Aeorema Comm. Regulatory News (AEO)

17 Oct 2006 07:01

Cheerful Scout PLC17 October 2006 CHEERFUL SCOUT PLC ('Cheerful Scout' or 'the Company') FINAL RESULTS Cheerful Scout plc, the AIM listed multi media specialist, announces its resultsfor the year ended 30 June 2006. Overview: - Inaugural pre-tax profit of £259,032 before goodwill amortisation and reorganisation costs (2005: loss £219,865 before goodwill amortisation and impairment) - Turnover up 142% to £2,173,163 (2005: £898,492) - Strengthened portfolio of blue-chip clients- Solid pipeline of new business from both old and new clients- Enhanced technology and service offering - primarily through the launch of nVision- Events division established to work in tandem with nVision Presenter, organising and executing live events- Targeted expansion into new markets, principally The Business Intelligence Market with nVision Strategy - Co developing nVision strategy with a visualisation company that deals in strategy for large retail corporates- Consolidation of share capital being recommended to reduce trading costs for shareholders without having an adverse effect on liquidity- Several prestigious awards won in the UK and Europe CHAIRMAN'S STATEMENTFOR THE YEAR ENDED 30 JUNE 2006________________________________________________________________________________ It gives me great pleasure to report on Cheerful Scout's progress and I believeyour Company has much to celebrate in its tenth year. The period under reviewhas been extremely positive resulting in an exciting turnaround in our corebusiness of corporate programming and DVD production. Several prestigious awardshave been won - CIB and IVCA in UK and recently at the FEIFA Grand Prix awardsin Vienna, which underline our commitment to quality and the use of innovationand further solidify our position and reputation in our market place.Importantly, we have strengthened our portfolio of blue-chip clients, secured asolid pipeline of new business and enhanced our technology and service offering- primarily through the launch of nVision. I therefore believe we have a healthybusiness that will now be in a position to deliver value to shareholders andrealise our full potential. Financial Results As confirmation of our improvement and ongoing success, I am delighted to reportan inaugural pre-tax profit of £259,032 before goodwill amortisation andreorganisation costs (2005: loss £219,865 before goodwill amortisation andimpairment) on a turnover of £2,173,163 (2005: £898,492).Cash balances stand at£885,559. We are encouraged that our existing core business has made the mostsignificant impact on the numbers and as we anticipate an increased potentialcontribution from our new divisions - we can look forward to the future withkeen anticipation.No Dividend will be payable this year, but the Directors will continue to reviewthis position closely as our financial situation improves. Operations Cheerful Scout is a multidisciplinary creative consultancy that specialises indevising and delivering corporate communications solutions. Its business isdivided into three areas; (1) film and video programme production; (2) DVDAuthoring; (3) nVision Technology - which incorporates the events division. (1) Programme ProductionThe programme productions division - which builds entire projects from initialideas through to implementation - continues to perform well. While much of ourwork has traditionally been from long standing contracts with clients such asAllen & Overy and Deloitte, we have now secured a number of new contracts withother leading organisations. In particular we recently won two brandingcontracts, the first a project with the Health, Work and Wellbeing StrategyDepartment and the second a project to create the imagery and characters for thenew Tesco Direct service. This increase in client base not only bodes well forthe future but underlines that our attention to detail, creativity and qualityof work is paying off, as new business increases from both old and new clients. (2) DVDIn the same vein, our DVD division is also performing well. We have been anactive participator in the DVD market for several years and have worked on anumber of major features as well as many well known television series such asSpooks and Life On Mars. Our customers recognise our consistently high standardof work, enabling us to build an extensive and loyal customer base whichincludes 2 Entertain, Contender Entertainment Group and Fremantle. This highstandard has once again been endorsed by our DVD department being singled out byTelevisual for its menu designs as some of the best for 2006. (3) nVisionCheerful Scout is building a name for itself as a developer of pioneeringtechnologies and for pushing the boundaries of on-screen visual communication.nVision technology is our latest development, of which there