,688

-

170,312

48,678

1,273,678

Comprehensive income for the year

-

-

-

50,226

50,226

Purchase of own shares

(87,500)

-

87,500

(43,225)

(43,225)

Issue of new shares

12,500

-

-

-

12,500

At 30 June 2010

979,688

-

257,812

55,679

1,293,179

Company

Share capital

Special reserves

Capital redemption reserve

Retained earnings

Total equity


£

£

£

£

£

At 1 July 2008

1,225,000

1,747,416

-

(192,072)

2,780,344

Comprehensive expense for the year

-

-

-

(592,042)

(592,042)

Transfer of special reserves to retained earnings

-

(1,747,416)

-

1,747,416

-

Purchase of own shares

(170,312)

-

170,312

(127,522)

(127,522)

At 30 June 2009

1,054,688

-

170,312

835,780

2,060,780

At 1 July 2009

1,054,688

-

170,312

835,780

2,060,780

Comprehensive expense for the year

-

-

-

(364,301)

(364,301)

Purchase of own shares

(87,500)

-

87,500

(43,225)

(43,225)

Issue of shares

12,500

-

-

-

12,500

At 30 June 2010

979,688

-

257,812

428,254

1,665,754

 

Following a board resolution on 3 November 2009, the Company transferred its special reserves of £1,747,416 to retained earnings following the expiry of the undertaking given to the High Court of Justice in 2006.

 

Statement of Cash Flows

For the year ended 30 June 2010

 

 

Group

 

Company

 

 


2010

2009

2010

2009

 


£

£

£

£

Cash flows from operating activities


 

 

 

 

Profit / (loss) before taxation


1,144

(245,478)

(364,301)

(592,042)

Depreciation


68,908

71,259

-

-

Amortisation of intangibles


-

46,518

-

-

Gain on sale of property, plant and equipment


-

(20,242)

-

-

Impairment of investment in subsidiaries


-

-

401,908

500,000

Finance income


(1,883)

(23,408)

(1,823)

(22,866)

 


68,169

(171,351)

35,784

(114,908)

Increase / (decrease) in trade and other payables


85,848

(72,743)

(138,231)

152,527

Decrease / (increase) in trade and other receivables


(296,698)

222,860

(142,242)

(33,703)

Decrease / (increase) in inventories


(219)

196

-

-

Taxation received


9,250

34,286

-

-

Cash (used) / generated from operating activities


(133,650)

13,248

(244,689)

3,916

 


 

 

 

 

Cash flows from investing activities


 

 

 

 

Finance income


1,883

23,408

1,823

22,866

Purchase of property, plant and equipment

11

(36,799)

(82,832)

-

-

Proceeds from sale of property, plant and equipment


-

20,242

-

-

Investments in subsidiaries


-

-

692

(2,000)

Cash (used) / generated in investing activities


(34,916)

(39,182)

2,515

20,866

 


 

 

 

 

Cash flows from financing activities


 

 

 

 

Purchase of own shares


(43,225)

(127,522)

(43,225)

(127,522)

Issue of shares


12,500

-

12,500

-

Cash used in financing activities


(30,725)

(127,522)

(30,725)

(127,522)

 


 

 

 

 

Net decrease in cash and cash equivalents


(199,291)

(153,456)

(272,899)

(102,740)

Cash and cash equivalents at beginning of year


831,491

984,947

788,846

891,586

Cash and cash equivalents at end of year

14

632,200

831,491

515,947

788,846

 

Notes to the Consolidated Financial Statements

For the year ended 30 June 2010

 

1.  Accounting policies

 

Cheerful Scout plc is a public limited company incorporated in the United Kingdom.  The Company is domiciled in the United Kingdom and its principal place of business is 25/27 Riding House Street, London, W1P 7PB.  The Company's Ordinary Shares are traded on the Alternative Investment Market.

 

The principal accounting policies adopted in the preparation of the financial statements are set out below.  The policies have been consistently applied to all the years presented, unless otherwise stated.

 

Going concern

 

The Group's business activities, together with the factors likely to affect its future development and performance are set out in the review of business contained in the Chairman's Statement.  The Group's financial statements show details of its financial position including, in note 22, details of its financial instruments and exposure to risk.

After reviewing the Group's budget for the next financial year, other medium term plans and considering the risks outlined in note 22, the Directors, at the time of approving the financial statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.

