Mineral & Fin Regulatory News (MAFL)

20 Dec 2006 07:01

Upstream Marketing and Comms Inc.20 December 2006 Upstream Marketing and Communications Inc. ("Upstream" or "the Company") Second Interim Results For the six month period ended 30 September 2006 Interim Statement 20 December 2006, Upstream Marketing and Communications Inc. (AIM: UPS)announces its second interim results for the six month period ended 30 September2006. The requirement to report a second interim is due to the change of theCompany's accounting reference date from 30 September to 31 December. Theresults for the full accounting period the 15 month period ending 31 December2006 will be announced in 2007. On 16 October 2006 the reverse acquisition of AIM-listed Raven Capital Inc wascompleted and the Company changed its name to Upstream Marketing andCommunications Inc. The numbers contained in this report predate thistransaction and for the six month period ended 30 September 2006 the Companyincurred a loss before tax of £94,000. Trading Update since the Reverse Takeover Since the acquisition was completed the Company has been executing the businessplan outlined in the Chairman's letter of the AIM Admission Document sent toshareholders on 19 September 2006. The management team at Upstream iscontinuing to build further consulting capabilities in Greater China, developnew business, and identify potential strategic acquisitions. • Greater China Expansion: • Ms Hua Foley, a seasoned and respected communications and public affairs executive in China, has joined the Company as Managing Director, China, Beijing. • Ms Hester Chan, a senior public relations executive with a 20 year proven track record in Hong Kong, has joined Upstream Hong Kong as Managing Director. • The Company has signed an agreement with an affiliate which will expand the range of services offered to clients in Guangzhou, China. • Business development and client activity: • The Company has pursued renewal of existing retainer based contracts to be extended through 2007, and has won a number of new retainer-based and client assignments. • Work for existing clients continues, with solid organic growth arising from current relationships. • Acquisition strategy: • The Company is currently sourcing and evaluating a number of prospective acquisitions in strategic sectors including digital marketing, travel and consumer, corporate and financial, and technology marketing. Commenting, David Ketchum, Chief Executive of Upstream Marketing andCommunications Inc. said: "We are now laying the groundwork for dramatic growth in 2007 both organically,and via carefully considered strategic investments and acquisitions. We havecontinued to invest in senior people, our most important asset as a consultingand communications group, and the enlarged, experienced and well-connectedmanagement group is set to grow the business in line with the strategy that wassent to shareholders at the time of the acquisition. "Trading conditions in Greater China and in the corporate and marketingcommunications sector remain buoyant. The combination of our investments forgrowth, the market opportunities and our ability to execute against our businessplan are the foundations for delivering value to our shareholders." Enquiries: John Bick tel: 020 7451 9800 or m: 07917 649362 www.aboutupstream.com Upstream Marketing & Communications Inc.Income StatementFor the six months ended 30 September 2006 Period from 19 Six month November period ended Year ended 2004 to 30 September 30 September 30 September 2006 2006 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Continuing operations Administrative expenses (94) (163) (362) Operating loss (94) (163) (362) Finance income 5 - 3 4 Loss for the period before taxation (94) (160) (358) Tax income 7 - - - Net loss for the period (94) (160) (358) Loss per ordinary share- Basic 8 (0.21p) (0.40p) (1.20p) Upstream Marketing & Communications Inc. Income Statement of Changes in Equity Six months ended 30 September 2006 Share Share Profit and Total premium based loss Share payment account capital reserve £'000 £'000 £'000 £'000 £'000 At 19 November 2004 - - - - -Issue of new shares 78 399 - - 477Cost of issue of new shares - (166) - - (166)Net loss for the period - - - (358) (358)Share based payment - - 20 - 20At 30 September 2005 78 233 20 (358) (27) Issue of new shares 33 117 - - 150Net loss for the period - - - (66) (66)At 31 March 2006 111 350 20 (424) 57 Net loss for the period - - - (94) (94)At 30 September 2006 111 350 20 (518) (37) Upstream Marketing & Communications Inc. Balance Sheet As at 30 September 2006 30 September 30 September 2006 2005 Unaudited Unaudited Note £'000 £'000Assets CurrentTrade and other receivables 9 73 4Cash and cash equivalents 51 43Total assets 124 47 LiabilitiesCurrentTrade and other payables 10 161 74Total liabilities 161 74 EquityShare capital 12 111 78Share premium 350 233Share based payment reserve 20 20Profit and loss account (518) (358)Total equity (37) (27) Total equity and liabilities 124 47 Upstream Marketing & Communications Inc. Cash Flow Statement For the six months ended 30 September 2006 Period from 19 Six month November period ended Year ended 2004 to 30 September 30 September 30 September 2006 2006 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Operating activitiesOperating loss (94) (163) (362)Interest received - 3 4Change in trade and other receivables (71) (69) (4)Change in trade and other payables 80 87 74Net cash outflow from operating activities (85) (142) (288) Financing activitiesIssue