are two versions:nVision Presenter, a unique communications product targeted at organisers oflive events, and nVision Strategy, a high end product directed at organisationsrequiring complex problem solving tools.nVision Presenter was the first to launch in 2006 and is establishing itself inthe market place. With such a unique offering, we decided that your Companycould increase the business potential and benefits of nVision Presenter byestablishing an events division to help organise and execute live events. Wehave subsequently organised a number of events both in the UK and in Europewhich I am happy to report, were very well received. The Business Intelligence Market is growing rapidly and I am delighted thatnVision Strategy provides an entry point into what is an entirely new market forCheerful Scout. We believe that nVision Strategy will provide considerableopportunities for us in the future. Furthermore, to develop the product further,we are co developing with avisualisation company that deals in strategy for large retail corporates. Webelieve by working with partners we can increase both the value of ourproposition as well as the uptake. Our People Our people are crucial to the success of Cheerful Scout. We have 18 full timepeople all who are well trained, able to adapt to the changing needs of ourclients and who understand the Cheerful Scout ethos. The culture of CheerfulScout remains as solid today as it did when it was founded by Gary and Peter 10years ago. It remains flexible, innovative and creative and offers the bestservice possible at all times to all clients. We understand the importance ofclient relationships and will continue to employ and hopefully retain the verybest of people. We are proud of our retention of staff, which I believe can be put down to themanagement, innovative environment and the opportunities for those involved inthe business as we continue to grow. Good people are essential and I'd like totake this opportunity to thank everyone for their hard work in building CheerfulScout to what it is today. Consolidation of Share Capital Your Board is aware that, due to the large number of shares in issue and lowunit price per share, the Company's shares have traded with a relatively widebid-offer spread compared to other companies of similar size. Your Boardbelieves that consolidating the share capital of the Company will reduce tradingcosts for shareholders without having an adverse effect on liquidity, and willresult in a more appropriate number of shares in issue. Consequently, your approval is sought for a consolidation of the ordinary sharesof 0.5p each, such that all shareholders will receive one new ordinary share of12.5p each for every 25 ordinary shares of 0.5p. Subject to the passing ofresolution 6 of the notice of the AGM, fractions of new ordinary sharesresulting from the consolidation will not be issued to shareholders. The Boardmay decide that any fractions shall be consolidated into consolidated shareswhich the Board may sell for the best price that can be reasonably obtained. Thenet proceeds of any such sale after deduction of expenses will be distributed indue proportion among holders of fractional entitlements (except that any amountdue which is less than £3 may be retained for the benefit of the Company). Basedon the shareholdings at the date of this letter, it is not expected that anyfractional entitlements will be above £3 and so it is not expected that anydistribution will be made to shareholders in relation to fractionalentitlements. Except in relation to fractional entitlements, the proportion of eachshareholder's interest in the Company will remain the same, and except for theincrease in nominal value, the new ordinary shares will be identical in allrespects to the ordinary shares. The new ordinary shares will rank pari passu inrespect of dividends. As a result of the consolidation of ordinary shares the existing warrants tosubscribe for ordinary shares will also be consolidated such that eachconsolidated warrant would entitle the holder to subscribe for one new ordinaryshare of 12.5 p at 62.5 p per share. The record date for the consolidation of both the ordinary shares and thewarrants is close of business on 23 November 2006. Crest accounts will becredited with new ordinary shares and/or new warrants in uncertificated form on24 November 2006. Dealings will commence in new ordinary shares and new warrantson 24 November 2006. Persons holding ordinary shares and warrants incertificated form will be issued with new share certificates and new warrantcertificates on 7 December 2006. Existing share certificates and warrantcertificates will remain valid pending the issue of new share certificates andnew warrant certificates. Upon receipt of new share certificates and new warrantcertificates, the existing share certificates