 

Basis of Preparation

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The following new standards, amendments to standards and interpretations, applied for the first time from 1 July 2009.

·    IAS 1 (Revised) 'Presentation of Financial Statements'.  The revised standard has introduced terminology chances (including revised titles for the financial statements) and changes in the format and content of the financial statements.

·    IFRS 8 'Operating segments'.  IFRS 8 replaces IAS 14 'Segment Reporting'.  The Group concluded that its operating segments determined in accordance with IFRS 8 are the same as the business segments previously identified under IAS 14.

·    IFRS 2 (Amended) 'Share based payments'.  The amendment to IFRS 2 clarifies the definition of vesting conditions and prescribes the treatment for an award that is cancelled.  This amendment did not have an impact on the financial position or performance of the group.

 

Adopted IFRSs not yet applied

 

At the date of authorisation of this report, the following standards, which have not been applied in this report, were issued but not yet effective.

·    IFRS 1 (Amended) 'First time adoption of International Financial Reporting Standards', effective 1 January 2010.

·    IFRS 2 (Amended) 'Share-based payments', effective 1 January 2010.

·    IFRS 3 (Amended) 'Business Combinations', effective 1 July 2010.

·    IFRS 5 (Amended) 'Non-current assets held for sale and discontinued operations', effective 1 January 2010.

·    IFRS 9 'Financial Instruments', effective 1 January 2013.

·    IAS 7 (Revised) 'Statement of cash flows', effective 1 January 2010.

·    IAS 17 (Revised) 'Leases', effective 1 January 2010.

·    IAS 24 (Revised) 'Related Party Disclosures', effective 1 January 2011.

·    IAS 27 (Amended) 'Consolidated and separate financial statements', effective 1 July 2010.

·    IAS 32 (Amended) 'Financial instruments', effective 1 February 2010.

·    IAS 36 (Revised) 'Impairment of assets', effective 1 January 2010.

 

Management does not believe that the application of these standards, where applicable, will have an impact on the financial statements, except for the requirement of additional disclosures.

 

Basis of consolidation

 

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2010.  Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities.  Subsidiaries are fully consolidated from the date on which control is transferred until the date that such control ceases.

 

Intra-group transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.

 

Revenue

 

Revenue represents amounts (excluding value added tax) derived from the provision of services to third party customers in the course of the Group's ordinary activities.  Revenue is measured at the fair value of consideration received taking into account any trade discounts and volume rebates.  Revenue for all business segments is recognised when the Group has earned the right to receive consideration for its services.

 

Intangible assets - goodwill

 

All business combinations are accounted for by applying the acquisition method.  Goodwill acquired represents the excess of the fair value of the consideration and associated costs over the fair value of the identifiable net assets acquired.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.  At the date of acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory company level as the case may be, for the purpose of impairment testing and is tested at least annually for impairment.  On subsequent disposal or termination of a business acquired, the profit or loss on termination is calculated after charging the carrying value of any related goodwill.

 

Intangible assets - development costs

 

Development expenditure is written off to the income statement 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 is amortised over 4 years.

 

Property, plant and equipment

 

Property, plant and equipment is stated in the financial statements at cost less accumulated depreciation and any impairment value.  Depreciation is provided to write off the cost less estimated residual value of property, plant and equipment over its expected useful life (which is reviewed at least at each financial year end), as follows: 

 

 

Leasehold land and buildings

 

straight line over the life of the lease (5 years)

 

Fixtures, fittings and equipment

25% straight line

 

Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year that the asset is derecognised.

 

Fully depreciated assets still in use are retained in the financial statements.

 

Impairment

 

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.  If any such indication exists, the assets' recoverable amount is estimated.  For goodwill and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each annual balance sheet date and whenever there is an indication of impairment.

 

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.  Impairment losses are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

 

Operating leases

Rentals under operating leases are charged to the Income Statement on a straight line basis over the period of the lease.

 

Investments

 

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

 

Inventories

 

Inventories are stated at the lower of cost and net realisable value.

 

Trade and other receivables

 

Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any provision for impairment.

 

Trade and other payables

 

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

 

Cash and cash equivalents

 

Cash comprises, for the purpose of the Cash Flow Statement, cash in hand and deposits payable on demand and bank overdrafts.  Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.  Cash equivalents normally have a date of maturity of 3 months or less from the acquisition date.

 

Finance income

 

Financial income consists of interest receivable on funds invested.  It is recognised in the Income Statement as it accrues.

