Final Results

RNS Number : 0300D
Cheerful Scout PLC
25 November 2009
 



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

25 November 2009

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 2009.


Overview:

  • Cut costs reducing both headcount and operating expenses 

  • Reduction in loss for the year to £245,953 (2008: loss of £530,739) on lower revenues of £1,269,788 (2008: £1,566,329) 

  • Cash position remains healthy with cash reserves of £831,491 (2008: £984,947)

  • Maintain two divisions which deliver corporate communications solutions and DVD oriented design and technical services to a growing list of blue-chip corporations

  • Won a number of awards which demonstrate the breadth and depth of skill at Cheerful

  • Seeing a tentative recovery in new business flow - good levels of activity in the current financial year


CHAIRMAN'S STATEMENT


This was a challenging year for your Company with events in the global markets having a material impact on our business. In the light of these conditions, we took immediate action to cut costs, reducing both our headcount and operating expenses and focusing the business on the key value drivers.  


As our results demonstrate, these actions have proved beneficial to our financial position. Whilst revenues dropped to £1,269,788 for the year ended 30 June 2009 (2008: £1,566,329) the Board, considering the economic conditions, is pleased to report a reduction in loss for the year to £245,953 (2008: loss of £530,739). Furthermore, our cash position remains healthy with cash reserves of £831,491 (2008: £984,947). We see it as highly important to manage our cash and costs and in-line with this we undertook a capital reorganisation during the year to reduce the number of shareholders and ultimately reduce our costs on an ongoing basis. This saw shareholders holding fewer than 12,500 ordinary shares, amounting to almost 90% of the register, receive a cash payment free of dealing charges for their entire holdings. Since the year end, one further action undertaken was the buy-back of 500,000 of our own ordinary shares at 5p per share for cancellation. As a result, the number of ordinary shares currently in issue now amount to 7,937,500.


Operationally, we maintain two divisions which deliver corporate communications solutions and DVD oriented design and technical services to a growing list of blue-chip corporations, both in the public and private sectors. We are seeing a tentative recovery in new business flow in both divisions, so that caution may, we hope, shortly be replaced by optimism.


Our On Screen Communications division, incorporating film, graphics and interactive events, performed well during the year and we continue to strengthen our relationships with existing clients and also look for new relationships in this sector.


Importantly, we retained our place on a number of rosters, which have proved a valuable route to new business. We are now on two rosters for the Central Office of Information and have completed several film projects and interactive conference work for them over the past year. We have also completed our third project for The Directorate of Optometric Continuing Education and Training ('DOCET') and have successfully won two further commissions with them for new projects. Our place on the preferred supplier lists for BP plc ('BP'), BAA Limited and a large audit and accountancy firm, have also started to produce new work for us. We are currently at the post production stage on a large marketing film for the accountancy firm for its work in the sporting arena. We have also provided conference support for BP and the British Private Equity and Venture Capital Association over the past year and, moving forward, we would hope to extend our offering in conference support to these and some of our other clients.  


Additionally, we have provided Pro Bono services to Allen & Overy LLP as part of its involvement in Smart Start, an exciting project developed to give young people a better start in life. As part of this, we have provided a week of filming and post production to create a film that will inspire and encourage other firms to start their own versions of Smart Start.


The excellent work of our team is not going unnoticed and during the year we have won a number of awards which demonstrate the breadth and depth of skill at Cheerful. These included awards for Rolls Royce Group plc and DOCET at the International Visual Communications Association awards, which are internationally recognised as setting the benchmark for corporate communications. We also won an award for our work for Alstom at the New York Film festival for a film we shot in Tennessee


Our DVD division, however, did not perform as well as On Screen Communications. We lost a significant contract at the beginning of the year, which in turn meant that we had to reduce headcount in this division. However, on the positive side, we continued to work with some leading industry names including 2entertain, Universal, Icon, Classic Media, Freemantle and Eureka, and completed a number of large titles. 


Last year we invested heavily in Blu-ray technology to accommodate the DVD industry's growing demand for High Definition products. Blu-ray has been slower off the mark than anticipated although interest is now picking up, an upward trend that we expect to accelerate during 2010. We are in a good position to embrace this change without the need for further investment to take advantage of opportunities.


The Board is of the opinion that market conditions have now stabilised. Looking forward, Cheerful is strategically well placed to exploit any upturn and, indeed, levels of activity in the current financial year have already been good.  


