Interim Results

RNS Number : 0663E

Upstream Marketing and Comms Inc.

23 September 2008

 



Upstream Marketing and Communications Inc.

('Upstream' or 'the Company')

Interim Results 

For the six month period ended 30 June 2008

Interim Statement

23 September 2008, Upstream Marketing and Communications Inc. (AIM: UPS) announces its interim results for the six month period ended 30 June 2008.  

HIGHLIGHTS

• Revenues up 47% to $2.90 million (2007: $1.97 million)

• Net profit of $333,000 (2007: loss of $730,000) primarily attributable to the profit on the sale of Media Services Asia for $350,000 cash

• Balance sheet strengthened

• Upstream Australia successfully integrated.

CHAIRMAN'S STATEMENT

The Board is pleased to report Upstream's unaudited results for the six months ended 30 June 2008. The Group made its first-ever net profit of $333,000 (2007: loss of $730,000).

Revenues for the period were $2.90 million, up 47% over the level recorded in the same period in 2007 of $1.97 million. The increase in revenue is largely attributable to new client assignments gained from business development efforts In addition, the Group saw other income increase due to profit arising from the sale of the Group's Media Services Asia subsidiary for $350,000 in May 2008, which also strengthened the Group's balance sheet.

During the first half of 2008, the Group's business in China strengthened in the lead up to the Beijing Olympics. With the new Upstream China leadership put in place in November 2006, the foundation for growth has been put in place. The business in Hong Kong grew while remaining profitable and Singapore performed to expectations. Upstream Australia contributed revenue for all six months of the current period, whereas in 2007 only two months of Australian revenue were recognized as the acquisition of that business unit was only completed in April 2007. Upstream Australia is now fully integrated into the Group.

Looking ahead to future trading conditions, there is uncertainty about the impact of the global economic slowdown. Many of Upstream's clients are headquartered in the US and Europe, and it remains to be seen whether they will continue to invest in the higher growth markets in Asia Pacific, or will curtail spending through the anticipated difficult period. Under either scenario, Management is confident that Upstream is well positioned for continuous operation and business development.

David Ketchum, Chief Executive        Shahed Mahmood, Chairman

23 September 2008                           23 September 2008

www.aboutupstream.com 

Upstream Marketing & Communications Inc. Consolidated Income Statement For the six months ended 30 June 2008

		Six month period ended 30 June 2008 Unaudited US$'000	Six month period ended 30 June 2007 Unaudited US$'000	Year ended 31 December 2007 Audited US$'000
Continuing operations
Turnover		2,904	1,973	5,514
Material cost of sales		-	-	(901)
Revenue		2,904	1,973	4,613
Other income		380	18	65
Total income		3,284	1,991	4,678
Operating expenses		(2,899)	(2,498)	(4,992)
Operating profit/(loss) prior to share based payment charge		385	(507)	(314)
Share based payment charge		(54)	(220)	(329)
Profit/(loss) for the period from operations before tax		331	(727)	(643)
Tax credit/(expense)	4	2	(3)	-
Net profit/(loss) for the period		333	(730)	(643)
		US cents	US cents	US cents
Earnings/(loss) per ordinary share	5
- Basic		0.2	(0.5)	(0.5)
- Diluted		0.2	(0.5)	(0.5)



Consolidated Statement of Changes in Equity Six months ended 30 June 2008

	Share capital and shares to be issued*	Share premium		Capital reserve	Foreign exchange  reserve	Profit and loss account	Total  equity
	US$'000		US$'000	US$'000	US$'000	US$'000	US$'000
At 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
Cost of share issue	-		(67)	-	-	-	(67)
Foreign exchange
Share based payments	10		209	-	-	110	329
At 31 December 2007(Audited)	745		4,385	6,547	8	(11,473)	212
Exchange difference on consolidation	-	-		-	7	-	7
Profit for the period	-	-		-	-	333	333
Total recognised income and expense for the period	-		-	-	7	333	340
Share issue	4		53	-	-	-	57
Decrease of shares to be issue	(57)		-	-	-	-	(57)
Share based payments	-		-	-	-	54	54
At 30 June 2008(Unaudited)	692	4,438		6,547	15	(11,086)	606

*Share capital and shares to be issued at 30 June 2008 includes an amount of US$56,191 (1 January 2007:US$nil; 31 December 2007:US$113,145) in connection with shares to be issued as part of the deferred consideration for the acquisition of Upstream Australia (formerly Macro Consulting Pty Limited).