 

Taxation

 

Income tax on the profit or loss for the periods presented comprises current and deferred tax.  Current tax is the expected tax payable on the taxable income for the year, using rates enacted or subsequently enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is provided on temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.  The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; the differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.  The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or subsequently enacted at the balance sheet date.

 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised.

 

Pension costs

 

The Group does not operate a pension scheme for its employees.  It does however, make contributions to the private pension arrangements of certain employees.  These arrangements are of the money purchase type and the amount charged to the income statement represents the contributions payable by the Group for the period.

 

Financial instruments

 

The Group does not enter into derivative transactions and does not trade in financial instruments.  Financial assets and liabilities are recognised on the Balance Sheet when the Group becomes a party to the contractual provision of the instrument.

 

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 the income statement.

 

Share-based payments

 

The Group has applied the transitional provisions of IFRS 2 only to awards of equity instruments made after 7 November 2002 that had not vested by 1 July 2006.

 

The fair value of equity rights is estimated using the Binomial model at the date of grant to key employees and is dependent on factors such as the exercise price, expected volatility, option price and risk free interest rate.  The fair value is then amortised through the Income Statement on a straight-line basis over the vesting period.  Expected volatility is determined based on the historical share price volatility for the Company.  Further information is given in note 20 to the financial statements.

 

Significant judgements and estimates

 

The preparation of the Group's financial statements in conforming with IFRS required management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements.  These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances.  Information about such judgements and estimation is contained in the accounting policies and / or notes to the financial statements and the key areas are summarised below:

a)   Depreciation rates are based on the estimated useful lives and residual value of the assets involved.

b)   The impairment review of goodwill is based on the estimation of future cash flows and discount rates in order to calculate the present value of the cash flows.

c)   The Group operates share incentive schemes as detailed in note 20.  In order to calculate the annual charge in accordance with IFRS 2, management are required to make a number of assumptions and include, amongst others, volatility and expected life of options.

 

2. Revenue and segment information

 

Revenue and segmental profit has been disclosed by three operating segments of On Screen, DVD & Interactive and Events in the manner that the information is presented to the Board of Directors, being the Chief Operating Decision Makers, in accordance with IFRS 8.

 


On Screen

On Screen

DVD & Interactive

DVD & Interactive

Events

Events

Total

Total


2010

2009

2010

2009

2010

2009

2010

2009


£

£

£

£

£

£

£

£

Revenue

979,859

885,240

278,120

384,548

551,778

-

1,809,757

1,269,788

Segment results

117,758

(62,668)

(93,855)

(91,310)

58,711

-

82,614

(153,978)

Unallocated expenses







(100,274)

(114,908)

Operating loss







(17,660)

(268,886)

Finance income







1,883

23,408

Other income







16,921

-

Taxation







49,082

(475)

Profit / (loss) for the year







50,226

(245,953)










Segment assets

446,047

410,494

379,207

359,497

293,507

-

1,118,761

769,991

Unallocated assets







560,644

804,065

Total assets

446,047

410,494

379,207

359,497

293,507

-

1,679,405

1,574,056










Segment liabilities

(149,298)

(59,991)

(47,311)

(24,367)

(81,178)

-

(277,787)

(84,358)

Unallocated liabilities







(108,439)

(216,020)

Total liabilities

(149,298)

(59,991)

(47,311)

(24,367)

(81,178)

-

(386,226)

(300,378)










Capital expenditure

17,236

41,416

17,236

41,416

2,327

-

36,799

82,832

Depreciation and amortisation

33,949

82,147

33,949

35,630

1,010

-

68,908

117,777

 

The geographical analysis of turnover and assets by geographical location of customer is as follows:

 

Geographical market

2010

2009

2010

2009

2010

2009

2010

2009


UK

UK

Europe

Europe

USA

USA

Total

Total


£

£

£

£

£

£

£

£

Revenue

1,789,719

1,216,687

-

53,101

20,038

-

1,809,757

1,269,788










Segment assets

361,760

100,839

-

56

-

-

361,760

100,895

Unallocated assets







1,317,645

1,473,161

Total assets







1,679,405

1,574,056

 

 

Capital expenditure - unallocated







36,799

82,832

 

3. Operating loss

 

Operating loss is stated after charging:

2010

2009

 

£

£

Amortisation of intangible assets

-

46,518

Depreciation of property, plant and equipment

68,908

71,259

Fees payable to the Company's auditor in respect of:

