TIDMCLS
RNS Number : 0208S
Cheerful Scout PLC
14 November 2011
cheerful scout plc / Index: AIM / Epic: CLS / Sector: Media
14 November 2011
cheerful scout plc ('cheerful' or 'the Company')
Final Results
Cheerful Scout plc, the AIM-traded multi-media specialist, is
pleased to announce its results for the year ended 30 June
2011.
Overview
-- 19% increase in revenues to GBP2,147,844 (2010: GBP1,809,757)
and a healthy cash position of GBP528,415 (2010: GBP632,200)
-- Continued cooperation between Cheerful Scout (Cheerful Scout
Productions Limited) and Twentyfirst (nVision Technology Limited)
to successfully provide high quality and all-encompassing brand and
corporate communications on screen and through events
-- Prestigious awards won over the period and post period end
highlighting the effectiveness, innovation and talent of the
Cheerful team
-- Increasing blue-chip client roster across a range of sectors
- Twentyfirst appointed to the events roster for a transport
company for the next three years
-- Strategy to add value through development into new dramatic
areas of growth, including video online via PCs, tablets and
mobiles
-- Proposed change of Company name to Aeorema Communications Plc
to provide flexibility to add other communication companies
Chairman's Statement
I am delighted to present Cheerful's final results to you in my
first report since joining the Board as Chairman in September 2011
and to give you some insight into where we see the Company going in
the coming year. Led by my predecessor, Stuart Appleton, cheerful
enjoyed an encouraging year during which it focused on laying the
foundations to bolster its position in the corporate communications
and events space. The Company achieved a 19% increase in revenues
to GBP2,147,844 (2010: GBP1,809,757). I would like to thank Stuart
for his input and very significant contribution in building the
Company to this stage.
Over the period the Company remained centred on its core
strategy to deliver high quality, extremely effective and
innovative brand and corporate communications and events through
our award winning On Screen (Cheerful Scout) and Live Events
(Twentyfirst) divisions. We will continue to build on this strategy
to strengthen Cheerful's growth prospects. We will also build on
our strengths to enter new emerging areas, particularly the
dramatic growth area of video and film on the Internet, delivered
not only via PCs but via tablets and mobiles. This is the fastest
growing communication area in the world, providing us with an
excellent opportunity to leverage our video and film skills and
communication strategic abilities.
Cheerful Scout and Twentyfirst collaborated productively during
the year, a trend we will continue to build on. This allows us to
provide highly effective and all-encompassing packages to
innovatively convey our clients' brands and corporate messages to
their target audiences. We have worked with an excellent blue-chip
client roster and continue to build new relationships. Key
companies we have worked with include financial institutions,
leading construction companies, legal firms and the public
sector.
We were awarded accolades for the effectiveness, innovation and
creativity of our work over the period and post period end. This
included recognition from the most important organisations in our
space; the New York Festivals(R) International Television &
Film Awards, London's IVCA Awards and the Cannes Corporate Media
& TV Awards where Peter Litten, our Creative Director, won the
highly coveted best director award. In addition, we also won two
other key awards at Cannes.
Twentyfirst's talented team has successfully produced a number
of events for major companies in locations worldwide including
Chicago, Panama and Berlin. Highlights include major events for
Immarsat, a leading telecommunications company, creating a highly
creative launch for one of the most valuable brands in the world,
and staging a major event for an international accountancy firm. We
have also been appointed to the events roster for a transport
company for the next three years. We have a very strong team and we
see this as an important growth area, particularly as clients are
looking for innovation and new ways of creating impact. The market
is worth over GBP2 billion and we are looking to drive into new
areas that have strong margins and where we can leverage our
skills.
The results for the year show a loss before taxation of
GBP90,336 (2010: GBP1,144 profit before taxation). Revenue for the
year was GBP2,147,844 (2010: GBP1,809,757). Due to the economic
turmoil experienced over the period, margins were reduced, although
we hope to improve upon this going forward. Gross profit was
GBP639,327 (2010: GBP677,615). We remain cash positive with
reserves of GBP528,415.