We believe that our creativity, technological innovation and in-depth understanding of the markets ideally position us to grow in the coming years and take advantage of opportunities to deliver sound profitable growth in the medium and long term. Furthermore, we continue to assess various opportunities which could complement our existing businesses and accelerate the growth of Cheerful.  


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 
24 November 2009


Consolidated Income Statement 

For the year ended 30 June 2009


 Continuing operations

Notes

2009

2008

 


£ 

£ 

 




Revenue

2

1,269,788

1,566,329

Cost of sales



(820,026)

(1,029,463)

Gross profit


449,762

536,866

Administrative expenses


 (718,648)

(802,358)

Development costs written off

8

-

(346,076)

Operating loss 

3

(268,886)

(611,568)

Finance income

4

23,408

45,870

Loss before taxation


(245,478)

(565,698)

Taxation

5

(475)

34,959

Loss for the year

15

(245,953)

(530,739)

Attributable to:




Minority interests


-

(400)

Equity holders of parent


(245,953)

(530,339)

Loss for the financial year


(245,953)

(530,739)


Loss per ordinary share:


 

 

Basic

7

(2.51451)p

(5.41162)p

Diluted

7

(2.51451)p

(5.41162)p


There are no recognised gains or losses other than those passing through the income statement.


Balance Sheet 

As at 30 June 2009


 

Notes

Group

 


2009

2008

 


£

£

Non-current assets


 

 

Intangible assets

8

365,154

411,672

Property, plant and equipment

9

165,484

153,911

Investments in subsidiaries

10

-

-

 


530,638

565,583

Current assets



 

Inventories


2,033

2,229

Trade and other receivables

11

209,894

432,754

Current tax receivable


-

34,761

Cash and cash equivalents

12

831,491

984,947

 


1,043,418

1,454,691





Total assets


1,574,056

2,020,274




 

Current liabilities




Trade and other payables

13

(300,378)

(373,121)





Net assets


1,273,678

1,647,153

Equity


 

 

Share capital

14

1,054,688

1,225,000

Special reserves

15

-

1,747,416

Capital redemption reserve

15

170,312

-

Retained earnings

15

48,678

(1,325,263)

Equity attributable to equity holders of the parent 


1,273,678

1,647,153

Minority interest


-

-

Total equity


1,273,678

1,647,153

 

Consolidated Cash Flow Statement 

For the year ended 30 June 2009


 

Notes

Group




2009

2008

 


£

£

Cash flows from operating activities


 


Loss before taxation


(245,478)

(565,698)

Depreciation


71,259

63,203

Amortisation of intangibles


46,518

46,517

Impairment losses


-

12,738

Gain on sale of property, plant and equipment


(20,242)

(23,834)

Development costs written off


-

346,076

Impairment of investment in subsidiaries


-

-

Finance income


(23,408)

(45,870)



(171,351)

(166,868)

Increase / (decrease) in trade and other payables


(72,743)

138,988

Decrease / (increase) in trade and other receivables


222,860

32,585

Decrease in inventories


196

56

Taxation received / (paid)


34,286

(2,838)

Cash generated from operating activities


13,248

1,923





Cash flows from investing activities




Finance income


23,408

45,870

Purchase of property, plant and equipment

9

(82,832)

(125,955)

Proceeds from sale of property, plant and equipment


20,242

23,834

Investments in subsidiaries


-

-

Cash (used) / generated in investing activities


(39,182)

(56,251)





Cash flows from financing activities




Purchase of own shares


(127,522)

-

Cash used in financing activities


(127,522)

-





Net decrease in cash and cash equivalents


(153,456)

(54,328)

Cash and cash equivalents at beginning of year


984,947

1,039,275

Cash and cash equivalents at end of year

12

831,491

984,947



Notes to the Consolidated Financial Statements 

For the year ended 30 June 2009


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 StreetLondonW1P 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.


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.


Adopted IFRSs not yet applied


At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not chosen to adopt early any of the pronouncements. The new standards and interpretations that are expected to be relevant to the Group's financial statements are as follows:

  • IAS 1 Presentation of Financial Statements (Revised 2007), applicable for reporting periods commencing on or after 1 January 2009.  

  • IFRS 2 (Revised 2009) Share-based payments, applicable for reporting periods commencing on or after 1 January 2010.

  • IFRS 3 (Revised 2008) Business combinations, applicable for combinations on or after 1 July 2009.  

  • IFRS 8 Operating segments, applicable for reporting period commencing on or after 1 January 2009


The Group plans to adopt the above standards in the period in which they become applicable. The directors do not consider that the adoption of these standards will have a material impact on the consolidated financial statements in the period of initial application. Other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.