 

 

     Audit of the Company's annual accounts

6,000

5,000

     Audit of the Company's subsidiaries

12,000

10,000

Operating leases

97,245

109,233

 

4. Finance income

 


2010

2009


£

£

Interest income

1,883

23,408

 

 

5. Other income

 

 

2010

2009

 

£

£

Rental income

16,921

-

 

6. Taxation

 

 

2010

2009

 

£

£

The tax (credit) / charge comprises:

 

 

 

 

 

Current tax

 

 

 

Adjustment to prior years

(9,250)

475

 

 

 

 

(9,250)

475

 

 

 

Deferred tax

 

 

Current year

(39,832)

-

 

(39,832)

-

 

 

 

Total tax (credit) / charge in the statement of comprehensive income 

(49,082)

475

Factors affecting the tax (credit) / charge for the year

 

 

Profit / (loss) on ordinary activities before taxation

1,144

(245,478)

Profit / (loss) on ordinary activities before taxation multiplied by standard rate

 

 

of UK corporation tax of 21% (2009: 21%)

240

(51,550)

Effects of:

 

 

Non deductible expenses

8,043

81

Depreciation and impairment losses

14,471

14,914

Capital allowances

(13,772)

(18,055)

Research and development

-

8,093

Other tax adjustments

-

(4,146)

Losses utilised

(13,165)

-

Losses carried forward

4,183

50,663

Deferred tax asset recognition

(39,832)

-

Adjustment to prior years

(9,250)

475

 

(49,322)

52,025

Total taxation (credit) / charge

(49,082)

475

 

The Group has estimated losses of £647,885 (2009: £691,027) available to carry forward against future trading profits.

 

7. Deferred taxation

 

 

2010

2009

 

£

£

Property, plant and equipment temporary differences

(2,450)

-

Temporary differences

2,624

-

Losses

39,658

-

 

39,832

-

At 1 July

-

-

Transfer to statement of comprehensive income

39,832

-

At 30 June

39,832

-

 

A deferred tax asset has been recognised in respect of previously unrecognised trading losses.  These are expected to be utilised given the return to profitability and future trading prospects.  The deferred tax asset is expected to be realised after more than one year.

 

8. Loss attributable to members of the parent company

 

As permitted by section 408 of the Companies Act 2006, the parent Company's Statement of Comprehensive Income has not been included in these financial statements.  The retained loss for the financial year of the holding company was £364,301 (2009: £592,042).

 

9. Earnings / (loss) per ordinary share

 

Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year. 

 

Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

 

The following reflects the income and share data used and dilutive earnings per share computations:

 


2010

2009


£

£

Profit / (loss) attributable to owners of the parent

50,226

(245,953)




Basic weighted average number of shares

7,959,966

9,781,336

Dilutive potential ordinary shares:



Employee share options

-

-

Diluted weighted average number of shares

7,959,966

9,781,336

 

Employee share options do not have a dilutive effect on the weighted average number of shares in 2009 and 2010 as the exercise price of the share options is in excess of the average market price of the ordinary shares.

 

After the reporting period, the Company granted a total of 1,200,000 share options to a number of employees. The options were granted at a price of 8.75 pence each. The options vest after 3 years and can be exercised in the period commencing on the third anniversary of the date of grant through until the tenth anniversary of the date of grant.

 

10. Intangible fixed assets

 

Group

Goodwill

Development Costs

Total

 

£

£

£

Cost

 

 

 

At 1 July 2008

2,728,292

186,069

2,914,361

At 30 June 2009

2,728,292

186,069

2,914,361

At 1 July 2009

2,728,292

186,069

2,914,361

Development costs written off

-

(186,069)

(186,069)

At 30 June 2010

2,728,292

-

2,728,292

Impairment and amortisation

 

 

 

At 1 July 2008

2,363,138

139,551

2,502,689

Amortisation

-

46,518

46,518

 

At 30 June 2009

2,363,138

186,069

2,549,207

At 1 July 2009

2,363,138

186,069

2,549,207

Development costs written off

-

(186,069)

(186,069)

 

At 30 June 2010

2,363,138

-

2,363,138

Net book value

 

 

 

At 1 July 2008

365,154

46,518

411,672

At 30 June 2009

365,154

-

365,154

At 1 July 2009

365,154

-

365,154

 

At 30 June 2010

365,154

-

365,154

 

Development costs

 

Development costs in relation to the Group's nVision Presenter product have been amortised over its expected useful life of four years.  As this product is no longer in use, the development costs have been written off in full during the year.

