Aeorema Comm. Regulatory News (AEO)

28 Nov 2005 07:01

Cheerful Scout PLC28 November 2005 CHEERFUL SCOUT PLC ("Cheerful Scout" or "the Company") FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2005 CHAIRMAN'S STATEMENTFOR THE YEAR ENDED 30 JUNE 2005 Cheerful Scout has made significant progress over the past year. After a periodof consolidation and retrenchment, the Company is focused upon the achievementof prudent and profitable growth. The Company's results for the year ended 30June 2005 represent a small turnaround in comparison to the previous year. Themanagement and workforce have been strengthened and, with a focus on cashgeneration, the Company now has a solid infrastructure on which to build futuregrowth. In line with the Board's expectations, the Company reports pre-tax losses beforetaxation, goodwill amortisation and impairment for the year ended 30 June 2005of £219,865 (2004: loss of £249,636) on turnover of £898,492 up 48 per cent. onthe previous year (2004: £607,042). In April the Company raised gross funds of£525,000 through a placing with institutions. Cash at bank and in hand at theyear end was £721,757 (2004: £585,965) which is sufficient to invest further inour products and team. Net current assets increased by 33 per cent. to £899,172(2004: £676,168). Our core business has performed well with new contracts won with new as well asexisting clients. Following positive indications that the industry was seeing aturnaround, we have continued to invest in both personnel and technologyincluding interactive DVD. The programme production division, which producesentire projects, has continued to strengthen its relationships with keycorporates including Allen & Overy, Getronics and several leading managementconsultancy. It has also won further contracts with Centrica, Deloitte and theCentral Office of Information. The Company's DVD department is expandingrapidly, and we are now pleased to be working with Freemantle, BBC, Universal,Contender and other major independents. Last year we updated our shareholders on our new communications technology -nVision. This software has two applications; the first is nVision Presenterwhich provides the seamless and high speed integration of several live eventelements. The roll out has taken longer than anticipated but, since thefundraising in April and subsequent investment in its marketing and managementteam, interest and sales momentum have gathered steadily. We now have adedicated events team that has recently managed a number of extremely successfulhigh profile conferences. We currently have a variety of other projects in thepipeline with international blue-chip companies. Our emphasis remains on the continuing development of nVision and improving itscapabilities through the integration of new hardware and software technology. nVision's second application is a high end strategic version, nVision Strategy,focussed at more sophisticated organisations which require complex problemsolving tools. This product is now fully developed and is being looked at byglobal organisations, investment companies and various government departmentsfor long term strategy. We remain focused on providing cutting edge creative work and were thereforedelighted to receive both gold and bronze awards at the annual ceremony held bythe International Visual Communication Association ('IVCA'), the professionalbody for companies using film, video, interactive media and live events as partof the communication process. As a result of continuing trading losses following the Company's acquisition ofCentralfix Limited, the sole trading company within the Group, the Directorshave undertaken an impairment review on the goodwill arising from theacquisition of that subsidiary. This has been carried out in accordance with Financial Reporting Standard 11. As a result, a one-off impairment charge of £1,867,467 has been provided for inthe accounts of the Group and has been shown as an exceptional item. Your attention is drawn to the circular which accompanies the Report andFinancial Statements. This document outlines the proposed share premium accountcancellation subject to the passing of a special resolution to be proposed at anEGM to be convened immediately after the AGM. Full details of the resolution arecontained in the circular but the overall result, subject to approval by theHigh Court, should enable the Company to pay dividends as and when the Boardconsiders it appropriate to do so. Looking forward, Cheerful Scout is beginning to see a number of attractiveopportunities present themselves across the group. With its broad productplatform and growing population of talented individuals I believe that theGroup's prospects are very encouraging. S AppletonChairman25 November 2005 CONSOLIDATED PROFIT & LOSS ACCOUNTFor the year ended 30 June 2005 2005 2004 Pre goodwill Goodwill Total Pre good Goodwill Total amortisation amortisation will amortisation and and amortisation and impairment impairment and impairment impairment Notes £ £ £ £ £ £ Turnover 2 898,492 - 898,492 607,042 - 607,042Cost of (631,550) - (631,550) (431,842) - (431,842)sales _______ _______ ________ _________ ________ ________Gross profit 266,942 - 266,942 175,200 - 175,200 Administrativeexpenses (504,071) (136,415) (640,486) (446,027) (136,415) (582,442) _______ _______ ________ _________ ________ ________ Operating loss 3 (237,129) (136,415) (373,544) (270,827) (136,415) (407,242)Exceptionalitem 4 - (1.867.467) (1,867,467) - - -Interestreceivable 17,268 - 17,268 