Basis of consolidation 


The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 June 2009. 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 (10 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 19 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 19. 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


Segment information is presented in respect of the Group's business and geographical segments.  


The primary format, business segments, is based on the Group's management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.


On Screen

On Screen

DVD & Interactive

DVD & Interactive

Events 

Events 

Total

Total


2009

2008

2009

2008

2009

2008

2009

2008

 

£

£

£

£

£

£

£

£

Revenue

885,240

892,968

384,548

468,854

-

204,507

1,269,788

1,566,329

Segment results

(62,668)

32,463

(91,310)

30,621

-

(101,661)

(153,978)

(38,577)

Unallocated expenses







(114,908)

(226,915)

Development costs written off







-

(346,076)

Operating loss







(268,886)

(611,568)

Finance income







23,408

45,870

Taxation







(475)

34,959

Loss for the year







(245,953)

(530,739)










Segment assets

410,494

656,842

359,497

461,247

-

-

769,991

1,118,089

Unallocated assets







804,065

902,185

Total assets

410,494

656,842

359,497

461,247

-

-

1,574,056

 2,020,274










Segment liabilities

(59,991)

(177,944)

(24,367)

(123,319)

-

(4,423)

(84,358)

(305,686)

Unallocated liabilities







(216,020)

(67,435)

Total liabilities

(59,991)

 (177,944)

(24,367)

 (123,319)

-

(4,423)

(300,378)

(373,121)










Capital expenditure

41,416

62,978

41,416

62,977

-

-

82,832

125,955

Depreciation and amortisation

82,147

48,715

35,630

48,715

-

12,290

117,777

109,720

Impairment loses

-

6,369

-

6,369

-

-

-

12,738



Secondary reporting of external revenue by location of customer is stated below. Whilst customers may be operating in different geographical locations, the Group operates from the United Kingdom.


Geographical market

2009

2008

2009

2008

2009

2008


UK

UK

Europe

Europe

Total

Total

 

£

£

£

£

£

£

Revenue

1,216,687

1,411,524

53,101

154,805

1,269,788

1,566,329








Segment assets

100,839

337,622

56

3,255

100,895

340,877

Unallocated assets





1,473,161

 1,679,397

Total assets





1,574,056

 2,020,274



Capital expenditure - unallocated





82,832

125,955


3. Operating loss


Operating loss is stated after charging:

2009

2008

 

£

£

Amortisation of intangible assets

46,518

46,517

Impairment losses

-

12,738

Depreciation of property, plant and equipment

71,259

63,203

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



  Audit of the Company's annual accounts

5,000

3,485

  Audit of the Company's subsidiaries

10,000

12,502

Operating leases

109,233

92,212


4 Finance income


 

2009

2008

 

£

£

Interest income

23,408

45,870


5 Taxation


 

2009

2008

 

£

£

Current year tax




UK corporation tax


-

(34,761)


Adjustment to prior years

475

(198)





475

(34,959)

Factors affecting the tax charge for the year


 

Loss on ordinary activities before taxation

(245,478)

(565,698)

Loss on ordinary activities before taxation multiplied by standard rate


 

of UK corporation tax of 21% (2008: 20%)

(51,550)

(113,140)

Effects of:


 

Non deductible expenses

81

(4,140)

Depreciation and impairment losses

14,914

15,236

Capital allowances

(18,055)

(15,844)

Research and development 

8,093

21,012

Other tax adjustments

(4,146)

525

Losses carried back to prior years

-

2,903

Losses carried forward 

50,663

58,687

Adjustment to prior years

475

(198)

 

52,025

78,181

Current tax charge

475

(34,959)


The Group has estimated losses of £691,027 (2008: £418,973) available to carry forward against future trading profits.


Unrecognised deferred tax assets in respect of tax losses amount to £142,580 (2008: £92,997). These deferred tax assets have not been recognised as the timing of recovery is uncertain.


6.  Loss attributable to members of the parent company


As permitted by section 408 of the Companies Act 2006, the parent Company's income statement has not been included in these financial statements. The retained loss for the financial year of the holding company was £592,042 (2008: £72,717).


