Final Results

RNS Number : 2190V

Upstream Marketing and Comms Inc.

27 May 2008

 



Chairman's and chief executive's report

The Board is pleased to report Upstream Marketing and Communications Inc.'s audited results for the year ended 31 December 2007.

Highlights

• Revenue up 71% to US$4.613 million (2006: US$2.693 million);

• Total assets up from US$1.0 million to US$1.7 million, representing a 72% increase.

This is the first full-year results report since the completion of the reverse acquisition of Upstream Asia Limited and the change of the Company's name to Upstream Marketing and Communications Inc. in October 2006.  In the time since the reverse takeover, Upstream has made significant headway in building top-line revenue and strengthening its service offering to focus on continued growth moving towards profitability.

Upstream is the holding company for six wholly-owned trading subsidiaries that form an Asia-Pacific-wide marketing and corporate communications services network. Upstream is positioned to help companies use public relations, public affairs, digital and other communications to make the most of their business opportunities in the region. Upstream has offices in Beijing, Hong Kong, Shanghai, Singapore, Sydney, and Taipei as well as branded affiliates in Tokyo and other partners throughout the world.  

Revenues for the year were US$4.613 million, representing a 71% increase over the previous year. Upstream posted a US$ 0.643 million loss before taxation for the full year after operating expenses of US$4.922 million and share based payment charge of US$0.329 million. This compares to the loss before taxation announced in its interim results statement fro the six months to 30 June 2007 of US$0.730 million. The Group therefore recorded a strong financial improvement in the second half of the year, primarily as a result of an increase in profitability from the operating division, Upstream Asia, and from a reduction in costs related to maintaining the listed holding company. As at the year-end, the Group was cash positive on a quarterly basis. 

The increase in full year revenue can be attributed to strong organic growth arising from a robust business environment in China and in other growing Asian economies, and also from the acquisition and subsequent integration of a Sydney-based public relations firm, renamed Upstream Australia, in April 2007.

In 2007, Upstream secured a number of new ongoing retainer and one-off project assignments with blue-chip multinational clients including Alstom, California Fitness, the Cultural Year of Greece in China, Disney Channel, Embraer, Fiat Group, Fidessa, JP Morgan, Jumeirah, Monsanto, Skype, SoftBank China & India Holdings, Sony-Ericsson, and SWIFT. 

Current Trading and Outlook 

The Group's pipeline of new business remains encouraging, and the Asia-Pacific economies showing signs of continued growth despite the slowing of the US and European economies.  The corporate and financial sector is increasingly a source of revenue as banks, financial institutions, and technology service providers look to Asia-Pacific to expand their businesses. The consumer and travel sector remains strong throughout the Asia Pacific region, particularly in China.  Upstream was named one of China's 10 Most Prominent Public Relations Agencies of 2007 by influential Chinese business newspaper Fortune Times.

Revenue and profit growth strategies initiated by the Group in 2007, and carried forward into 2008, include:

-    Building on existing client relationships by expanding the scope of work provided to include other offices

     and practice areas across the region;

-    Winning significant new client assignments from leads generated by Upstream's strong marketing efforts and

     international networks. Already in 2008 new client assignments have been won from Akamai, American Standard,

     Capgemini, CommunicAsia, Convergys, Neustar, and VP Bank; 

-    Developing new and emerging sources of revenue, such as public affairs and digital marketing;

-    Creating value from new and existing partnerships. The Group has joined an additional international

     agency network (GlobalFluency) and had sold certain assets of its Media Services Asia business for a

   one-time payment of US$350,000; and

-    Selective acquisitions that bring new geographic coverage, specialist expertise and revenue.  

The directors believe that the Group's focus on delivering marketing and corporate communications services in Asia-Pacific region will continue to grow. The Group expects to deliver further returns from the investments in people and business infrastructure which it has made over the past few years, and is well positioned to capitalize on the business opportunities that the region's fast growing economies offer.

David Ketchum, Chief Executive        Shahed Mahmood, Chairman

27 May 2008                                          27 May 2008

www.aboutupstream.com

Consolidated Income Statement

Continuing operations	Note	2007	2006
		US$'000	US$'000
Turnover		5,514	2,693
Material cost of sales		(901)	-
Revenue		4,613	2,693
Other income		65	170
Total income		4,678	2,863
Other operating expenses		(4,992)	(2,952)
Loss from operations prior to share based payment charge and write off of goodwill		(314)	(89)
Share based payment charge		(329)	-
Write off of goodwill		-	(10,783)
Loss from operations and loss before taxation		(643)	(10,872)
Taxation expense	3	-	-
Loss for the year		(643)	(10,872)
Total and continuing loss per share attributable to the equity holders of the Company		US Cents	US cents
- Basic and diluted	4	(0.47)	(11.51)

  Consolidated balance sheet

		2007	2006
		US$'000	US$'000
ASSETS
Non-current assets
Property, plant and equipment		180	88
Intangible assets		198	-
		378	88
Current assets
Trade and other receivables		1,092	612
Cash and cash equivalents		264	307
		1,356	919
Total assets		1,734	1,007
LIABILITIES
Current liabilities
Trade and other payables		1,404	602
Deferred income		55	26
Current tax provision		25	3
		1,484	631
Non-current liabilities
Deferred tax provision		38	-
Total liabilities		1,522	631
EQUITY
Share capital and shares to be issued		745	617
Reserves		(533)	(241)
Equity attributable to equity holders  of the Company and total equity		212	376
Total equity and liabilities		1,734	1,007