and warrant certificates willbecome invalid and should be destroyed. Outlook As the results demonstrate, our previous investment in both technology and ahighly experienced team has enabled us to build a strong position in acompetitive market. I am confident that our success will continue and that thefuture stability and growth of the Company is in safe hands. Importantly, ourcore business and nVision are beginning to interact, creating new businessprospects for each other, thus further strengthening our investment case.Through leveraging the team's creative abilities and exploiting our uniquetechnology, we have created a solid platform from which to further develop thebusiness and in turn generate increased shareholder value and fulfil thepotential of what I believe to be a very exciting company. S AppletonChairman16 October 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2006 2006 2005 Notes Pre goodwill Goodwill Total Pre goodwill Goodwill Total amortisation amortisation and Amortisation and Amortisation reorganisation and impairment and costs reorganisation impairment costs £ £ £ £ £ £Turnover 2 2,173,163 - 2,173,163 898,492 - 898,492Cost of (1,308,612) - (1,308,612) (631,550) - (631,550)sales __________ _________ __________ __________ __________ ________Gross profit 864,551 - 864,551 266,942 - 266,942Administrativeexpenses (635,581) (50,499) (686,080) (504,071) (136,415) (640,486) __________ _________ _________ __________ __________ ________OperatingProfit/(loss) 3 228,970 (50,499) 178,471 (237,129) (136,415) (373,544)Exceptionalitem 4 - - - - (1,867,467) (1,867,467) Interestreceivable 30,104 - 30,104 17,268 - 17,268Interestpayable andsimilarcharges 5 (42) - (42) (4) - (4) __________ ________ ________ __________ __________ ________Profit/(Loss)on ordinaryactivitiesbeforetaxation 259,032 (50,499) 208,533 (219,865) (2,003,882) (2,223,747) Tax onprofit/(loss)on ordinaryactivities 6 - - (54,000) 54,000 - 54,000 __________ _________ _________ __________ __________ _________Retainedprofit/(loss)for the year 16 154,533 (2,169,747) ========= ========= Earnings per ordinaryshares:Basic 8 0.063075p (1.045661)p ========= ========= Diluted 8 0.062814p (1.045661)p ======== ========= The profit and loss account has been prepared on the basis that all operationsare continuing operations. There are no recognised gains or losses other than those passing through theprofit and loss account. BALANCE SHEETAS AT 30 JUNE 2006________________________________________________________________________________ Group 2006 2005Fixed assets Notes £ £Intangible assets 9 793,194 799,135Tangible assets 10 129,678 212,152Investments 11 - - -------- -------- 922,872 1,011,287 -------- -------- Current assetsStock 2,268 1,211Debtors 12 615,914 295,946Cash at bank and in hand 885,559 721,757 -------- -------- 1,503,741 1,018,914Creditors: amounts falling due within one year 13 (361,621) (119,742) -------- --------Net current assets 1,142,120 899,172 -------- -------- Total assets less current 2,064,992 1,910,459liabilities -------- -------- 2,064,992 1,910,459 ======== ======== Capital and ReservesCalled up share capital 15 1,225,000 1,225,000Share premium account 16 - 3,360,169Special Reserves 16 1,747,416 -Profit and loss account 16 (907,424) (2,674,710) Shareholders' funds - equity interests 17 2,064,992 1,910,459 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2006________________________________________________________________________________ 2006 2005 £ £ £ £ Net cash inflow/(outflow) fromoperating 231,209 (136,242)activities Returns on investments andservicing of financeInterest received 30,104 17,268Interest paid (42) (4) -------- -------- Net cash inflow for returns oninvestments 30,062 17,264and servicing of finance Taxation - - Capital expenditure andfinancial investmentPayments to acquire intangible (66,052) (191,865)assetsPayments to acquire tangible (31,417) (52,115)assets -------- -------- Net cash outflow for capital (97,469) (243,980)expenditure ------- --------Net cash inflow/(outflow) beforemanagement 163,802 (362,958)of liquid resources andfinancing FinancingNet proceeds from issue ofordinary share - 525,000capitalExpenses relating to issue of - (26,250)share capital -------- -------- Net cash inflow from financing - 498,750 ------- --------Increase in cash in the year 163,802 135,792 ======= ======== NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2006________________________________________________________________________________ 1 Reconciliation of operating profit/(loss) to net cash inflow/(outflow)from operating activities 2006 2005 £ £ Operating profit/(loss) 178,471 (373,544)Depreciation of tangible assets 113,891 134,099Amortisation of intangible assets 71,993 136,415Increase/(decrease) in debtors (373,968) (15,577)Decrease/(increase) in creditors within one