21,284 - 21,284Interestpayable andsimilarcharges 5 (4) - (4) (93) - (93) _______ _______ ________ _________ ________ ________ Loss onordinaryactivitiesbeforetaxation (219,865) (2,003,882) (2,223,747) (249,636) (136,415) (386,051) Taxation onloss onordinaryactivities 6 54,000 - 54,000 16,946 - 16,946 _______ _______ ________ _________ ________ ________ Retained lossfor the year 16 (2,169,747) (369,105) _________ ________Earnings perordinaryshares:Basic 8 (1.045661)p (0.205474)p _________ _________ Diluted 8 (1.045661)p (0.205474)p __________ _________ The profit and loss account has been prepared on the basis that all operationsare continuing operations. There are no recognised gains or losses other than those passing through theprofit and loss account. BALANCE SHEETSAs at 30 June 2005 Notes 2005 2004 £ £Fixed assetsIntangible assets 9 799,135 2,611,152Tangible assets 10 212,152 294,136Investments 11 - - _________ _________ 1,011,287 2,905,288 Current assetsDebtors 12 295,946 226,369Stock 1,211 1,472Cash at bank and in hand 721,757 585,965 _________ _________ 1,018,914 813,806 Creditors: amounts falling due within one year 13 (119,742) (137,638) _________ _________Net current assets 899,172 676,168 Total assets less current liabilities 1,910,459 3,581,456 _________ _________ 1,910,459 3,581,456 _________ _________Capital and reservesCalled up share capital 15 1,225,000 975,000Share premium account 16 3,360,169 3,111,419Profit and loss account 16 (2,674,710) (504,963) __________ _________Shareholders' funds - equity interests 17 1,910,459 3,581,456 __________ _________ The financial statements were approved by the Board on 25 November 2005 P Litten, DirectorN J Newman, Director CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 June 2005 2005 2004 £ £ £ £ Net cash (outflow)/inflow fromoperating (136,242) (71,311)activities Returns on investments and servicingof financeInterest received 17,268 21,284Interest paid (4) (93) ______ ______ Net cash inflow for returns oninvestments and 17,264 21,191servicing of finance Taxation - 17,375 Capital expenditure and financialinvestmentPayments to acquire intangible (191,865) (178,426)assetsPayments to acquire tangible assets (52,115) (53,235) ________ ________ Net cash outflow for capital (243,980) (231,661)expenditure _______ _______ Net cash outflow before managementof liquid (362,958) (264,406)resources and financing FinancingNet proceeds from issue of ordinaryshare 525,000 301,875capitalExpenses relating to issue of share (26,250) (9,056)capital _______ _______ Net cash inflow/(outflow) from 498,750 292,819financing _______ _______ Increase/(Decrease) in cash in the 135,792 28,413year _______ _______ NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 June 2005 1. Reconciliation of operating loss to net cash outflow fromoperating activities 2005 2004 £ £ Operating loss (373,544) (407,242)Depreciation of tangible assets 134,099 161,783Amortisation of intangible assets 136,415 136,415Increase/(decrease) in debtors (15,577) 1,074Decrease/(increase) in creditors within one year (17,896) 36,793Decrease/(increase) in stock 261 (134) ________ ________Net cash outflow from operating activities (136,242) (71,311) ________ ________ 2. Analysis of net funds 1 July 2004 Cash flow 30 June 2005 £ £ £ Net cash:Cash at bank and in hand (26,087) 26,087 - _______ ______ ________Liquid resources:Bank deposits 612,052 109,705 721,757 _______ _______ _______Net funds 585,965 135,792 721,757 _______ _______ _______ 3. Reconciliation of net cash flow to movement in net funds 2005 2004 £ £ Increase in cash in the year 26,087 (27,929)Cash (outflow)/inflow from movement in liquid resources 109,705 56,342 ______ _______Change in net funds resulting from cash flows 135,792 28,413 ______ _______ Movement in net funds in the year 135,792 28,413 Opening net funds 585,965 557,552 _______ _______Closing net funds 721,757 585,965 _______ _______ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2005 1 Accounting policies 1.1 Accounting convention The financial statements are prepared under the historical cost convention. 1.2 Compliance with accounting standards The financial statements are prepared in accordance with applicable accounting standards. 1.3 Basis of consolidation The consolidated profit and loss account and balance sheet include the financial statements of the company and its subsidiary undertakings made up to 30 June 2005. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from the date control passes. Intra- group sales and profits are eliminated fully on consolidation. 1.4 Turnover Turnover represent amounts receivable for goods and services, net of VAT and trade discounts. 1.5 Goodwill and impairment Goodwill arising on acquisition is written off in equal annual instalments over its estimated useful economic life of 20 years. The carrying value of goodwill is reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. These reviews assess the recoverable amount by reference to the net present value of expected future cash flows of the relevant income generating unit at a discount rate of 2.8%. Impairment losses are recognised in the period in which they are identified. 1.6 Development costs Development expenditure is written off to the profit and loss account in the year in which it is incurred, unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the period during which the company is expected to benefit. Development costs of current projects will be amortised over 4 years. 