 

Impairment

 

The impairment test for goodwill involved the determination of recoverable amounts based upon cash flow projections, the annual business plan and directors' long term estimates based on past experience and external estimates related to market growth.  The key assumptions used are as follows: -

 

Discount rate                                                    3.1 %

Year on year growth                                         3.0% (on projected figures for 2011)

Number of annual cash flows considered           5   

There was no impairment in the year.

 

11. Property, plant and equipment

 

Group

Leasehold land

Fixtures, fittings

Total


and buildings

and equipment



£

£

£

Cost




At 1 July 2008

146,578

843,397

989,975

Additions

10,485

72,347

82,832

Disposals

-

(100,428)

(100,428)

At 30 June 2009

157,063

815,316

972,379

At 1 July 2009

157,063

815,316

972,379

Additions

-

36,799

36,799

At 30 June 2010

157,063

852,115

1,009,178

Depreciation




At 1 July 2008

146,578

689,486

836,064

 

Charge for the year

988

70,271

71,259

Disposals

-

(100,428)

(100,428)

 

At 30 June 2009

147,566

659,329

806,895

At 1 July 2009

147,566

659,329

806,895

 

Charge for the year

2,072

66,836

68,908

 

At 30 June 2010

149,638

726,165

875,803

Net book value




At 1 July 2008

-

153,911

153,911

At 30 June 2009

9,497

155,987

165,484

At 1 July 2009

9,497

155,987

165,484

At 30 June 2010

7,425

125,950

133,375

 

The gross carrying amount of fully depreciated property, plant and equipment still in use is as follows:

 

Cost

2010

 2009

 

 £

 £

Leasehold land and buildings

146,578

146,578

Fixtures, fittings and equipment

577,459

695,724

 

724,037

842,302

 

12. Non-current assets - Investments

 

Company

Shares in subsidiary

Loans to subsidiary

Total

 

£

£

£

Cost

 

 

 

At 1 July 2008

3,144,813

200,000

3,344,813

Additions

-

2,000

2,000

At 30 June 2009

3,144,813

202,000

3,346,813

At 1 July 2009

3,144,813

202,000

3,346,813

Repayment

-

(692)

(692)

At 30 June 2010

3,144,813

201,308

3,346,121

Provision

 

 

 

At 1 July 2008

1,444,213

-

1,444,213

 

Impairment

300,000

200,000

500,000

 

 

 

 

At 30 June 2009

 

1,744,213

 

200,000

 

1,944,213

 

At 1 July 2009

1,744,213

200,000

1,944,213

 

Impairment

400,600

1,308

401,908

 

 

 

 

At 30 June 2010

 

 

2,144,813

 

 

201,308

 

 

2,346,121

 

 

Net book value

 

 

 

At 1 July 2008

1,700,600

200,000

1,900,600

At 30 June 2009

1,400,600

2,000

1,402,600

At 1 July 2009

1,400,600

2,000

1,402,600

 

 

 

 

At 30 June 2010

1,000,000

-

1,000,000

 

Holdings of more than 20%

 

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

 

Company

Country of

Shares held

 

 

registration

 

 

 

or incorporation

Class

%

Subsidiary undertakings

 

 

 

Cheerful Scout Productions Limited (formerly Centralfix Limited)

England and Wales

Ordinary

100

nVision Technology Limited

England and Wales

Ordinary

100

Business Data Interactive Limited

England and Wales

Ordinary

60

 

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

 

Company

Principal activity

Cheerful Scout Productions Limited

Provision of business communication services

nVision Technology Limited

Provision of event management services

Business Data Interactive Limited

Development of business gaming software

 

13. Trade and other receivables

 

 

Group

 

Company

 

 

2010

2009

2010

2009

 

£

£

£

£

Trade receivables

361,760

100,895

-

-

Related party receivables

-

-

179,756

15,238

Other receivables

35,722

36,864

2,821

14,744

Prepayments and accrued income

109,110

72,135

4,866

15,219

 

506,592

209,894

187,443

45,201

 

Other receivables include £34,543 (2009: £34,543) for a rental deposit which is secured by a charge in favour of the landlords.  All trade and other receivables are expected to be recovered within 12 months of the balance sheet date.  The fair value of trade and other receivables is the same as the carrying values shown above.