year 241,879 (17,896)Decrease/(increase) in stock (1,057) 261 --------- --------Net cash inflow/(outflow) from operating activities 231,209 (136,242) ========= ======== 2 Analysis of net funds 1 July 2005 Cash flow 30 June 2006 £ £ £Net cash:Cash at bank and in hand - 158,916 158,916 --------- --------- ----------Liquid resources:Bank deposits 721,757 4,886 726,643 --------- --------- ---------- Net funds 721,757 163,802 885,559 ========= ========= ========== 3 Reconciliation of net cash flow to movement in net funds 2006 2005 £ £Increase in cash in the year 158,916 26,087Cash inflow from movement in liquid resources 4,886 109,705 --------- ---------- Change in net funds resulting from cash flows 163,802 135,792 --------- ---------- Movement in net funds in the year 163,802 135,792 Opening net funds 721,757 585,965 --------- ----------Closing net funds 885,559 721,757 ========= ========== NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2006________________________________________________________________________________ 1 Accounting policies 1.1 Accounting convention The financial statements are prepared under the historical cost convention. 1.2 Compliance with accounting standards The financial statements are prepared in accordance with applicable accountingstandards. 1.3 Basis of consolidation The consolidated profit and loss account and balance sheet include the financialstatements of the company and its subsidiary undertakings made up to 30 June2006. The results of subsidiaries sold or acquired are included in the profitand loss account up to, or from the date control passes. Intra-group sales andprofits are eliminated fully on consolidation. 1.4 Turnover Turnover represent amounts receivable for goods and services, net of VAT andtrade discounts and has been derived from its principal activity. 1.5 Goodwill and impairment Goodwill arising on acquisition is written off in equal annual instalments overits estimated useful economic life of 20 years. The carrying value of goodwill is reviewed for impairment in periods if eventsor changes in circumstances indicate the carrying value may not be recoverable.These reviews assess the recoverable amount by reference to the net presentvalue of expected future cash flows of the relevant income generating unit at adiscount rate of 2.8%. Impairment losses are recognised in the period in whichthey are identified. 1.6 Development costs Development expenditure is written off to the profit and loss account in theyear in which it is incurred, unless the directors are satisfied as to thetechnical, commercial and financial viability of individual projects. In thissituation, the expenditure is deferred and amortised over the period duringwhich the company is expected to benefit. Development costs of current projectswill be amortised over 4 years. 1.7 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost less estimated residual valueof each asset over its expected useful life, as follows: Leasehold land and buildings straight line over the life of the leaseFixtures, fittings and equipment 25% straight line 1.8 Leasing Rentals payable under operating leases are charged against income on a straightline basis over the lease term. 1.9 Investments Fixed asset investments are stated at cost less provision for diminution invalue. 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 ofFRS19 - Deferred tax. Deferred tax is provided in full in respect of taxationdeferred by timing differences between the treatment of certain items fortaxation and accounting purposes. Deferred tax is measured on a non-discountedbasis. 1.12 Pensions The pension costs charged in the financial statements represent thecontributions 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 infinancial instruments. For the purpose of note 22, short term debtors andcreditors are not treated as financial assets or financial liabilities. 1.14 Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translatedinto sterling at the rates of exchange ruling at the balance sheet date.Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. All differences are taken to profit and loss account. 