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 $350,000 in May 2008, which also strengthened
the Group's balance sheet.
During the first half of 2008, the Group's business in China strengthened in the lead up to the Beijing Olympics. With the new Upstream
China leadership put in place in November 2006, the foundation for growth has been put in place. The business in Hong Kong grew while
remaining profitable and Singapore performed to expectations. Upstream Australia contributed revenue for all six months of the current
period, whereas in 2007 only two months of Australian revenue were recognized as the acquisition of that business unit was only completed in
April 2007. Upstream Australia is now fully integrated into the Group.
Looking ahead to future trading conditions, there is uncertainty about the impact of the global economic slowdown. Many of Upstream's
clients are headquartered in the US and Europe, and it remains to be seen whether they will continue to invest in the higher growth markets
in Asia Pacific, or will curtail spending through the anticipated difficult period. Under either scenario, Management is confident that
Upstream is well positioned for continuous operation and business development.
David Ketchum, Chief Executive Shahed Mahmood, Chairman
23 September 2008 23 September 2008
www.aboutupstream.com
Upstream Marketing & Communications Inc.
Consolidated Income Statement
For the six months ended 30 June 2008
Six month period Six month
ended 30 June 2008 period Year ended 31
Unaudited ended December 2007
US$'000 30 June Audited
2007 US$'000
Unaudited
US$'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 333 (730) (643)
period
US cents US cents US cents
Earnings/(loss) per ordinary 5
share
- 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* Foreign exchange Profit and
reserve loss
Share premium Capital reserve 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 (5) - (5)
consolidation - - -
Loss for the year - - - - (643) (643)
Total recognised income and - (5) (643) (648)
expense for the year - -
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) 4,385 8 (11,473) 212
745 6,547
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$113,145) in connection with shares to be issued as part of the deferred consideration for the acquisition of Upstream Australia
(formerly Macro Consulting Pty Limited).
Consolidated Balance Sheet
As at 30 June 2008
Note 30 June 2008 30 June 2007 31 December
Unaudited Unaudited 2007
US$'000 US$'000 Audited
US$'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 9 692 632 745
issued
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 Six month period Year ended 31
30 June ended December 2007
2008 30 June 2007 Audited
Unaudited Unaudited US$'000
US$'000 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 38 14 60
equipment
Share based expenses 54 220 329
Amortisation of intangibles 28 - 41
Operating cashflow before 113 (493) (198)
working capital changes
Increase in trade and other (1,479) (469) (275)
receivables
Increase in trade and other 329 409 579
payables
Increase in deferred income 966 5 29
Cash (used from)/generated by (71) (548) 135
operations
Tax received/(paid) (8) 18 (7)
Net cash (outflow)/inflow used (79) (530) 128
in operating activities
Investing activities
Acquisition of subsidiary - (24) -
Finance income - - 3
Purchases of property, plant (20) (49) (124)
and equipment
Proceeds from sale of 350 - -
intangible assets
Reverse acquisition expenses - - (27)
Cash acquired on acquisition - - 67
Net cash inflow/(outflow) from 330 (73) (81)
investing activities
Financing activities
Finance costs (12) - (18)
New bank loan 45 - -
Repayment of bank loan (7) - -
Expenses in connection with - - (67)
shares issue
Net cash inflow/ (outflow) 26 - (85)
from financing activities
Net increase/(decrease) in 277 (603) (38)
cash and equivalents
Cash and cash equivalents 264 307 307
brought forward
Effect of exchange rate 7 218 (5)
fluctuations
Cash and cash equivalents 548 (78) 264
carried forward
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 Six month period ended 30 June 2007 Year ended
period Unaudited 31
ended US$'000 December
30 June 2007
2008 Audited
Unaudited US$'000
US$'000
Current period income tax 6 3 12
charge
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 Six month period ended 30 Year ended
period June 2007 31
ended Unaudited December
30 June US$'000 2007
2008 Audited
Unaudited US$'000
US$'000
Profit/(loss) for the period 331 (727) (643)
before taxation
Expected tax expense/(credit) 58 (124) (113)
Losses (utilised)/not (52) 127 125
recognised as deferred tax
asset
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$643,000) divided by the weighted average number of shares in issue during the
period of 136,972,994 (period ended 30 June 2007 : 134,298,962; year ended 31 December 2007 : 135,376,825).
The diluted earnings per share is based on a weighted average number of shares in issue of 136,972,994 for the period ended 30 June
2008. The impact of the share options and warrants is anti-dilutive for the period ended 30 June 2007 and the year ended 31 December 2007.
6 trade and other receivables
30 June 2008 30 June 2007 31 December
Unaudited Unaudited 2007
US$'000 US$'000 Audited
US$'000
Trade and other receivables, 2,303 818 978
gross
Impairment of trade and other - (9) (39)
receivables
Trade and other receivables, 2,303 809 939
net
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 30 June 2007 31 December
Unaudited Unaudited 2007
US$'000 US$'000 Audited
US$'000
Trade and other payables 466 642 572
Other payables and accrued 1,166 188 533
charges
Amounts due to directors 101 181 299
1,733 1,011 1,404
The fair value of trade and other payables is considered by management to be a reasonable approximation of their fair value.
8 deferred tax assets and liabilities
Deferred tax liabilities recognized can be summarized as follows:
30 June 2008 30 June 2007 31 December
Unaudited Unaudited 2007
US$'000 US$'000 Audited
US$'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 30 June 2007 31 December 2007
Unaudited Unaudited Unaudited
US$'000 US$'000 US$'000
Authorised
4,000,000,000 ordinary shares 18,470 18,470 18,470
of 0.25p
Allotted, issued and fully paid
137,401,194 (30 June
2007:136,544,795, 31 December 636 632 632
2007:136,544,794) ordinary
shares of 0.25p
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:
Market price
at
date of issue
Date of grant Dates first Exercis
exercisable e
price Number Fair
value
5 July 2007 3 years from date of 20p 7p 6,750,000 0.311p
grant
5 July 2007 3 years from date of 7p 7p 6,677,084 2.159p
grant
19 December 2007 3 years from date of 2p 2p 250,000 0.617p
grant
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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