 

14. Cash and cash equivalents

 

 

Group

 

Company

 

 

2010

2009

2010

2009

 

£

£

£

£

Bank balances

632,200

831,491

515,947

788,846

Cash and cash equivalents

632,200

831,491

515,947

788,846

 

 

 

 

 

Cash and cash equivalents in the statement of cash flows

632,200

831,491

515,947

788,846

 

15. Trade and other payables

 

 

Group

 

Company

 

 

2010

2009

2010

2009

 

£

£

£

£

Trade payables

176,205

160,796

27,005

149,166

Related party payables

-

-

1

1

Taxes and social security costs

22,355

15,133

250

-

Other payables

57,534

69,599

-

-

Accruals and deferred income

130,132

54,850

10,380

26,700

 

386,226

300,378

37,636

175,867

 

All trade and other payables are expected to be settled within 12 months of the balance sheet date.  The fair value of trade and other payables is the same as the carrying values shown above.

 

16. Share capital

 

 

2010

2009

 

£

£

Authorised

 

 

28,000,000 Ordinary shares of 12.5p each

3,500,000

3,500,000

 

 

 

 

 

 

Allotted, called up and fully paid

Number 

Ordinary shares 

 

 

£

At 1 July 2008

9,800,000

1,225,000

Purchase of own shares

(1,362,500)

(170,312)

At 30 June 2009

8,437,500

1,054,688

Purchase of own shares

(700,000)

(87,500)

Issue of shares

100,000

12,500

At 30 June 2010

7,837,500

979,688

 

On 14 July 2009, the Company purchased 500,000 of its own Ordinary 12.5p shares for cancellation.  The price paid per share amounted to 5p and the total consideration paid was £25,000.  On 26 March 2010, the Company purchased 200,000 of its own Ordinary 12.5p shares for cancellation.  The price paid per share amounted to 9p and the total consideration paid was £18,000.  Total transaction costs amounted to £225.

 

On 2 December 2009, the Company issued 100,000 Ordinary 12.5p shares at par value.

See note 20 for details of share options outstanding.

 

17. Financial commitments

 

Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:

 

 

Land and Buildings

 

 

2010

2009

 

£

£

Not later than one year

110,000

110,000

Later than one year and not later than five years

174,167

284,167

 

18. Directors' emoluments

 

The remuneration of Directors of the Company is set out below.

 


Salary or fees

Salary or fees

Pensions

Pensions

Total

Total


2010

2009

2010

2009

2010

2009


£

£

£

£

£

£

P Litten

50,000

75,000

26,250

-

76,250

75,000

S Appleton

10,000

8,000

-

-

10,000

8,000

N J Newman

 

1,500

1,500

-

-

1,500

1,500

R L Owen

7,500

7,500

-

-

7,500

7,500


69,000

92,000

26,250

-

95,250

92,000

 

Fees for N J Newman are charged by Harris & Trotter LLP, a firm in which he is a member.  See note 21.

 

No directors had interests in share based incentive schemes.

 

19. Employee information

 

The average monthly number of employees (including directors) employed by the Group during the year was:

 

Number of employees

2010

2009

 

 

 

 

Number

Number

Production

14

13

Administration

6

4

 

20

17

 

The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as follows:

 

Employment costs

2010

2009

 

£

£

Wages and salaries

559,299

553,021

Social security costs

61,948

60,715

Pension costs

52,672

172

 

673,919

613,908

 

20. Share based payments

 

The Company has set up an EMI Share option scheme for key employees. The maximum term of current arrangements under the EMI scheme ends on 27 October 2014. Upon vesting, each option allows the holder to purchase one ordinary share at the pre agreed option price.

 

Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:

 


Number of options

Weighted average exercise price

Number of options

Weighted average exercise price


2010 

2010

2009

2009



£


£

Outstanding at beginning of the year

249,600

0.31

249,600

0.31

Lapsed during the year

(14,000)

(0.19)

-

-

Outstanding at end of the year

235,600

0.32

249,600

0.31

 

The exercise price of options outstanding at the year-end ranged between £0.1875 and £0.625 (2009: £0.1875 and £0.625) and their weighted average contractual life was 4 years (2009: 4 years).