7 Earnings per ordinary share


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


Diluted earnings per share are calculated by dividing the loss attributable to ordinary equity shareholders 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:



2009

2008

 

£

£

Loss for the year

245,953

530,739 

Adjusted for minority interests

-

(400)

Loss attributable to equity holders of the parent

245,953

530,339 




Basic weighted average number of shares

9,781,336

9,800,000

Dilutive potential ordinary shares:


 

Employee share options

-

-

Diluted weighted average number of shares

9,781,336

9,800,000


Employee share options do not have a dilutive effect on the weighted average number of shares in 2008 and 2009 as the exercise price of the share options is in excess of the average market price of the ordinary shares.


After the year end, 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.  


8 Intangible fixed assets


Group

Goodwill

Development Costs

Total

 

£

£

£

Cost

 


 

At 1 July 2007

2,728,292

532,145

3,260,437

Development costs written off

-

(346,076)

(346,076)

At 30 June 2008

2,728,292

186,069

2,914,361

At 1 July 2008

2,728,292

186,069

2,914,361

At 30 June 2009

2,728,292

186,069

2,914,361

Impairment and amortisation

 


 

At 1 July 2007

2,350,400

93,034

2,443,434

Amortisation

-

46,517

46,517


Impairment losses

12,738

-

12,738


At 30 June 2008

2,363,138

139,551

2,502,689

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

Net book value

 


 

At 1 July 2007

377,892


439,111


817,003


At 30 June 2008

365,154

46,518

411,672



At 1 July 2008

365,154

46,518

411,672


At 30 June 2009

365,154

-

365,154


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   
2.8%
Year on year growth    
3.0% (on projected figures for 2010)
Number of annual cash flows considered
5   
 

There was no impairment in the year.


Development costs


Development costs in relation to the Group's nVision Presenter product are amortised over its expected useful life of four years.  


9 Property, plant and equipment


Group

Leasehold land

Fixtures, fittings

Total

 

and buildings

and equipment

 

 

£

£

£

Cost

 


 

At 1 July 2007

146,578

769,227

915,805

Additions

-

125,955

125,955

Disposals

-

(51,785)

(51,785)

At 30 June 2008

146,578

843,397

989,975

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

Depreciation

 


 

At 1 July 2007

133,072

691,574

824,646


Charge for the year

13,506

49,697

63,203

Disposals

-

(51,785)

(51,785)


At 30 June 2008

146,578

689,486

836,064

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

Net book value

 


 

At 1 July 2007

13,506

77,653

91,159

At 30 June 2008

-

153,911

153,911

At 1 July 2008

-

153,911

153,911

At 30 June 2009

9,497

155,987

165,484


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


Cost

2009

 2008

 

 £

 £

Leasehold land and buildings

146,578

146,578

Fixtures, fittings and equipment

695,724

643,641


842,302

790,219


10 Non-current assets - Investments


Company

Shares in subsidiary

Loans to subsidiary

Total

 

£

£

£

Cost

 


 

At 1 July 2007

3,144,213

-

3,144,213

Additions

600

200,000

200,600

At 30 June 2008

3,144,813

200,000

3,344,813

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

Provision




At 1 July 2007

1,444,213

-

1,444,213





At 30 June 2008


1,444,213


-


1,444,213


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

Net book value

 


 

At 1 July 2007

1,700,000

-

1,700,000





At 30 June 2008

1,700,600

200,000

1,900,600





At 1 July 2008

1,700,600

200,000

1,900,600





At 30 June 2009

1,400,600

2,000

1,402,600


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

 

 

 

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

Centralfix Limited

Provision of business communication services

nVision Technology Limited

Dormant

Business Data Interactive Limited

Development of business gaming software


11 Trade and other receivables


 

Group

 

Company

 

 

2009

2008

2009

2008

 

£

£

£

£

Trade receivables

100,895

340,877

-

-

Related party receivables

-

-

15,238

-

Other receivables

36,864

36,404

14,744

896

Prepayments and accrued income

72,135

55,473

15,219

10,602

 

209,894

432,754

45,201

11,498


Other receivables include £34,543 (2008: £34,473) 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.


12.  Cash and cash equivalents


 

Group

Company

 

2009

2008

2009

2008

 

£

£

£

£

Bank balances

831,491

984,947

788,846

891,586

Cash and cash equivalents

831,491

984,947

788,846

891,586






Cash and cash equivalents in the Cash Flow Statement

831,491

984,947

788,846

891,586


13.   Trade and other payables


 

Group

 

Company

 

 

2009

2008

2009

2008

 

£

£

£

£

Trade payables

160,796

157,637

149,166

-

Related party payables

-

-

1

8,230

Taxes and social security costs

15,133

62,022

-

-

Other payables

69,599

11,433

-

-

Accruals and deferred income

54,850

142,029

26,700

15,110

 

300,378

373,121

175,867

23,340


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.