of shares - 150 477Share issue costs - - (146)Net cash inflow from financing activities - 150 331Net increase in cash and cash equivalents (85) 8 43Cash and cash equivalents at beginning of period 136 43 -Cash and cash equivalents at end of period 51 51 43 Upstream Marketing & Communications Inc. Notes to the Interim Report For the six months ended 30 September 2006 1 GENERAL INFORMATION The information for the period ended 30 September 2006 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefigures for the period ended 30 September 2005 have been extracted from the 2005statutory financial statements prepared under UK GAAP and adjusted wherenecessary in order to comply with International Financial Reporting Standards(IFRS) as shown in note 3. The auditors' report on those accounts wasunqualified and did not contain a statement under section 237(2) of theCompanies Act 1985. 2 ACCOUNTING POLICIES Basis of preparation The Company was incorporated as a Corporation in the Cayman Islands which doesnot prescribe the adoption of any particular accounting framework. The Boardhad previously resolved that the Company would follow UK Accounting Standardsand apply the Companies Act 1985 when preparing its annual financial statements. The Board have now resolved that Upstream Inc. will adopt IFRS for the firsttime in its financial statements for the period ending 31 December 2006. Thissecond interim financial report has therefore been prepared under the historicalcost convention and in accordance with International Accounting Standard 34"Interim Financial Reporting" and the requirements of International FinancialReporting Standard 1 "First Time Adoption of International Reporting Standards"relevant to interim reports. The transition to IFRS reporting has resulted in a number of changes in thereported financial statements, notes thereto and accounting principals comparedto the previous annual report. Note 3 provides further details on the transitionfrom UK GAAP to IFRS. The principal accounting policies of the Company are set out below. Taxation Current income tax assets and/or liabilities comprise those obligations to, orclaims from, fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable result for the year. All changes to current taxassets or liabilities are recognised as a component of tax expense in the incomestatement. Deferred income taxes are calculated using the liability method on temporarydifferences. This involves the comparison of the carrying amounts of assets andliabilities in the consolidated financial statements with their respective taxbases. In addition, tax losses available to be carried forward as well as otherincome tax credits to the Company are assessed for recognition as deferred taxassets. Deferred tax liabilities are always provided for in full. Deferred tax assetsare recognised to the extent that it is probable that they will be able to beoffset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply totheir respective period of realisation, provided they are enacted orsubstantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a componentof tax expense in the income statement. Only changes in deferred tax assets orliabilities that relate to a change in value of assets or liabilities that ischarged directly to equity are charged or credited directly to equity. Financial assets The Company's financial assets include cash and trade and other receivables. All financial assets are recognised on their settlement date. All financialassets are initially recognised at fair value, plus transaction costs. Non-compounding interest and other cash flows resulting from holding financialassets are recognised in profit or loss when received, regardless of how therelated carrying amount of financial assets is measured. Trade and other receivables are provided against when objective evidence isreceived that the Company will not be able to collect all amounts due to it inaccordance with the original terms of the receivables. The amount of thewrite-down is determined as the difference between the asset's carrying amountand the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. Equity Share capital is determined using the nominal value of shares that have beenissued. The share premium account represents premiums received on the initial issuing ofthe share capital. Any transaction costs associated with the issuing of sharesare deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results as disclosed inthe income statement. Share based payments All share-based payment arrangements are recognised in the financial statements.The Company does not currently operate equity-settled share-based remunerationplans for remuneration of its employees but has issued a share warrant. All services received in exchange for the grant of any share-based remunerationare measured at their fair values. These are indirectly determined by referenceto the fair value of the share options/warrants awarded. Their value isappraised at the grant date and excludes the impact of any non-market vestingconditions (for example, profitability and sales growth targets). Share-based payments are ultimately recognised as an expense in profit or lossor included as part of the cost of share issues with a corresponding credit tothe share based payment reserve, net of deferred tax where applicable. Ifvesting periods or other vesting conditions apply, the expense is allocated overthe vesting period, based on the best available estimate of the number of shareoptions/warrants expected to vest. Non-market