Consolidated statement of changes in equity

	Share capital and  shares to be issued	Share premium	Capital  reserve	Foreign exchange  reserve	Retained earnings	Total equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
At 1 January 2006	16	136	-	(1)	(68)	83
Exchange difference on consolidation	-	-	-	14	-	14
Loss for the year	-	-	-	-	(10,872)	(10,872)
Total recognised income and expense for the year	-	-	-	14	(10,872)	(10,858)
Issue of new shares prior to reverse acquisition	2	159	-	-	-	161
Issue of new shares on reverse acquisition	106	3,700	-	-	-	3,806
Share issue costs	-	(9)	-	-	-	(9)
Adjustment on reverse acquisition	493	153	6,547	-	-	7,193
At 31 December 2006 and 1 January 2007	617	4,139	6,547	13	(10,940)	376
Exchange difference on consolidation	-	-	-	(5)	-	(5)
Loss for the year	-	-	-	-	(643)	(643)
Total recognised income and expense for the year	-	-	-	(5)	(643)	(648)
Share issue	118	104	-	-	-	222
Share issue costs	-	(67)	-	-	-	(67)
Share based payments	10	209	-	-	110	329
At 31 December 2007	745	4,385	6,547	8	(11,473)	212
	*

* Includes US$113,000 shares to be issued in connection with the acquisition of Macro Consulting Pty Limited.

The capital reserve movement of US$6,547,000 arises on the reverse acquisition of Upstream Asia Limited.

Consolidated cash flow statement

	2007	2006
	US$'000	US$'000
Operating activities
Loss after taxation	(643)	(10,872)
Adjustments for:
Finance income	(3)	(3)
Finance costs	18	-
Depreciation of property, plant and equipment	60	37
Share based payment costs	329	-
Amortization of intangibles	41	-
Write off of goodwill	-	10,783
Operating cashflow before working capital changes	(198)	(55)
(Increase)/decrease in trade and other receivables	(275)	29
Increase/(decrease) in trade and other payables	579	(90)
Increase in deferred income	29	26
Cash generated by/(used from) operations	135	(90)
Tax paid	(7)	(10)
Net cash inflow/(outflow) used in operating activities	128	(100)

Investing activities
Finance income	3	3
Purchases of property, plant and equipment	(124)	(89)
Reverse acquisition expenses	-	(730)
Cash acquired on acquisitions	67	95
Business acquisition costs	(27)	-
Net cash outflow from investing activities	(81)	(721)
Financing activities Finance costs	(18)	-
Issue of shares	-	928
Share issue costs	(67)	(9)
Net cash  (outflow)/inflow from financing activities	(85)	919
Net (decrease)/increase in cash and cash equivalents	(38)	98
Cash and cash equivalents as at 1 January	307	104
Effect of exchange rate fluctuations	(5)	105
Cash and cash equivalents as at 31 December	264	307

1. GENERAL INFORMATION

The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted International Financial Reporting Standards as adopted by the European Union (IFRSs). 

The Company's shares are listed on the AIM market of the London Stock Exchange.  

The principal accounting polices of the Group remain unchanged from those set out in the Group's 2006 annual report and financial statements.

2.    SEGMENTAL INFORMATION

(a)    Primary reporting format - business segment:

As defined under International Accounting Standard 14 (IAS14), the only material business segment the Group has is that of marketing and public relations. 

(b)    Secondary reporting format - geographical segment:

Under the definitions contained in IAS 14, the only material geographic segment that the Group operates in is the Asia-Pacific region.

3.    TAXATION EXPENSE

	2007	2006
	US$'000	US$'000
Current year income tax charge	12	-
Deferred tax credit	(12)	-
	-	-

The income tax charge for the year has been calculated at the rates prevailing in the relevant jurisdictions.

A reconciliation of the tax expense to the loss before taxation using the statutory rates for the countries in which the Company and its subsidiaries are domiciled to the tax expense at the effective tax rates, and a reconciliation of the statutory tax rates to the effective tax rates, are as follows :

	2007		2006
	US$'000	%	US$'000	%
Loss before taxation	(643)		(10,872)
Tax at the domestic income tax rates	(113)	(17.5)	(1,903)	(17.5)
Expenses not deductible for tax (primarily goodwill written off)	-	-	1,889	17.4
Tax effect of unrecognised tax losses	101	15.7	14	0.1
Current year income tax charge	12	1.8	-	-

The Group has unrelieved tax losses of approximately $270,000 (2006 :$170,000), the utilisation of which is uncertain and consequently no deferred tax asset has been recognised.

4.    LOSS PER SHARE

(a)    Basic loss per share

The calculation of basic loss per share is based on the loss attributable to equity holders of the parent Company of US$643,000 (2006: loss of US$10,872,000) and the weighted average number of ordinary shares in issue during the year of 135,376,825 (2006: 94,479,385).

(b)    Diluted loss per share

The impact of the share options is anti-dilutive.  

5.    pUBLICATION OF NON STATUTORY ACCOUNTS

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.  

The consolidated balance sheet at 31 December 2007 and the consolidated income statement, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year ended 31 December 2007 have been extracted from the Group's 2007 financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985.

The accounts for the year ended 31 December 2007 will be posted to shareholders and laid before the Company at the Annual General Meeting in due course. Copies will also be available from the registered office of the Company and via the website.

 

END

 

 

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