2 Turnover Geographical market 2006 2005 £ £United Kingdom 2,008,332 678,335Europe 144,061 220,157Rest of the world 20,770 - 2,173,163 898,492 3 Operating profit/(loss) 2006 2005 £ £Operating profit /(loss) is stated after charging:Amortisation of intangible assets 71,993 136,415Depreciation of tangible assets 113,891 134,099Auditors' remuneration (company £4,750) 13,000 12,250Operating leases 83,545 75,950 ======== ======== 4 Exceptional item 2006 2005 £ £ Impairment of goodwill - 1,867,467 -------- -------- - 1,867,467 ======== ======== 5 Interest payable 2006 2005 £ £ Other interest 42 4 ======== ======== 6 Taxation 2006 2005 £ £Current year tax - - ======== ========Deferred taxDeferred tax charge/(credit) for the year 54,000 (54,000) ======== ======== Factors affecting the tax charge for the yearProfit/(loss) on ordinary activities beforetaxation 208,533 (2,223,747) ======== ======== Profit/(loss) on ordinary activities beforetaxation multiplied by standard rate of UKcorporation tax of 19% (2005 - 19%) 39,621 (422,512) Effects of:Non deductible expenses 232 181Depreciation add back 21,683 25,478Capital allowances (12,140) (14,984)Research and development allowances (20,825) -Other tax adjustments (28,571) 411,837 -------- -------- (39,621) 422,512 -------- --------Current tax charge - - ======== ======== The group has estimated losses of £154,329 (2005: £363,079) available for carryforward against future trading profits. 7 Loss for the financial year As permitted by section 230 of the Companies Act 1985, the holding company'sprofit and loss account has not been included in these financial statements. Theloss for the financial year is made up as follows:- 2006 2005 £ £ Holding company's loss for the financial year (53,453) (1,504,702)Transfer to special reserves (See Note 16) 32,241 - -------- --------Retained loss for the year (21,212) (1,504,702) ======== ======== This figure is stated after an exceptional charge for permanent diminution inthe value of the investment in the subsidiary undertaking of £ nil (2005:£1,444,213). 8 Earnings per ordinary share Basic earnings per share are calculated by dividing the profit attributable toordinary shareholders of £154,533 (2005: £2,169,747) using a weighted average of245,000,000 (2005: 207,500,000) ordinary shares in issue during the year. Diluted earnings per share are adjusted for warrants and share options grantedto employees where the exercise price is less than the price of the Company'sordinary shares during the year. These adjustments give rise to an increase of1,015,804 ordinary shares. 9 Intangible fixed assets Group Goodwill Development Total Costs £ £ £Cost At 1 July 2005 2,728,292 370,291 3,098,583Additions - 66,052 66,052 --------- --------- -------- At 30 June 2006 2,728,292 436,343 3,164,635 --------- --------- -------- Amortisation At 1 July 2005 2,299,448 - 2,299,448Charge for the year 25,476 46,517 71,993 --------- --------- -------- At 30 June 2006 2,324,924 46,517 2,371,441 --------- --------- -------- Net book value At 30 June 2006 403,368 389,826 793,194 ========= ========= ======== At 30 June 2005 428,844 370,291 799,135 ========= ========= ======== 10 Tangible fixed assets Group Leasehold land and Fixtures, fittings and Total buildings equipment £ £ £Cost At 1 July 2005 142,218 695,725 837,943Additions - 31,417 31,417 --------- --------- --------At 30 June2006 142,218 727,142 869,360 --------- --------- --------Depreciation At 1 July 2005 78,319 547,472 625,791Charge for theyear 26,442 87,449 113,891 --------- --------- --------At 30 June2006 104,761 634,921 739,682 --------- --------- --------Net bookvalueAt 30 June2006 37,457 92,221 129,678 --------- --------- -------- At 30 June2005 63,899 148,253 212,152 ========= ========= ======== 11 Fixed asset investments Company Shares in subsidiary £CostAt 1 July 2005 and 30 June 2006 3,144,213 ImpairmentAt 1 July 2005 and 30 June 2006 (1,444,213) --------Valuation as at 30 June 2006 1,700,000 ======== In the opinion of the directors, the aggregate value of the company's investmentin subsidiary undertakings is not less than the amount included in the balancesheet. Holdings of more than 20%The company holds more than 20% of the share capital of the following companies: Company Country of registration Shares held or incorporation Class %Subsidiary undertakingsCentralfix Limited England and Wales Ordinary 100nVision Technology Limited England and Wales Ordinary 100 The principal activity of these undertakings for the last relevant financialyear was as follows: Principal activityCentralfix Limited Provision of business communication servicesnVision Technology Limited Dormant 12 Debtors Group Company 2006 2005 2006 2005 £ £ £ £ Trade debtors 516,023 113,942 - -Amounts owed by groupundertakings - - 511,681 534,167Other debtors 39,014 38,464 - -Prepayments and accruedincome 60,877 89,540 7,988 7,890Deferred tax asset (see note14) - 54,000 - - -------- -------- -------- -------- 615,914 295,946 519,669 542,057 ======== ======== ======== ======== Other debtors include £35,473 (2005: £35,473) rental deposit which is secured bya charge in favour of the landlords. 