Consolidated Balance Sheet As at 30 June 2008

	Note	30 June 2008 Unaudited US$'000	30 June 2007 Unaudited US$'000	31 December  2007 Audited US$'000
Assets
Non current assets
Property, plant and equipment		162	123	180
Goodwill		170	454	198
		332	577	378
Current
Trade and other receivables	6	2,571	1,081	1,092
Cash and cash equivalents		548	-	264
		3,119	1,081	1,356
Total assets		3,451	1,658	1,734
Liabilities
Current
Bank overdraft		-	78	-
Trade and other payables	7	1,733	1,011	1,404
Deferred income		1,021	31	55
Current tax provision		23	24	25
Bank loan		22	-	-
		2,799	1,144	1,484
Non-current liabilities
Deferred tax provision		30	-	38
Bank loan		16	-	-
		46	-	38
Total liabilities		2,845	1,144	1,522
Equity
Share capital and shares to be issued	9	692	632	745
Reserves		(86)	(118)	(533)
Total equity		606	514	212
Total equity and liabilities		3,451	1,658	1,734

Consolidated Cash Flow Statement For the six months ended 30 June 2008

		Six month period ended 30 June 2008 Unaudited US$'000	Six month period ended 30 June 2007 Unaudited US$'000	Year ended 31 December 2007 Audited US$'000
Operating activities
Profit/(loss) before taxation		331	(727)	(643)
Adjustments for:
Finance income		-	-	(3)
Finance costs		12	-	18
Profit on disposal of intangible assets		(350)	-	-
Depreciation of property, plant and equipment		38	14	60
Share based expenses		54	220	329
Amortisation of intangibles		28	-	41
Operating cashflow before working capital changes		113	(493)	(198)
Increase in trade and other receivables		(1,479)	(469)	(275)
Increase in trade and other payables		329	409	579
Increase in deferred income		966	5	29
Cash (used from)/generated by operations		(71)	(548)	135
Tax received/(paid)		(8)	18	(7)
Net cash (outflow)/inflow used in operating activities		(79)	(530)	128
Investing activities
Acquisition of subsidiary		-	(24)	-
Finance income		-	-	3
Purchases of property, plant and equipment		(20)	(49)	(124)
Proceeds from sale of intangible assets		350	-	-
Reverse acquisition expenses		-	-	(27)
Cash acquired on acquisition		-	-	67
Net cash inflow/(outflow) from investing activities		330	(73)	(81)
Financing activities
Finance costs		(12)	-	(18)
New bank loan		45	-	-
Repayment of bank loan		(7)	-	-
Expenses in connection with shares issue		-	-	(67)
Net cash inflow/ (outflow) from financing activities		26	-	(85)
Net increase/(decrease) in cash and equivalents		277	(603)	(38)
Cash and cash equivalents brought forward		264	307	307
Effect of exchange rate fluctuations		7	218	(5)
Cash and cash equivalents carried forward		548	(78)	264

Notes to the Interim Report

For the six months ended 30 June 2008

1    general information

The information for the period ended 30 June 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2007 have been extracted from the 2007 statutory financial statements prepared under International Financial Reporting Standards (IFRS). The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985. The interim financial statements have been neither audited or reviewed by the Group's auditors.

2    BASIS OF PREPARATION

The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board have resolved that the Company will follow International Financial Reporting Standards as adopted by the European Union ( IFRSs) when preparing its annual financial statements.  

The principal accounting policies of the Group remain unchanged from those set out in the Group's 2007 annual report.