Although it has been a challenging year we have a strong core
business. Importantly we have the skills and the commitment to
drive into new growth areas. These developments will take time but
we are convinced they will produce profitable revenue and
significant growth. To help us have the flexibility to maximise
these new areas, we propose changing the name of the company to
Aeorema Communications Plc as announced in September 2011. Cheerful
Scout and Twentyfirst will become divisions and we will have the
flexibility to add other communication companies.
I would like to take the opportunity to thank shareholders for
their support. I particularly want to thank the extremely committed
team of talented and creative people we have working for us. They
are our greatest asset and constantly tackle tough jobs and
impossible deadlines with enthusiasm, innovation and
creativity.
M Hale
Chairman
14 November 2011
** ENDS **
For further information visit www.cheerfulscout.com or
contact:
Gary Fitzpatrick cheerful scout plc Tel: 020 7291
0444
Mark Percy/Catherine Seymour Pierce Tel: 020 7107
Leftley 8030
Elisabeth Cowell St Brides Media & Finance Tel: 020 7236
Ltd 1177
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2011
Continuing operations Notes 2011 2010
GBP GBP
Revenue 2 2,147,844 1,809,757
Cost of sales (1,508,517) (1,132,142)
Gross profit 639,327 677,615
Administrative expenses (731,794) (695,275)
Operating loss 3 (92,467) (17,660)
Finance income 4 271 1,883
Other income 5 1,860 16,921
(Loss) / profit before
taxation (90,336) 1,144
Taxation 6 (17,778) 49,082
Total comprehensive
(expense) / income
for the year attributable
to owners of the parent (108,114) 50,226
(Loss) / earnings per
ordinary share:
Basic 9 (1.37944p) 0.63098p
Diluted 9 (1.31363p) 0.63098p
Statement of Financial Position
As at 30 June 2011
Notes Group Company
2011 2010 2011 2010
GBP GBP GBP GBP
Non-current assets
Intangible assets 10 365,154 365,154 - -
Property, plant and equipment 11 107,188 133,375 - -
Investments in subsidiaries 12 - - 481,116 1,000,000
Deferred taxation 7 22,054 39,832 - -
494,396 538,361 481,116 1,000,000
Current assets
Inventories 2,675 2,252 - -
Trade and other receivables 13 517,461 506,592 122,959 187,443
Cash and cash equivalents 14 528,415 632,200 399,302 515,947
1,048,551 1,141,044 522,261 703,390
Total assets 1,542,947 1,679,405 1,003,377 1,703,390
Current liabilities
Trade and other payables 15 (326,766) (386,226) (12,553) (37,636)
Net assets 1,216,181 1,293,179 990,824 1,665,754
Equity
Share capital 16 979,688 979,688 979,688 979,688
Share-based payment reserve 31,116 - 31,116 -
Capital redemption reserve 257,812 257,812 257,812 257,812
Retained earnings (52,435) 55,679 (277,792) 428,254
Equity attributable to owners
of the parent 1,216,181 1,293,179 990,824 1,665,754
Statement of Changes in Equity
As at 30 June 2011-11-11
Share-based Capital
Share payment redemption Retained Total
Group capital reserve reserve earnings equity
GBP GBP GBP GBP GBP
At 1 July 2009 1,054,688 - 170,312 48,678 1,273,678
Comprehensive income for the
year - - - 50,226 50,226
Purchase of own shares (87,500) - 87,500 (43,225) (43,225)
Issue of new shares 12,500 - - - 12,500
At 30 June 2010 979,688 - 257,812 55,679 1,293,179
At 1 July 2010 979,688 - 257,812 55,679 1,293,179
Comprehensive expense for the
year - - - (108,114) (108,114)
Share-based payments - 31,116 - - 31,116
At 30 June 2011 979,688 31,116 257,812 (52,435) 1,216,181
Share-
based Capital
Share payment redemption Retained Total
Company capital reserve reserve earnings equity
GBP GBP GBP GBP GBP
At 1 July 2009 1,054,688 - 170,312 835,780 2,060,780
Comprehensive expense for the
year - - - (364,301) (364,301)
Purchase of own shares (87,500) - 87,500 (43,225) (43,225)
Issue of shares 12,500 - - - 12,500
At 30 June 2010 979,688 - 257,812 428,254 1,665,754
