Mineral & Financial Investments Regulatory News (MAFL)

29 Sep 2009 07:00



Upstream Marketing and Communications Inc.

("Upstream" or "the Company")

Interim Results 

For the six month period ended 30 June 2009

Interim Statement

29 September 2009, Upstream Marketing and Communications Inc. (AIM: UPS) announces its interim results for the six month period ended 30 June 2009.

FINANCIAL SUMMARY

- Revenue for the period of US$ 2.091 million (2008: US$ 2.904 million)

- Year on year revenue is down 28%, in part due to post Olympics revenue drops in China, and to the fact that the Company ceased receiving fees from the news distribution business disposed of in May 2008 (Jun 2008: $0.189 million)

- Challenging trading conditions from worldwide economic downturn dampen client spending

- Cost reduction measures expected to begin having an impact in the second half of 2009

CHAIRMAN'S STATEMENT

Despite difficult trading conditions, Upstream generated revenue of US$ 2.091 million in the six months to 30 June 2009. This performance represents a 28% decrease from the revenue of US$2.904 million achieved in the comparable period in the prior year. The reduction can be attributed primarily to reduced client assignments in the worldwide recessionary climate, following on from the exceptional level of spending in China in 2008 in connection with the Olympics. Additionally, in the first half of last year Upstream was collecting fees from a news release distribution business which it sold in May 2008. Proceeds from the sale generated US$ 0.350 million of other income in 2008 and following the disposal, this income stream ceased.

The net loss before tax for the period is US$ 0.402 million, compared to a profit before tax of US$0.331 million in 2008, of which US$ 0.350 million came from the sale of the news release business.

Total assets are down 49% year on year from US$ 3.451 million to US$ 1.770 million. The Company's bank and cash balances are lower by 25% year on year, at US$ 0.409 million compared to US$ 0.548 million at the end of June 2008. 

Initial cost cutting measures in the first half of the year decreased operating expenses by 13%, from US$ 2.899 million in 2008 to US$2.512 million. Towards the end of the period and in July further cost-saving actions of approximately US$ 42,000 per month have been enacted. These savings will positively impact the results from July onwards.

Upstream continues to serve a portfolio of blue chip clients, and creates innovative marketing and corporate communications campaigns across its network of five offices. Digital communications and work with Asia-based clients show future potential, in addition to the Group's core public relations business.

In the longer term, economic conditions in Upstream's markets in Asia Pacific are viewed by many to be more robust than elsewhere and China, which comprises a significant part of Upstream's operations, is on track for more than 7% GDP growth in 2009. The total cost of maintaining the Upstream listed company and its subsidiaries is still high relative to revenue and the directors are considering ways to address this.

David Ketchum Stephen Smith

28 September 2009 28 September 2009

www.aboutupstream.com 

Upstream Marketing & Communications Inc.

Notes to the Interim Report

For the six months ended 30 June 2009

1 general information

The information for the period ended 30 June 2009 does not constitute statutory accounts as defined in the Companies Act 2006. The figures for the year ended 31 December 2008 have been extracted from the 2008 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 nor 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 2008 annual report, except for the adoption of IAS1 Presentation of Financial Statements (revised 2007) and IFRS 8 Operating Segments.

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income, for example translation of foreign currencies. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of Comprehensive Income'.

The adoption of IFRS 8 has not changed the segments that are disclosed in the interim financial statements.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the consolidated interim report.

3 segmental reporting

(a) By business segment (primary segment):

As defined under IFRS 8, 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 IFRS 8, the only material geographic segment that the Group operates in is the Asia- Pacific region.

4 tax EXPENSE/(CREDIT)

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

5 (LOSS)/EARNINGS per share

The calculation of the basic (loss)/earnings per share is based on the net loss for the period of (US$448,000) (period ended 30 June 2008 : profit US$333,000; year ended 31 December 2008 : profit US$433,000) divided by the weighted average number of shares in issue during the period of 137,401,194 (period ended 30 June 2008 : 136,972,994; year ended 31 December 2008 : 137,187,094).

The diluted earnings per share is based on a weighted average number of shares in issue of 137,401,194 for the period ended 30 June 2009 (period ended 30 June 2008: 136,972,994; year ended 31 December 2008: 150,864,178). The impact of the share options and warrant is anti-dilutive for the period ended 30 June 2009.

6 trade and other receivables

 7 TRADE AND OTHER PAYABLES

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

8 deferred taxATION

Deferred tax liabilities recognised can be summarised as follows:

9 share capital

  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:

At 30 June 2009, the Group had the following options outstanding:

During the period, employee share-based expense of US$43,031 (period ended 30 June 2008 : US$54,175, year ended 31 December 2008:US$103,000) has been included in the income statement. No liabilities were recognized due to share-based payment transactions.