13 Creditors: amounts falling due within one year Group Company 2006 2005 2006 2005 £ £ £ £ Trade creditors 170,593 59,456 - -Amounts due to groupundertakings - - 1 1Taxes and social security costs 76,126 13,510 - -Accruals and deferred income 114,902 46,776 11,275 7,850 -------- -------- -------- -------- 361,621 119,742 11,276 7,851 ======== ======== ======== ======== 14 Provisions for liabilities and charges The deferred tax asset (included in debtors, note 12) is made up as follows:- 2006 2005 £ £ Tax losses and accelerated capital allowances - 54,000 ======== ======== 15 Share capital 2006 2005Authorised £ £ 700,000,000 Ordinary shares of 0.5p each 3,500,000 3,500,000 ======== ========Allotted, called up and fully paid 245,000,000 Ordinary shares of 0.5p each 1,225,000 1,225,000 ======== ======== On 1 May 2002 34,500,000 warrants were issued at the time of the company'slisting on the Alternative Investment Market. Each warrant entitles the warrant holder to subscribe for an ordinary share atthe issue price of 2.5p per share. The warrants are exercisable at any timeuntil the expiry of 5 years from 1 May 2002. The company has entered into a scheme to provide share option incentives forstaff. A total of 1,800,000 ordinary shares of 0.5p each have been offered at anoption price of 2.5p per share exercisable between 3 and 10 years after the dateof grant, which was 1 May 2002. An additional 6,105,000 ordinary shares of 0.5p each have been offered at anoption price of 0.75p per share exercisable between 3 and 10 years after thedate of grant, which was 28 October 2004. 16 Statement of movements on reserves Group Share premium Special Profit and loss account Reserves account £ £ £Balance at 1July 2005 3,360,169 - (2,674,710)Transfer inrespect of thecancellationof sharepremiumaccount (3,360,169) 3,360,169 -Transfer inrespect ofaccumulatedlosses to 30November 2005 - (1,612,753) 1,612,753RetainedProfit for theyear - - 154,533 --------- --------- -------- Balance at 30June 2006 - 1,747,416 (907,424) ========= ========= ======== Company Share premium Special Profit and loss account Reserves account £ £ £Balance at 1July 2005 3,360,169 - (1,580,512)Retained lossfor the year - - (53,453)Transfer inrespect of thecancellationof sharepremiumaccount (3,360,169) 3,360,169 -Transfer inrespect ofaccumulatedlosses to 30November 2005 - (1,612,753) 1,612,753 --------- --------- -------- Balance at 30June 2006 - 1,747,416 (21,212) ========= ========= ======== The company successfully applied to the High Court of Justice to transfer to aspecial reserve the sum of £3,360,169 being the balance of the share premiumaccount. In addition accumulated losses of £1,612,753 to 30 November 2005 werealso transferred to the special reserves with the approval of the High Court ofJustice. 17 Reconciliation of movements in shareholders' funds Group 2006 £ Profit for the financial year 154,533 Opening shareholders' funds 1,910,459 -------- Closing shareholders' funds 2,064,992 ======== Company 2006 £ Loss for the financial year (53,453) Opening shareholders' funds 3,004,657 -------- Closing shareholders' funds 2,951,204 ======== 18 Financial commitments At 30 June 2006 the group had annual commitments under non-cancellable operatingleases as follows: Land and buildings 2006 2005 £ £Expiry date:In over five years 83,545 75,950 ======== ======== 19 Directors' emoluments 2006 2005 £ £ Emoluments for qualifying services 127,500 106,800 ======== ======== Directors remuneration includes £12,750 (2005: £48,555) which has beencapitalised as development costs. 20 Related party transactions During the year, £21,715 (2005: £15,155) was charged by Harris & Trotter LLP inrespect of professional services. N J Newman is a member of that firm. Cheerful Scout Plc is a guarantor for the lease entered into by CentralfixLimited, its subsidiary undertaking. 21 Employees Number of employeesThe average monthly number of employees (including directors) during the yearwas: 2006 2005 Number Number Production 13 11Administration 4 3 -------- -------- 17 14 ======== ======== Employment costs £ £ Wages and salaries 498,535 392,568Social security costs 53,091 36,612Pension costs 172 172 -------- -------- 551,798 429,352 ======== ======== 22 Treasury activities and financial instruments The group's financial instruments comprise cash and liquid resources.The main risks arising from the group's financial instruments are the interestrate risks. The Board reviews and agrees policies for managing these risks. Interest rate risk profile of financial assets The interest rate profile of the financial assets of the group at 30 June 2006is as follows: Financial assets Floating rate Total on which no financial interest is assets earned £ £ £Sterling 5,000 880,559 885,559 ======= ======== ======= The floating rate financial assets comprise cash deposits on money marketdeposits at monthly rates. Fair value of financial assets The group's book value of the financial assets equates to their fair values. 23 Pension costs Defined contribution The group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the group for the year were £172 (2005: £172). This information is provided by RNS The company news service from the London Stock Exchange