At 1 July 2010 979,688 - 257,812 428,254 1,665,754
Comprehensive expense for the
year - - - (706,046) (706,046)
Share-based payments - 31,116 - - 31,116
At 30 June 2011 979,688 31,116 257,812 (277,792) 990,824
Statement of Cash Flows
For the year ended 30 June 2011
Notes Group Company
2011 2010 2011 2010
GBP GBP GBP GBP
Cash flows from operating
activities
(Loss) / profit before taxation (90,336) 1,144 (706,046) (364,301)
Depreciation 72,193 68,908 - -
Profit on disposal of property,
plant and equipment (23,496) - - -
Share-based payment 31,116 - - -
Impairment of investment in
subsidiaries - - 550,000 401,908
Finance income (271) (1,883) (229) (1,823)
(10,794) 68,169 (156,275) 35,784
(Decrease) / increase in trade
and other payables (59,460) 85,848 (25,083) (138,231)
(Increase) / decrease in trade
and other receivables (10,869) (296,698) 64,484 (142,242)
Increase in inventories (423) (219) - -
Taxation received - 9,250 - -
Cash used from operating activities (81,546) (133,650) (116,874) (244,689)
Cash flows from investing
activities
Finance income 271 1,883 229 1,823
Purchase of property, plant
and equipment 11 (47,022) (36,799) - -
Proceeds from sale of property,
plant and equipment 24,512 - - -
Investments in subsidiaries - - - 692
Cash (used) / generated in
investing activities (22,239) (34,916) 229 2,515
Cash flows from financing
activities
Purchase of own shares - (43,225) - (43,225)
Issue of shares - 12,500 - 12,500
Cash used in financing activities - (30,725) - (30,725)
Net decrease in cash and cash
equivalents (103,785) (199,291) (116,645) (272,899)
Cash and cash equivalents
at beginning of year 632,200 831,491 515,947 788,846
Cash and cash equivalents
at end of year 14 528,415 632,200 399,302 515,947
Notes to the consolidated financial statements
For the year ended 30 June 2011
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
AIM 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.
Going concern
The Group's business activities, together with the factors
likely to affect its future development and performance are set out
in the review of business contained in the Chairman's Statement.
The Group's financial statements show details of its financial
position including, in note 22, details of its financial
instruments and exposure to risk.
After reviewing the Group's budget for the next financial year,
other medium term plans and considering the risks outlined in note
22, the Directors, at the time of approving the financial
statements, have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and have therefore used the going concern basis
in preparing the financial statements.
Basis of Preparation
The Group's financial statements have been prepared under the
historical cost convention and 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.
The following new standards, amendments to standards and
interpretations, applied for the first time from 1 July 2010.
-- IFRS 2 (Amended) 'Share-based payments', effective 1 January 2010.
-- IAS 17 (Revised) 'Leases', effective 1 January 2010.
-- IAS 27 (Amended) 'Consolidated and separate financial statements', effective 1 July 2010.
-- IAS 32 (Amended) 'Financial instruments', effective 1 February 2010.
-- IAS 36 (Revised) 'Impairment of assets', effective 1 January 2010.
The adoption of these revised and amended standards has not
impacted on the Annual Report and Financial Statements.
Adopted IFRSs not yet applied
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 July 2010 and have not been early
adopted by the group:
-- IFRS 7 (Amended) 'Financial Instruments: Disclosures', effective 1 January 2011.
-- IFRS 9 'Financial Instruments', effective 1 January 2013.
-- IFRS 10 'Consolidated Financial Statements', effective 1 January 2013.
-- IFRS 11 'Joint Arrangements', effective 1 January 2013.