1.7 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: Leasehold land and buildings straight line over the life of the lease Fixtures, fittings and equipment 25% straight line 1.8 Leasing Rentals payable under operating leases are charged against income on a straight line basis over the lease term 1.9 Investments Fixed asset investments are stated at cost less provision for diminution in value. 1.10 Stock Stock is valued at the lower of cost and net realisable value. 1.11 Deferred taxation The accounting policy in respect of deferred tax reflects the requirements of FRS19 - Deferred tax. Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax is measured on a non-discounted basis. 1.12 Pensions The pension costs charged in the financial statements represent the contributions payable by the company during the year in accordance with FRS17. 1.13 Financial instruments The group does not enter into derivative transactions and does not trade in financial instruments. For the purpose of note 23, short term debtors and creditors are not treated as financial assets or financial liabilities. 1.14 Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account. 2. Turnover The total turnover of the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom. 3. Operating loss 2005 2004 £ £Operating loss is stated after charging:Amortisation of intangible assets 136,415 136,415Depreciation of tangible assets 134,099 161,783Auditors' remuneration (company £4,250) 12,250 12,250Operating leases 75,950 75,950 _______ _______ 4. Exceptional item 2005 2004 £ £Impairment of goodwill 1,867,467 - _________ _______ A detailed review of the carrying value of goodwill has been performed which has resulted in an impairment charge in respect of the goodwill relating to the company's investment in Centralfix Limited. 5. Interest payable 2005 2004 £ £Other interest 4 93 ______ ______ 6. Taxation 2005 2004 £ £Domestic current year taxU.K. corporation tax - -Adjustments for prior years - - _____ _____ - - Deferred tax (54,000) (16,945) _______ _______ (54,000) (16,946) _______ _______ The group has estimated Losses of £363,079 (2004: £198,943) available for carry forward against future trading profits. 7 Loss for the financial year As permitted by section 230 of the Companies Act 1985, the holding company's profit and loss account has not been included in these financial statements. The loss for the financial year is made up as follows:- 2005 2004 £ £Holding company's loss for the financial year (1,504,702) (48,464) ________ _______ This figure is stated after an exceptional charge for permanent diminution in the value of the investment in the subsidiary undertaking of £1,444,213. 8. Earnings per ordinary share Basic earnings per share are calculated by dividing the loss attributable to ordinary shareholders of £2,169,747 (2004: £369,105) using a weighted average of 207,500,000 (2004: 186,250,000) ordinary shares in issue during the year. Diluted earnings per share are adjusted for warrants and share options granted to employees where the exercise price is less than the average price of the Company's ordinary shares during the year. These adjustments give rise to no increase in weighted average ordinary shares.9. Intangible fixed assets Group Goodwill Development Costs Total £ £ £CostAt 1 July 2004 2,728,292 178,426 2,906,718Additions - 191,865 191,865 _________ _______ _________At 30 June 2005 2,728,292 370,291 3,098,583 _________ _______ _________Amortisation At 1 July 2004 295,566 - 295,566Charge for the year 136,415 - 136,415Impairment 1,867,467 - 1,867,467 _________ _______ _________At 30 June 2005 2,299,448 - 2,99,448 _________ _______ _________ Net book valueAt 30 June 2005 428,844 370,291 799,135 _________ _______ _________At 30 June 2004 2,432,726 178,426 2,611,152 _________ _______ _________ 10 Tangible fixed assets Group Leasehold land and Fixtures, fittings and Total buildings equipment £ £ £CostAt 1 July 2004 142,218 643,610 785,828Additions - 52,115 52,115 At 30 June2005 142,218 695,725 837,943 DepreciationAt 1 July 2004 51,876 439,816 491,692Charge for theyear 26,443 107,656 134,099 At 30 June2005 78,319 547,472 625,791 Net bookvalueAt 30 June 63,899 148,253 212,152 At 30 June2004 90,342 203,794 294,136 11. Debtors 2005 Group 2004 £ £ Trade debtors 113,942 122,578Amounts owed by group undertakings - -Other debtors 38,464 37,287Prepayments and accrued income 89,540 66,504Deferred tax asset (see note 14) 54,000 - ______ ______ 295,946 226,369 ______ _______ Other debtors include £35,473 (2004: £35,473) rental deposit which is secured by a charge in favour of the landlords. 12 Creditors: amounts falling due within one year Group 2004 2005 £ £Trade creditors 59,456 68,451Amounts due to group undertakings - -Taxes and social security costs 13,510 12,276Accruals and deferred income 46,776 56,911 ______ ______ 119,742 137,638 ______ ______ 13 Provisions for liabilities and charges The deferred tax asset (included in debtors, note 12) is made up as follows: 2005 2004 £ £ Tax losses and accelerated capital allowances (54,000) - _______ ______ 14 Statement of movements on reserves Group Share premium account Profit and loss account £ £Balance at 1 July 2004 3,111,419 (504,963)Retained loss for the year - (2,169,747) Premium on shares issuedduring the year 275,000 -Expenses relating to issueof shares (26,250) - ________ _________Balance at 30 June 2005 3,360,169 (2,674,710) ________ _________ This information is provided by RNS The company news service from the London Stock Exchange