 

The Group issues equity-settled share-based payments to employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value as determined at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

 

Fair value is measured by using the Binomial model. The expected life used in the model has been adjusted based on management's best estimate for the effect of non-transferability, exercise restrictions and behavioural considerations. The fair value of the options is calculated using the Binomial model making the following assumptions:

 

Grant date

28 October 2004

Share price at grant date

16.25p

Exercise price

18.75p

Expected life

4 years

Contractual life

10 years

Risk free rate

6%

Expected volatility

43%

Expected dividend rate

0%

Fair value option

5.9868p

 

No expense has been recognised in the Consolidated Statement of Comprehensive Income for share based payments in respect of employee share options as, in the opinion of the directors, the amounts are considered immaterial. 

 

After the reporting period, the Company granted a total of 1,200,000 share options to a number of employees. The options were granted at a price of 8.75 pence each. The options vest after 3 years and can be exercised in the period commencing on the third anniversary of the date of grant through until the tenth anniversary of the date of grant.

 

21. Related party transactions

 

The Group has a related party relationship with its subsidiaries and its directors. 

 

Details of transactions between the Company and its subsidiaries are as follows:

 


2010

2009


£

£

Management fees charged to subsidiaries



Cheerful Scout Productions Limited

100,000

-

nVision Technology Limited

35,000

-


135,000

-

Amounts owed by subsidiaries



Total amount owed by subsidiaries

381,064

202,000

Less provision

 (201,308)

(200,000)


179,756

2,000

Amounts owed to subsidiaries

-

15,238

 

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

 

During the year, the Company's investment in its subsidiary, Cheerful Scout Productions Limited, was impaired by £400,000 (2009: £300,000).

 

Harris and Trotter LLP is a firm in which N J Newman is a member.  The amounts charged to the Group for professional services and the balance outstanding at the reporting date is as follows:

 

 Harris and Trotter LLP - charged during the year

2010

2009

 

£

£

Cheerful Scout plc

13,745

25,750

Cheerful Scout Productions Limited

17,380

7,100

nVision Technology Limited

3,273

-

 

34,398

32,850

 

 

 

 Harris and Trotter LLP - balance outstanding at the reporting date

2010

2009

 

£

£

Cheerful Scout plc

1,763

16,963

Cheerful Scout Productions Limited

8,072

-

 

9,835

16,963

 

The compensation of key management (including directors) of the Group is as follows:

 

 

2010

2009

 

£

£

Short-term employee benefits

115,778

167,737

Post-employment benefits

52,500

-

 

168,278

167,737

 

At the reporting date, the following amounts are due to directors:

 

 

2010

2009

 

£

£

S Appleton

10,000

-

 

22. Financial instruments

 

The Group is exposed to risks that arise from its use of financial instruments.  There have been no significant changes in the Group's exposure to financial instrument risk, its objectives, policies and processes for managing those from previous periods.  The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables, cash and cash equivalents and trade and other payables.

 

Credit risk

 

Credit risk arises principally from the Group's trade receivables.  It is the risk that the counterparty fails to discharge its obligation in respect of the instrument.  The maximum exposure to credit risk at 30 June 2010 was £361,760 (2009: £100,895).  Trade receivables are managed by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.  At the year end, the credit quality of trade receivables is considered to be satisfactory.

 

Liquidity risk

 

Liquidity risk arises from the Group's management of working capital.  It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.  The Group's policy is to meet its liabilities when they fall due.  The Group monitors cash flow on a regular basis.  At the year end, the Group has sufficient liquid resources to meets its obligations of £386,226 (2009: £300,378).

 

Market risk

 

Market risk arises from the Group's use of interest bearing financial instruments.  It is the risk that the fair value of future cash flows of a financial instrument will fluctuate.  At the year end, the cash and cash equivalents of the Group was £632,200 (2009: £831,491).  The Group ensures that its cash deposits earn interest at a reasonable rate.

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 £52,672 (2009: £172).

 

24. Control

 

The Company is controlled by P Litten.

 

25. Events after the reporting date

 

After the reporting period, the Company granted a total of 1,200,000 share options to a number of employees. The options were granted at a price of 8.75 pence each. The options vest after 3 years and can be exercised in the period commencing on the third anniversary of the date of grant through until the tenth anniversary of the date of grant.

 

26. Notice of AGM

 

The Annual General Meeting of Cheerful Scout Plc will be held at 25-27 Riding House Street, London W1W 7DU on 13 December 2010 at 10.30 a.m.  A formal notice of AGM along with the Annual Report and Accounts will be sent to shareholders.

 

 


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