-- IFRS 12 'Disclosure of Interests in Other Entities', effective 1 January 2013.
-- IFRS 13 'Fair Value Measurement', effective 1 January 2013.
-- IAS 12 'Income Taxes', effective 1 January 2010.
-- IAS 19 'Employee Benefits', effective 1 January 2013.
-- IAS 24 (Amended) 'Related Party Disclosures', effective 1 January 2011.
-- IAS 28 (Revised) 'Investments in Associates and Joint Ventures', effective 1 January 2013.
Management does not believe that the application of these
standards, where applicable, will have an impact on the financial
statements, except for the requirement of additional
disclosures.
Basis of consolidation
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to 30 June 2011.
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 (5 years)
Fixtures, fittings and 25% straight line
equipment
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 option
pricing models 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 20 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 20. 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
Revenue and segmental results have been disclosed by two
operating segments of On Screen and Live Events in the manner that
the information is presented to the Board of Directors, being the
Chief Operating Decision Makers, in accordance with IFRS 8. From 1
July 2010, the company's DVD & Interactive segment has been
incorporated into the On Screen segment. Comparative figures for On
Screen include DVD & Interactive.
Live Live
On Screen On Screen Events Events Total Total
2011 2010 2011 2010 2011 2010
GBP GBP GBP GBP GBP GBP
Revenue 1,151,574 1,257,979 996,270 551,778 2,147,844 1,809,757
Segment results 47,038 23,903 17,784 58,711 64,822 82,614
Unallocated expenses (157,289) (100,274)
Operating loss (92,467) (17,660)
Finance income 271 1,883
Other income 1,860 16,921
Taxation (17,778) 49,082
(Loss) / profit
for the year (108,114) 50,226
Segment assets 532,224 825,254 242,254 293,507 774,478 1,118,761
Unallocated assets 768,469 560,644
Total assets 532,224 825,254 242,254 293,507 1,542,947 1,679,405
Segment liabilities (207,423) (196,609) (106,789) (81,178) (314,212) (277,787)
Unallocated liabilities (12,554) (108,439)
Total liabilities (207,423) (196,609) (106,789) (81,178) (326,766) (386,226)
Capital expenditure 44,039 34,472 2,983 2,327 47,022 36,799
Depreciation and
amortisation 71,345 67,898 848 1,010 72,193 68,908
All revenue represents sales to external customers. Two
customers (2010: Four) are defined as major customers by revenue,
each contributing more than 10% of the Group revenue.
Segment 2011 2010
GBP GBP
Major customer Live Events 252,877 218,343
Major customer On Screen 241,506
Major customer On Screen 235,565
Major customer On Screen 186,530
Major customer On Screen 186,180
The geographical analysis of turnover and assets by geographical
location of customer is as follows:
Geographical
market 2011 2010 2011 2010 2011 2010 2011 2010
UK UK Europe Europe USA USA Total Total
GBP GBP GBP GBP GBP GBP GBP GBP
Revenue 2,120,900 1,789,719 20,159 - 6,785 20,038 2,147,844 1,809,757
Segment assets 405,296 361,760 - - 3,730 - 409,026 361,760
Unallocated assets 1,133,921 1,317,645
Total assets 1,542,947 1,679,405
Capital expenditure
- unallocated 47,022 36,799
3. Operating loss
Operating loss is stated after charging: 2011 2010
GBP GBP
Depreciation of property, plant and equipment 72,193 68,908
Profit on disposal of property, plant and
equipment 23,496 -
Fees payable to the Company's auditor in respect
of:
Audit of the Company's annual accounts 10,650 6,000
Audit of the Company's subsidiaries 8,850 12,000
Staff costs (see note 19) 888,254 673,919
Operating leases - land and buildings 105,068 97,245
4. Finance income
2011 2010
GBP GBP
Interest income 271 1,883
5. Other income
2011 2010
GBP GBP
Rental income 1,860 16,921
6. Taxation
2011 2010
GBP GBP
The tax charge / (credit) comprises:
Current tax
Adjustment to prior years - (9,250)
- (9,250)
Deferred tax
Current year 17,778 (39,832)
