Interim Results
Cheerful Scout PLC
20 March 2008
Cheerful Scout Plc / Epic: CLS / Index: AIM / Sector: Media
20 March 2008
Cheerful Scout Plc ('Cheerful Scout' or 'the Company')
Interim Results
Cheerful Scout Plc, the AIM-traded multi media specialist, announces its results
for the six months ended 31st December 2007.
Chairman's Statement
As anticipated in the announcement made on 20th February 2008, we have
experienced difficult trading conditions in the first half year ended 31st
December 2007 as market conditions have become more difficult. The loss of two
large contracts and a slowdown in corporate spending have led to a reduced
turnover for the period of £695,839 (2006: £1,038,285) and an operating loss of
£238,948 (2006: profit £101,283). However, our cash position remains healthy
with cash balances at 31st December 2007 of £1,023,634 (2006: £1,020,866).
Our strategy for turning around the fortunes of the Company involve streamlining
the business, reducing overheads and using our resources in a cost effective
manner to deal more efficiently in the competitive sector in which we operate.
This process is already underway and will continue throughout the financial
year.
Operations
Our DVD division remains a stable and growing cornerstone of the Company. The
drive for new business continues and we are seeing an increase in the number of
opportunities that we are being invited to pitch for. Furthermore, our major
client relationships remain healthy and stable and there is potential for
increased activity from them.
The Film & Video division also continues to perform well, having invested in new
talent and further defined our areas of strength. Our blue-chip client list
includes BAA, Nationwide and the Central Office of Communication.
Our Corporate Events division has not delivered the results we anticipated and
has had a disappointing first half year. However, we believe that it will
benefit by drawing on the expertise of our joint venture company, Business Data
Interactive Limited ('BDI'), which has developed business intelligence software
that can enhance an event experience by combining conferencing techniques with
corporate interactive debating facilities - something which we believe is not
available from our competitors.
Outlook
Although the first half has been disappointing, we remain confident that the
services we offer our clients are improving. Importantly, we have maintained
our cash resources at more than £1m and we feel positive about the future
direction of the Company.
Finally, I would like to thank the staff for all their efforts and hope that
their continued enthusiasm and dedication will help Cheerful achieve its
ambitions.
S Appleton
Chairman
20 March 2008
Consolidated Income Statement
for the six months ended 31 December 2007
Unaudited Unaudited Audited
Six months to 31 December 2006 Year ended 30 June 2007
Pre Goodwill Pre Goodwill Pre Goodwill
Goodwill Goodwill Goodwill
impairment impairment Total impairment impairment Total impairment impairment Total
£ £ £ £ £ £ £ £ £
Revenue 695,839 695,839 1,038,285 1,038,285 2,085,367 2,085,367
Cost of sales (523,099) (523,099) (554,797) (554,797) (1,218,007) (1,218,007)
Gross Profit 172,740 172,740 483,488 483,488 867,360 867,360
Administrative
expenses (391,389) (20,299) (411,688) (369,467) (12,738) (382,205) (764,188) (25,476) (789,664)
Operating (loss)/
profit (218,649) (20,299) (238,948) 114,021 (12,738) 101,283 103,172 (25,476) 77,696
Financial Income 24,959 - 24,959 15,546 - 15,546 37,840 - 37,840
Financial expenses - - - (8) - (8) - - -
Net Financing costs 24,959 - 24,959 15,538 - 15,538 37,840 - 37,840
(Loss)/Profit before
tax (193,690) (20,299) (213,989) 129,559 (12,738) 116,821 141,012 (25,476) 115,536
Taxation 2 3,036 - 3,036 (12,288) - (12,288) (3,036) - (3,036)
(Loss)/profit for
the period (190,654) (20,299) (210,953) 117,271 (12,738) 104,533 137,976 (25,476) 112,500
Minority interest 44,911 - 44,911 - - - - - -
(Loss)/profit for the
period attributable
to equity holders of