14 Share capital


 

2009

2008

 

£

£

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 2007

9,800,000

1,225,000

At 30 June 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


On 26 June 2009, a reorganisation of the Company's share capital took place. The Company purchased 1,362,500 of its own Ordinary 12.5p shares for cancellation. The price paid per share amounted to 5p and the total consideration paid was £68,100. Transaction costs amounted to £59,422.


See note 19 for details of share options outstanding.


15.  Statement of changes in equity


Group

Share capital

Special reserves

Capital redemption reserve

Retained earnings

Total

Minority interest

Total equity

 

 

 

 

 

 

 

 

 

£

£

£

£

£

£

£

At 1 July 2007

1,225,000

1,747,416

-

(794,924)

2,177,492

-

2,177,492

Retained loss for the year

-

-

-

(530,339)

(530,339)

(400)

(530,739)

Group contributions to minority

-

-

-

-

-

400

400

At 30 June 2008

1,225,000

1,747,416

-

(1,325,263)

1,647,153

-

1,646,153

At 1 July 2008

1,225,000

1,747,416

-

(1,325,263)

1,647,153

-

1,646,153

Retained loss for the year

-

-

-

(245,953)

(245,953)

-

(245,953)

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)

-

(127,522)

At 30 June 2009

1,054,688

-

170,312

48,678

1,273,678

-

1,273,678


Company

Share capital

Special reserves

Capital redemption reserve

Retained earnings

Total

Minority interest

Total equity

 

 


 

 

 

 

 

 

£

£

£

£

£

£

£

At 1 July 2007

1,225,000

1,747,416

-

(119,355)

2,853,061

-

2,853,061

Retained loss for the year

-

-

-

(72,717)

(72,717)

-

(72,717)

At 30 June 2008

1,225,000

1,747,416

-

(192,072)

2,780,344

-

2,780,344

At 1 July 2008

1,225,000

1,747,416

-

(192,072)

2,780,344

-

2,780,344

Retained loss for the year

-

-

-

(592,042)

(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)

-

(127,522)

At 30 June 2009

1,054,688

-

170,312

835,780

2,060,780

-

2,060,780


Following a board resolution on 3 November 2008, 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.


16.  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

 

2009 

2009

2008

2008



£


£

Outstanding at beginning of the year

249,600

0.31

293,600

0.29

Lapsed during the year

-

-

(44,000)

0.19

Outstanding at end of the year

249,600

0.31

249,600

0.31


The exercise price of options outstanding at the year-end ranged between £0.1875 and £0.625 (2008: £0.1875 and £0.625) and their weighted average contractual life was 4 years (2008: 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 income statement for share based payments in respect of employee share options as, in the opinion of the directors, the amounts are considered immaterial.  


17.  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:


Subsidiaries

2009

2008

 

£

£

Amounts owed by subsidiaries 

202,000

200,000

Less provision in year

(200,000)

-


2,000

200,000

Amounts owed to subsidiaries

15,238

8,230


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


During the year, the Company's investment in its subsidiary, Centralfix Limited, was impaired by £300,000 (2008 : £Nil)


Harris and Trotter LLP is a firm in which N J Newman is a member. The following was charged to the Group in respect of professional services:


 Harris and Trotter LLP

2009

2008

 

£

£

Cheerful Scout plc 

25,750

20,950

Centralfix Limited

7,100

13,400


32,850

34,350


During the year, the Company purchased its own 12.5p Ordinary Shares from the following key management of the Company:


 

Number of shares

Total consideration

 

£

£

P Litten 

7,840

392

S Appleton

19,820

991

N J Newman

4,840

242


19.  Post balance sheet events


After the year end, 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.  


20.  Notice of AGM


The Annual General Meeting of Cheerful Scout Plc will be held at 25-27 Riding House StreetLondon W1W 7DU on 18 December 2009 at 10.00 a.m.  A formal notice of AGM along with the Annual Report and Accounts has been sent to shareholders today.


**ENDS**


For further information contact:

Gary Fitzpatrick
Cheerful Scout Plc
Tel: 020 7291 0444
Mark Percy
Seymour Pierce
Tel: 020 7107 8030
Isabel Crossley
St Brides Media & Finance Ltd
Tel: 020 7236 1177
Elisabeth Cowell
St Brides Media & Finance Ltd
Tel: 020 7236 1177

 

 


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