17,778 (39,832)
Total tax charge / (credit) in the statement
of comprehensive income 17,778 (49,082)
Factors affecting the tax charge / (credit)
for the year
(Loss) / profit on ordinary activities before
taxation (90,336) 1,144
(Loss) / profit on ordinary activities before
taxation multiplied by standard rate
of UK corporation tax of 20.75% (2010: 21%) (18,745) 240
Effects of:
Non deductible expenses (429) 8,043
Depreciation, impairment losses and disposals 9,895 14,471
Capital allowances (13,481) (13,772)
Share-based payment 6,457 -
Losses utilised (7,503) (13,165)
Losses carried forward 23,806 4,183
Deferred tax asset recognition 17,778 (39,832)
Adjustment to prior years - (9,250)
36,523 (49,322)
Total taxation charge / (credit) 17,778 (49,082)
The weighted average corporation tax rate applied was 20.75%
(2010: 21%). This reduced as a result of a reduction in the UK
corporation tax rate from 21% to 20% from 1 April 2011. The Group
has estimated losses of GBP525,872 (2010: GBP647,885) available to
carry forward against future trading profits.
7. Deferred taxation
2011 2010
GBP GBP
Property, plant and equipment temporary differences (5,326) (2,450)
Temporary differences 1,733 2,624
Losses 25,647 39,658
22,054 39,832
At 1 July 39,832 -
Transfer to statement of comprehensive income (17,778) 39,832
At 30 June 22,054 39,832
A deferred tax asset is expected to be utilised given the
expected return to profitability and future trading prospects. The
deferred tax asset is expected to be realised after more than one
year.
8. Loss attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the
parent Company's Statement of Comprehensive Income has not been
included in these financial statements. The retained loss for the
financial year of the holding company was GBP706,046 (2010:
GBP364,301).
9. (Loss) / earnings per ordinary share
Basic (loss) / earnings per share are calculated by dividing the
profit or loss attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit
or loss attributable to owners 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:
2011 2010
GBP GBP
(Loss) / profit attributable to owners
of the parent (108,114) 50,226
Basic weighted average number of
shares 7,837,500 7,959,966
Dilutive potential ordinary shares:
Employee share options 392,702 -
Diluted weighted average number of
shares 8,230,202 7,959,966
10. Intangible fixed assets
Development
Group Goodwill Costs Total
GBP GBP GBP
Cost
At 1 July 2009 2,728,292 186,069 2,914,361
Development costs written
off - (186,069) (186,069)
At 30 June 2010 2,728,292 - 2,728,292
At 1 July 2010 2,728,292 - 2,728,292
At 30 June 2011 2,728,292 - 2,728,292
Impairment and amortisation
At 1 July 2009 2,363,138 186,069 2,549,207
Development costs written
off - (186,069) (186,069)
At 30 June 2010 2,363,138 - 2,363,138
At 1 July 2010 2,363,138 - 2,363,138
At 30 June 2011 2,363,138 - 2,363,138
Net book value
At 1 July 2009 365,154 - 365,154
At 30 June 2010 365,154 - 365,154
At 1 July 2010 365,154 - 365,154
At 30 June 2011 365,154 - 365,154
Development costs
Development costs in relation to the Group's nVision Presenter
product have been amortised over its expected useful life of four
years. This product is no longer in use and the development costs
were written off in full during the previous year.
Impairment
Goodwill has been tested for impairment based on its future
value in use. Future value has been calculated on a discounted cash
flow basis using the 2012 budgeted figures as approved by the Board
of Directors extended for a period of 5 years and discounted at a
rate of 4.2%. It has been assumed that future growth will be at 2%.
Based upon these assumptions, there was no impairment in the
year.
Management has assessed the sensitivity of the recoverable
amounts in the key assumptions to be as follows: a five percentage
increase in the discount rate would reduce the recoverable amount
by GBP30,000 and a one percentage fall in future growth would
reduce the recoverable amount by GBP97,000.
