Aeorema Comm. Regulatory News (AEO)

25 Nov 2009 07:00



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 AppletonChairman 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 Street, London, W1P 7PB. The Company's Ordinary Shares are traded on the Alternative Investment Market.

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

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 Street, London 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**

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

 

 

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