vesting conditions are included inassumptions about the number of options that are expected to become exercisable.Estimates are subsequently revised, if there is any indication that the numberof share options/warrants expected to vest differs from previous estimates. Noadjustment is made to the expense or share issue cost recognised in priorperiods if fewer share options/warrants ultimately are exercised than originallyestimated. Upon exercise of share options/warrants, the proceeds received net of anydirectly attributable transaction costs up to the nominal value of the sharesissued are allocated to share capital with any excess being recorded as sharepremium. Financial liabilities The Company's financial liabilities include trade and other payables. Financial liabilities are recognised when the Company becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in "finance cost" in the income statement. Trade payables are recognised initially at their nominal value and subsequentlymeasured at amortised cost less settlement payments. Dividend distributions to shareholders are included in 'other short termfinancial liabilities' when the dividends are approved by the shareholders'meeting. Other provisions, contingent liabilities and contingent assets Other provisions are recognised when present obligations will probably lead toan outflow of economic resources from the Company and they can be estimatedreliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment thathas resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle thepresent obligation, based on the most reliable evidence available at the balancesheet date, including the risks and uncertainties associated with the presentobligation. Any reimbursement expected to be received in the course ofsettlement of the present obligation is recognised, if virtually certain as aseparate asset, not exceeding the amount of the related provision. Where thereare a number of similar obligations, the likelihood that an outflow will berequired in settlement is determined by considering the class of obligations asa whole. In addition, long term provisions are discounted to their presentvalues, where time value of money is material. All provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimate. In those cases where the possible outflow of economic resource as a result ofpresent obligations is considered improbable or remote, or the amount to beprovided for cannot be measured reliably, no liability is recognised in thebalance sheet. Probable inflows of economic benefits to the Company that do not yet meet therecognition criteria of an asset are considered contingent assets. 3 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The transition from previous UK GAAP to IFRS has been made in accordance withIFRS 1, "First-time Adoption of International Financial Reporting Standards".The Company's financial information for the six months ended 30 September 2006,for the year ended 30 September 2006 and the comparatives presented for theperiod ended 30 September 2005 comply with all presentation recognition andmeasurement requirements of IFRS applicable for accounting periods commencing onor after 1 January 2005. The following reconciliations and explanatory notes thereto describe the effectsof the transition for the financial period 2005. All explanations should be readin conjunction with the IFRS accounting policies of Upstream Marketing &Communications Inc. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONTINUED) Since Upstream Marketing & Communications Inc. was incorporated on 19 November2004 that is the transition date to IFRS. As that was the date of incorporationof the Company no reconciliation of equity is required at that date. The re-measurement of balance sheet items as at 30 September 2005 may besummarised as follows:Reconciliation as at 30 September 2005 Effect of UK GAAP transition IFRS £'000 £'000 £'000 Share premium 253 (20) 233Share based payment reserve - 20 20Total adjustment to assets and equity 253 - 253 There is no difference between the profit and loss reported under UK GAAP forthe period ended 30 September 2005 and the profit and loss as reported underIFRS. The Company has modified its former balance sheet and income statement structureon transition to IFRS. The only change is to recognise the share based paymentin connection with the warrants issued to the Company's Nominated Advisor aspart of their fee for services provided in connection with the Admission of theCompany to the AIM market in December 2004. 4 SEGMENTAL REPORTING (a) By business segment (primary segment): As defined under International Accounting Standard 14 (IAS14), the only materialbusiness segment the Company has is that of an investment company. (b) By geographical segment (secondary segment): Under the definitions contained in IAS 14, the only material geographic segmentthat the Company operates in is currently Switzerland. 