11 Property, plant and equipment
Group Leasehold land Fixtures, fittings Total
and buildings and equipment
GBP GBP GBP
Cost
At 1 July 2009 157,063 815,316 972,379
Additions - 36,799 36,799
At 30 June 2010 157,063 852,115 1,009,178
At 1 July 2010 157,063 852,115 1,009,178
Additions - 47,022 47,022
Disposals - (28,154) (28,154)
At 30 June 2011 157,063 870,983 1,028,046
Depreciation
At 1 July 2009 147,566 659,329 806,895
Charge for the year 2,072 66,836 68,908
At 30 June 2010 149,638 726,165 875,803
At 1 July 2010 149,638 726,165 875,803
Charge for the year 2,100 70,093 72,193
Disposals - (27,138) (27,138)
At 30 June 2011 151,738 769,120 920,858
Net book value
At 1 July 2009 9,497 155,987 165,484
At 30 June 2010 7,425 125,950 133,375
At 1 July 2010 7,425 125,950 133,375
At 30 June 2011 5,325 101,863 107,188
The gross carrying amount of fully depreciated property, plant
and equipment still in use is as follows:
Cost 2011 2010
GBP GBP
Leasehold land and buildings 146,578 146,578
Fixtures, fittings and equipment 601,550 577,459
748,128 724,037
12. Non-current assets - Investments
Loans to
Company Shares in subsidiary subsidiary Total
GBP GBP GBP
Cost
At 1 July 2009 3,144,813 202,000 3,346,813
Repayment - (692) (692)
At 30 June 2010 3,144,813 201,308 3,346,121
At 1 July 2010 3,144,813 201,308 3,346,121
Additions 31,116 - 31,116
Loan to subsidiary written off - (201,308) (201,308)
At 30 June 2011 3,175,929 - 3,175,929
Provision
At 1 July 2009 1,744,213 200,000 1,944,213
Impairment 400,600 1,308 401,908
At 30 June 2010 2,144,813 201,308 2,346,121
At 1 July 2010 2,144,813 201,308 2,346,121
Impairment 550,000 - 550,000
Loan to subsidiary written off - (201,308) (201,308)
At 30 June 2011 2,694,813 - 2,694,813
Net book value
At 1 July 2009 1,400,600 2,000 1,402,600
At 30 June 2010 1,000,000 - 1,000,000
At 1 July 2010 1,000,000 - 1,000,000
At 30 June 2011 481,116 - 481,116
Holdings of more than 20%
The Company holds more than 20% of the share capital of the
following companies:
Shares
Subsidiary undertakings Country of held
registration
or incorporation Class %
Cheerful Scout Productions
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
Cheerful Scout Productions Provision of business communication
Limited services
nVision Technology Limited Provision of event management services
Business Data Interactive
Limited Dormant
Subsequent to the year end, the company's subsidiary, Business
Data Interactive Limited, was dissolved.
13. Trade and other receivables
Group Company
2011 2010 2011 2010
GBP GBP GBP GBP
Trade receivables 405,296 361,760 - -
Related party receivables - - 118,946 179,756
Other receivables 37,303 35,722 - 2,821
Prepayments and accrued income 74,862 109,110 4,013 4,866
517,461 506,592 122,959 187,443
Other receivables include GBP34,543 (2010: GBP34,543) 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.
14. Cash and cash equivalents
Group Company
2011 2010 2011 2010
GBP GBP GBP GBP
Bank balances 528,415 632,200 399,302 515,947
Cash and cash equivalents 528,415 632,200 399,302 515,947
Cash and cash equivalents
in the statement of cash
flows 528,415 632,200 399,302 515,947
15 Trade and other payables
Group Company
2011 2010 2011 2010
GBP GBP GBP GBP
Trade payables 194,533 176,205 3,792 27,005
Related party payables - - - 1
Taxes and social security
costs 73,391 22,355 250 250
Other payables 12,656 57,534 375 -
Accruals and deferred income 46,186 130,132 8,136 10,380
326,766 386,226 12,553 37,636
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.