3    segmental reporting

(a)    By business segment (primary 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)    By geographical segment (secondary segment):

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

4    tax (CREDIT)/EXPENSE

	Six month period ended 30 June 2008 Unaudited US$'000	Six month period ended 30 June 2007 Unaudited US$'000	Year ended  31 December 2007 Audited US$'000
Current period income tax charge	6	3	12
Deferred tax credit	(8)	-	(12)
Actual tax (credit)/expense	(2)	3	-

The relationship between the expected tax expense at 17.5% and the tax expense actually recognised in the income statement can be reconciled as follows:

	Six month period ended 30 June 2008 Unaudited US$'000	Six month period ended 30 June 2007 Unaudited US$'000	Year ended  31 December 2007 Audited US$'000
Profit/(loss) for the period before taxation	331	(727)	(643)
Expected tax expense/(credit)	58	(124)	(113)
Losses (utilised)/not recognised as deferred tax asset	(52)	127	125
Actual tax expense	6	3	12

5    EARNINGS/(LOSS) per share

The calculation of the basic earnings/(loss) per share is based on the net profit for the period of US$333,000 (period ended 30 June 2007 : loss US$730,000; year ended 31 December 2007 : loss US$643,000) divided by the weighted average number of shares in issue during the period of 136,972,994 (period ended 30 June 2007 : 134,298,962; year ended 31 December 2007 : 135,376,825).  

The diluted earnings per share is based on a weighted average number of shares in issue of 136,972,994 for the period ended 30 June 2008. The impact of the share options and warrants is anti-dilutive for the period ended 30 June 2007 and the year ended 31 December 2007.

6    trade and other receivables

	30 June 2008 Unaudited US$'000	30 June 2007 Unaudited US$'000	31 December  2007 Audited US$'000
Trade and other receivables, gross	2,303	818	978
Impairment of trade and other receivables	-	(9)	(39)
Trade and other receivables, net	2,303	809	939
Other receivables	71	51	11
Deposits and prepayments	197	221	142
	2,571	1,081	1,092

Trade and other receivables are usually due within 30 - 60 days and do not bear any effective interest rate.

The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.

7    trade and other payables

	30 June 2008 Unaudited US$'000	30 June 2007 Unaudited US$'000	31 December  2007 Audited US$'000
Trade and other payables	466	642	572
Other payables and accrued charges	1,166	188	533
Amounts due to directors	101	181	299
	1,733	1,011	1,404

The fair value of trade and other payables is considered by management to be a reasonable approximation of their fair value.

8    deferred tax assets and liabilities

Deferred tax liabilities recognized can be summarized as follows:

	30 June 2008 Unaudited US$'000	30 June 2007 Unaudited US$'000	31 December  2007 Audited US$'000
At beginning of period	38	-	-
Arising on acquisition	-	-	50
Credited to income statement	(8)	-	(12)
At end of period	30	-	38

9    share capital

	30 June 2008 Unaudited US$'000	30 June 2007 Unaudited US$'000	31 December 2007 Unaudited US$'000
Authorised
4,000,000,000 ordinary shares of 0.25p	18,470	18,470	18,470
Allotted, issued and fully paid
137,401,194 (30 June 2007:136,544,795, 31 December 2007:136,544,794) ordinary shares of 0.25p	636	632	632

Issues in period

On 11 April 2008, 856,400 shares were issued to the vendors of Upstream Australia (formerly Macro Consulting Pty Limited) as the first tranche of deferred consideration payable in respect of the acquisition of Upstream Australia by the Company, following the achievement of certain performance criteria by Upstream Australia for its financial year ended 31 December 2007. The difference between the nominal value and issue price of US$52,735 was transferred to the share premium account.

Share options

The Group has adopted an employee Share Option Scheme in order to incentivise key management and staff. The fair value of options granted was determined using Black-Scholes valuation models. Significant inputs into the calculations were as follows:

• 41% - 47% volatility based on expected share price (ascertained by reference to historic share prices of both the Company and comparable listed companies)

• share price of between 7p and 2p per share at date of grant of options

• exercise price of between 20p and 2p per share

• a risk free interest rate of 2.78%

• 0% dividend yield

• estimated options lives of three years.

At 30 June 2008, the Group had the following options outstanding:

Date of grant	Dates first exercisable	Exercise  price	Market price at  date of issue	Number	Fair value
5 July 2007	3 years from date of grant	20p	7p	6,750,000	0.311p
5 July 2007	3 years from date of grant	7p	7p	6,677,084	2.159p
19 December 2007	3 years from date of grant	2p	2p	250,000	0.617p
				13,677,084

During the period, employee share-based expense of US$54,175 (period ended 30 June 2007 : US$nil, year ended 31 December 2007:US$110,000) has been included in the income statement following the adoption of IFRS 2 Share Based Payments. No liabilities were recognized due to share-based payment transactions.  

 

END

 

 

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