5 FINANCE INCOME Period from 19 Six month November period ended Year ended 2004 to 30 September 30 September 30 September 2006 2006 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Interest on bank deposits - 3 4 6 EMPLOYEES REMUNERATION Employee benefits expense Expense recognised for employee benefits is analysed below: Period from 19 Six month November period ended Year ended 2004 to 30 September 30 September 30 September 2006 2006 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Directors fees 13 25 25 The average number of persons (including directors)employed by the Company during the period was: 3 3 3 7 TAX INCOME There is no tax charge for any period. The Company does not operate in theUnited Kingdom and there is no tax arising on its operations. The relationshipbetween the expected tax expense at 30% and the tax expense actually recognisedin the income statement can be reconciled as follows: Period from 19 Six month November period ended Year ended 2004 to 30 September 30 September 30 September 2006 2006 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000 Loss for the period before taxation (94) (160) (358) Tax rate 30% 30% 30% Expected tax expense (28) (48) (107) Losses not recognised as deferred tax asset 28 48 107Actual tax income - - - 8 LOSS PER SHARE The calculation of the basic loss per share is based on the net loss for theperiod of £94,000 (12 months ended 30 September 2006 : £160,000, period ended 30September 2005 : £358,000) divided by the weighted average number of shares inissue during the period of 44,366,668 (12 months ended 30 September 2006 :39,738,997, period ended 30 September 2005 : 29,941,589). The impact of the warrants on the loss per share is anti-dilutive. 9 TRADE AND OTHER RECEIVABLES 30 September 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Trade and other receivables, gross 73 4Impairment of trade and other receivables - - Trade and other receivables, net 73 4 Trade and other receivables are usually due within 30 - 60 days and do not bearany effective interest rate. The fair value of these short term financial assets is not individuallydetermined as the carrying amount is a reasonable approximation of fair value. 10 TRADE AND OTHER PAYABLES 30 September 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Trade and other payables 161 74 The fair value of trade and other payables has not been disclosed as, due totheir short duration, management considers the carrying amounts recognised inthe balance sheet to be a reasonable approximation of their fair value. 11 DEFERRED TAX ASSETS AND LIABILITIES There are no deferred taxes arising from temporary differences at 30 September2006 or 30 September 2005. 12 SHARE CAPITAL 30 September 30 September 2006 2005 Unaudited Unaudited £'000 £'000Authorised4,000,000,000 ordinary shares of 0.25p 10,000 10,000 Allotted, issued and fully paid44,366,668 (31,066,668) ordinary shares of 0.25p 111 78 Allotments during the period On 4 February 2006 the Company issued 13,300,000 new ordinary shares of 0.25p at11.3p per share in order to provide funds for the Company to allow it tocontinue to fund the search for a suitable investment opportunity. Thedifference between the total nominal value of the shares issued of £33,250 andthe total consideration received of £150,000 has been credited to the sharepremium account (£116,750). SHARE CAPITAL (CONTINUED) Warrants On 25 November 2004 a warrant was issued to Strand Partners Limited, theCompany's Nominated Advisor, in connection with their role in the admission ofthe Company to the AIM market. The warrant entitles Strand Partners Limited tosubscribe, at a price of 10p per share, for such number of ordinary shares asare equivalent (on a fully diluted basis) to one per cent. of the issuedordinary share capital of the Company at that time. The issued warrant may beexercised at any time during the period from 15 December 2004 to 14 December2009. The fair value of warrants granted was determined using the Black-Scholesvaluation model. Significant inputs into the calculations were: - share price of 5p per share at date of grant of warrant - exercise price of 10p per warrant as detailed above - 50% volatility based on expected share price - a risk free interest rate of 5.0%. In total £20,000 of share based expense has been included in the share premiumaccount as a cost of the admission to AIM which gave rise to share based paymentreserve. No liabilities were recognised due to share based paymenttransactions. 13 RELATED PARTY TRANSACTIONS In the period ended 31 March 2006 Corvus Capital Inc., a shareholder in theCompany, settled expenses on behalf of the Company amounting to £10,000 (periodended 30 September 2005 : £40,000). 14 RISK MANAGEMENT OBJECTIVES AND POLICIES The Company is exposed to a variety of financial risks which result from bothits operating and investing activities. The Company's risk management isclosely monitored by the board of directors, and focuses on actively securingthe Company's short to medium term cash flows by minimising the exposure tofinancial markets. Upstream Marketing & Communications Inc. does not actively engage in the tradingof financial assets for speculative purposes nor does it write options. Themost significant financial risks to which the Company is exposed to aredescribed below: Credit risk Generally, the maximum credit risk exposure of financial assets is the carryingamount of the financial assets as shown on the face of the balance sheet (or inthe detailed analysis provided in the notes to the financial statements).Credit risk, therefore, is only disclosed in circumstances where the maximumpotential loss differs significantly from the financial asset's carrying amount. The Company's trade and other receivables are actively monitored to avoidsignificant concentrations of credit risk. Cash flow risk The Company seeks to manage financial risks to ensure sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably. Short term flexibility is achieved by the raising of equity and theuse of current accounts. -------------------------- This information is provided by RNS The company news service from the London Stock Exchange