16 Share capital
2011 2010
GBP GBP
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
GBP
At 1 July 2009 8,437,500 1,054,688
Purchase of own shares (700,000) (87,500)
Issue of shares 100,000 12,500
At 30 June 2010 7,837,500 979,688
At 1 July 2010 7,837,500 979,688
At 30 June 2011 7,837,500 979,688
See note 20 for details of share options outstanding
17 Financial commitments
Total future minimum lease payments under non-cancellable
operating lease rentals are payable as follows:
Land and Buildings
2011 2010
GBP GBP
Not later than one year 110,000 110,000
Later than one year and not later than
five years 64,167 174,167
18 Directors' emoluments
The remuneration of Directors of the Company is set out
below.
Salary Salary
or fees or fees Pensions Pensions Total Total
2011 2010 2011 2010 2011 2010
GBP GBP GBP GBP GBP GBP
P Litten 50,000 50,000 26,242 26,250 76,242 76,250
S Appleton 10,000 10,000 - - 10,000 10,000
N J Newman 1,500 1,500 - - 1,500 1,500
R L Owen 7,500 7,500 - - 7,500 7,500
69,000 69,000 26,242 26,250 95,242 95,250
Fees for N J Newman are charged by Harris & Trotter LLP, a
firm in which he is a member. See note 21.
No directors had interests in share-based incentive schemes.
19. Employee information
The average monthly number of employees (including directors)
employed by the Group during the year was:
Number of employees 2011 2010
Number Number
Production 15 14
Administration 6 6
21 20
The aggregate payroll costs of these employees charged in the
Statement of Comprehensive Income was as follows:
Employment costs 2011 2010
GBP GBP
Wages and salaries 725,268 559,299
Social security costs 79,214 61,948
Pension costs 52,656 52,672
Share-based payments 31,116 -
888,254 673,919
20. Share-based payments
The Group operates an EMI Share option scheme for key employees.
Options are granted to key employees at an exercise price equal to
the market price of the Company's shares at the date of grant.
Options are exercisable from the third anniversary of the date of
grant and lapse if they remain unexercised at the tenth anniversary
or upon cessation of employment. The following option arrangements
exist over the Company's shares:
Exercise Number of Number of
Date of grant price Exercise period options 2011 options 2010
From To
30 April
1 May 2002 62.50p 1 May 2005 2012 72,000 72,000
28 October 28 October 27 October
2004 18.75p 2007 2014 143,000 163,600
20 July
20 July 2010 8.75p 2013 19 July 2020 1,200,000 -
1,415,000 235,600
Details of the number of share options and the weighted average
exercise price outstanding during the year are as follows:
Weighted
Number of Weighted average Number of average exercise
options exercise price options price
2011 2011 2010 2010
GBP GBP
Outstanding at beginning
of the year 235,600 0.32 249,600 0.31
Lapsed during the
year (20,600) (0.19) (14,000) (0.19)
Granted during the
year 1,200,000 0.09 - -
Outstanding at end
of the year 1,415,000 0.12 235,600 0.32
Exercisable at the
end of the year 215,000 235,600
The exercise price of options outstanding at the year-end ranged
between GBP0.0875 and GBP0.625 (2010: GBP0.1875 and GBP0.625) and
their weighted average contractual life was 9.7 years (2010: 4.0
years).
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. The estimated fair
value of the options is measured using an option pricing model. The
inputs into the model are as follows:
Grant date 28 October 2004 20 July 2010
Model used Binomial Black-Scholes
Share price at grant date 16.25p 8.75p
Exercise price 18.75p 8.75p
Contractual life 10 years 10 years
Risk free rate 6% 0.5%
Expected volatility 43% 100%
Expected dividend rate 0% 0%
Fair value option 5.9868p 7.779p
The expected volatility is determined by calculating the
historical volatility of the company's share price over the last
three years. The risk free rate is the office Bank of England base
rate. The expected dividend rate is zero as the company has not
paid dividends in the past.