the parent company (145,743) (20,299) (166,042) 117,271 (12,738) 104,533 137,976 (25,476) 112,500
Basic earnings
per share 3 (1.6943)p 1.0667p 1.14796p
Diluted earnings
per share 3 (1.6815)p 1.0586p 1.13929p
Consolidated Balance Sheet
at 31 December 2007
Unaudited Unaudited Audited
Six months to Six months to Year ended
31 December 31 December 30 June
2007 2006 2007
Non-current assets
Intangible assets 781,005 806,506 817,003
Property, plant and equipment 102,062 100,017 91,159
Total non-current assets 883,067 906,523 908,162
Current assets
Inventories 2,632 2,757 2,285
Trade and other receivables 265,576 443,530 465,339
Cash and cash equivalents 1,023,634 1,020,866 1,039,275
Total Current assets 1,291,842 1,467,153 1,506,899
Total assets 2,174,909 2,373,676 2,415,061
Current liabilities
Trade and other payables (108,736) (76,023) (98,113)
Current tax payable (40,058) (66,252) (70,595)
Accruals and deferred income (59,176) (61,876) (68,861)
Total Current liabilities (207,970) (204,151) (237,569)
Net assets 1,966,939 2,169,525 2,177,492
Equity
Share capital 1,225,000 1,225,000 1,225,000
Special reserves 1,747,416 1,747,416 1,747,416
Retained earnings (960,966) (802,891) (794,924)
Total equity attributable to equity shareholders of
the parent company 2,011,450 2,169,525 2,177,492
Minority interest (44,511) - -
Total equity 1,966,939 2,169,525 2,177,492
Consolidated Cash Flow Statement
for the six months ended 31 December 2007
Unaudited Unaudited Audited
Six months Six months Year ended
to to
31 December 31 December 30 June
2007 2006 2007
£' 000 £' 000 £' 000
Cash flows from operating activities
(Loss)/profit for the period/year: (166,042) 104,533 112,500
Adjustments for:
Depreciation 37,359 40,578 84,964
Amortisation 35,998 35,996 71,993
Profit on sale of equipment (22,538) - -
Taxation (3,036) 12,288 3,036
Financial income (24,959) (15,546) (37,840)
Financial expense - 8 -
Operating (loss)/profit before changes in
working capital and provisions (143,218) 177,857 234,653
Decrease in trade and other receivables 155,252 172,384 150,575
(Increase) in inventories (347) (489) (17)
Decrease in trade and other payables (26,563) (169,758) (127,088)
Cash generated by the operations (14,876) 179,994 258,123
Tax paid - - -
Net cash inflow from operating activities (14,876) 179,994 258,123
Cash flows from investing activities
Financial income 24,959 15,546 37,840
Acquisition of property, fixtures and (48,262) (10,917) (46,445)
equipment
Acquisition of intangible assets - (49,308) (95,802)
Proceeds from sale of equipment 22,538 - -
(765) (44,679) (104,407)
Cash flows from financing activities
Financial expense - (8) -
Net cash (outflow) from financing activities - (8) -
Net (decrease)/ increase in cash and cash (15,641) 135,307 153,716
equivalents
Opening cash and cash equivalents 1,039,275 885,559 885,559
Cash and cash equivalents held 1,023,634 1,020,866 1,039,275
Statement of Recognised Income and Expense
Unaudited Unaudited Audited
Six months to Six months Year ended
to
31 December 31 December 30 June
2007 2006 2007
£' 000 £' 000 £' 000
Net expense recognised directly in equity
(Loss)/profit for the period/year (166,042) 104,533 112,500
Total recognised income and expense for (166,042) 104,533 112,500
the period/year
Statement of Changes in Shareholders' Equity
Unaudited Unaudited Audited
Six months to Six months Year ended
to
31 December 31 December 30 June
2007 2006 2007
£' 000 £' 000 £' 000
Total equity at beginning of period 2,177,492 2,064,992 2,064,992
Total recognised income and expense (166,042) 104,533 112,500
Total equity at end of period
attributable to equity
holders of the parent company 2,011,450 2,169,525 2,177,492
Minority interest (44,511) - -
Total equity at end of period 1,966,939 2,169,525 2,177,492
NOTES TO THE FINANCIAL INFORMATION
1. Accounting Policies
Basis of preparation
The Group's financial statements were prepared in accordance with UK GAAP until
30 June 2007. From 1st July 2007 the Group will prepare its consolidated
financial statements in accordance with IFRS as adopted for use in the EU.