The Group recognised the following charges in the Statement of
Comprehensive Income in respect of its share-based payment
plans:
2011 2010
GBP GBP
Share-based payment charge 31,116 -
21 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:
2011 2010
GBP GBP
Management fees charged to subsidiaries
by Cheerful Scout plc
Cheerful Scout Productions Limited - 100,000
nVision Technology Limited - 35,000
- 135,000
Management fees charged by subsidiaries
to Cheerful Scout plc
Cheerful Scout Productions Limited 81,790 -
Amounts owed by subsidiaries
Total amount owed by subsidiaries 118,946 381,064
Less provision - (201,308)
118,946 179,756
The compensation of key management (including directors) of the
Group is as follows:
2011 2010
GBP GBP
Short-term employee benefits 118,828 115,778
Post-employment benefits 52,484 52,500
171,312 168,278
At the reporting date, the following amounts are due to
directors:
2011 2010
GBP GBP
S Appleton - 10,000
Cheerful Scout Plc is a guarantor for a lease entered into by
Cheerful Scout Productions Limited, its subsidiary undertaking.
During the year, the Company's investment in its subsidiary,
Cheerful Scout Productions Limited, was impaired by GBP550,000
(2010: GBP400,000).
Harris and Trotter LLP is a firm in which N J Newman is a
member. The amounts charged to the Group for professional services
and the balance outstanding at the reporting date is as
follows:
Harris and Trotter LLP - charged during
the year 2011 2010
GBP GBP
Cheerful Scout plc 13,478 13,745
Cheerful Scout Productions Limited 11,514 17,380
nVision Technology Limited 4,975 3,273
29,967 34,398
Harris and Trotter LLP - balance outstanding
at the reporting date 2011 2010
GBP GBP
Cheerful Scout plc 1,800 1,763
Cheerful Scout Productions Limited 7,476 8,072
9,276 9,835
22 Financial instruments
The Group is exposed to risks that arise from its use of
financial instruments. There have been no significant changes in
the Group's exposure to financial instrument risk, its objectives,
policies and processes for managing those from previous periods.
The principal financial instruments used by the Group, from which
financial instrument risk arises, are trade receivables, cash and
cash equivalents and trade and other payables.
Credit risk
Credit risk arises principally from the Group's trade
receivables. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument. The maximum
exposure to credit risk at 30 June 2011 was GBP405,296 (2010:
GBP361,760). Trade receivables are managed by policies concerning
the credit offered to customers and the regular monitoring of
amounts outstanding for both time and credit limits. At the year
end, the credit quality of trade receivables is considered to be
satisfactory.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to meet its liabilities when they fall due. The Group
monitors cash flow on a regular basis. At the year end, the Group
has sufficient liquid resources to meets its obligations of
GBP326,766 (2010: GBP386,226).
Market risk
Market risk arises from the Group's use of interest bearing
financial instruments. It is the risk that the fair value of future
cash flows of a financial instrument will fluctuate. At the year
end, the cash and cash equivalents of the Group was GBP528,415
(2010: GBP632,200). The Group ensures that its cash deposits earn
interest at a reasonable rate.
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern while maximising
the return to stakeholders. The capital structure of the Group
consists of equity attributable to equity holders of the parent,
comprising issued share capital, reserves and retained earnings as
disclosed in the Group Statement of Changes in Equity. At the year
end, total equity was GBP1,216,181 (2010: GBP1,293,179).
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
GBP52,656 (2010: GBP52,672).
24 Control
During the year, the Company was controlled by P Litten.
Subsequent to the year end, control has changed and there is now no
overall controlling party.
26. Notice of AGM
The Annual General Meeting of Cheerful Scout Plc will be held at
25-27 Riding House Street, London W1W 7DU on 12 December 2010 at
10.00 a.m. A formal notice of AGM along with the Annual Report and
Accounts for the year ended 30 June 2011 will be sent to
shareholders and will be available on the Company's website
www.cheerfulscout.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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