The next annual financial statements of Cheerful Scout plc will be prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the EU applied in accordance with provisions of the Companies Act
1985.
IFRS transition
The Group's results for the half year ended 31 December 2007 are the first
results to be reported under IFRS.
Basis of consolidation
The consolidated financial statements incorporate the results of the Company and
all of its subsidiary undertakings as at 31 December 2007 using the acquisition
method of accounting. Under the acquisition method the results of subsidiary
undertakings are included from the date of acquisition.
Impairment of assets
The carrying amounts of the Group's assets, other than inventories and deferred
tax assets, are reviewed at each balance sheet date to determine whether there
is any indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated.
For goodwill the recoverable amount is estimated at each balance sheet date.
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.
Goodwill was tested for impairment at 1 July 2006, the date of transition to
Adopted IFRS.
Investments
There has been no change to the value of investments as a result of moving to
IFRS. Any change in fair values will be shown in the Income Statement in the
calculation of profit or loss.
Non-statutory accounts:
The half-year figures for the period ended 31 December 2007 and the full year
figures for the year ended 30 June 2007 do not constitute statutory accounts for
the purposes of section 240 of the Companies Act 1985. A copy of the statutory
accounts for that year under UK GAAP has been filed with the Registrar of
Companies. The report of the auditors on those accounts was unqualified and did
not contain a statement under either Section 237 (2) or Section 237 (3) of the
Companies Act 1985. Reconciliations and descriptions of the effect of the
transition from UK GAAP to IFRS on the Group's Equity and its net income are
provided in Note 5.
2. Taxation
The taxation charge has been estimated by the Company based on adjustments to
tax payable in respect of previous years and the tax rate for the year ended 30
June 2008.
3. Earnings per share
The calculation of the basic earnings per share is based on the profit after
taxation divided by the weighted average number of shares in issue, being
9,800,000 (period ended 31 December 2006: 9,800,000; year ended 30 June 2007:
9,800,0000).
The diluted earnings per share takes the weighted average number of ordinary
shares in issue during the period and adjusts this for dilutive share options
existing at the period end. The diluted weighted average number of shares in the
period ended 31 December 2007 was 9,874,578 (period ended 31 December 2006:
9,874,578; year ended 30 June 2007: 9,874,578).
Unaudited Unaudited Audited
Six months to Six months to Year ended
31 December 31 December 2006 30 June 2007
2007
(Loss)/profit after taxation (166,042) 104,533 112,500
Basic (loss)/earnings per (1.6943)p 1.0667p 1.14796p
share
Diluted (loss)/earnings per (1.6815)p 1.0586p 1.13929p
share
4. Operating Segment Analysis
Analysis by geographical market
6 months 6 months
ended ended Year ended
31 December 31 December 2006 30 June 2007
2007
£ £ £
United Kingdom 693,814 940,117 1,923,918
Europe 2,025 98,168 161,449
Total revenue 695,839 1,038,285 2,085,367
5. Transition to IFRS
The date of transition from UK GAAP to IFRS is 1 July 2006. Cheerful Scout PLC
reported under UK GAAP in its previously published financial statements for the
year ended 30 June 2007. Analysis of the financial statements as at 1 July 2006,
and subsequent periods shows that no adjustments are required to equity or
profit as a result of the transition to IFRS for the statements at the date of
transition, the six months ended 31 December 2006 or the full year ended 30 June
2007. There are however significant presentational changes to the results for
each of the periods and these adjustments have been made.
6. Other
Copies of the unaudited half-yearly results have not been sent to the
shareholders, however copies are available on our website at
www.cheerfulscout.com or can be requested from the Company Secretary at the
Company's Registered Office: 65 New Cavendish Street, London, W1G 7LS.
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