ferret's stock to watch: hyro limited

Ferret's Stock to Watch: HYRO LIMITED
08:38, Tuesday, 7 June 2005

STOCK SELLING ON SINGLE DIGIT PRICE NEEDS BIG FORM REVERSAL

Sydney - Tuesday - June 7: (RWE Australian Business News)
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OVERVIEW
********

When you are interested in stock selling at less than 10c, a
one-cent rise or fall is big news.

A recovery in such a stock is a windfall because in most cases
it's unexpected.

At this price the company may survive on an idea that has to be
developed or another company joining up to create an opportunity that
makes money.

It also may be a signal that the company is at the end of the
road.

As one associate commented, "This is a highly speculative stock
with a high risk associated with any investment in it."

He is not prone to even name a stock unless there is a serious
rustle in the wind.

Things looked even blacker for Hyro Ltd's (HYO) market prospects
yesterday after it released 248,024 fully paid ordinary shares held under
escrow.

The shares were issued as partial consideration for the purchase
of Hyro Thailand (formerly Cyberworks Consulting).

Interestingly, Hyro reported that it has entered into a
Memorandum Of Understanding with privately held internet development
services company Izilla Pty Ltd.

The MOU considered Izilla providing wholesale development
services capacity to Hyro with respect to specific types of internet
development and support and maintenance engagements.

Furthermore, the agreement considered by the MOU granted Hyro a
first right of refusal and an option to acquire all of the equity of
Izilla at any time over the next five years on terms attractive to both
parties and callable by Hyro.

Based in Newcastle, NSW, Izilla is a specialist provider of
internet development services with key capability in smaller, rapid
development projects, backed by well established support and maintenance
capability.

Hyro intends to use the services of Izilla for particular types
of projects and support engagements and will seamlessly integrate Izilla
to the Hyro process management systems to ensure that adequate control
and management capability is maintained.

Richard Lord, Hyro's chief operating officer, commented: "In the
course of preparing for the ISMC acquisition, the company undertook a
review of the Hyro business and determined that there were certain types
of engagements in which it was difficult for Hyro to make a profit.

"These were typically smaller engagements which, while an
important source of revenue for the Group, require a different method of
fulfillment."

He said Izilla, as a smaller, regionally based provider, enjoys a
lower cost base and is thus able to support these engagements at a lower
cost compared to Hyro and still meet its own profit objectives.

This arrangement allows Hyro to leverage this lower cost base and
ensure that an adequate margin accrues to the Hyro business.

Izilla will benefit from an increase in its revenue without an
associated increase in sales and administration costs, and thus it is a
mutually beneficial arrangement, Mr Lord said.

Chris Johnson, Izilla's managing director, said his company
enjoys having access to very talented and capable professionals at costs
comparatively lower than its metropolitan competitors.

"To date, Izilla has been able to grow our business into Sydney,
but the step to broader representation would require a significant
investment which may take an extended period to achieve," Mr Johnson
said.

"Through Hyro we may find ourselves servicing clients in
Melbourne, Brisbane, Canberra, Auckland and into Asia; markets previously
very difficult for Izilla to reach."

SHARE PRICE MOVEMENTS
*********************

Shares of Hyro yesterday sold steady at 6c. High for the year has
been 15c and low 5.2c. There 96 million shares on issue with a market cap
of $5.9 million.

Following shareholder approval of the acquisition of ISM
Consulting Asia Pacific Pty Ltd, Hyro announced the appointment of Joseph
Calavassy as chief executive officer of the company.

Mr Calavassy has previously acted in the capacity of acting chief
executive officer.

The key terms and conditions relating to Mr Calavassy's contract
include a total remuneration package of $231,000 per annum inclusive of
superannuation and motor vehicle allowance.

It is proposed to grant Mr Calavassy long-term incentives in the
form of performance options, subject to Mr Calavassy meeting certain
performance conditions to be determined by the board.

Mr Calavassy's performance will be assessed by the board on an
annual basis in line with the guidelines set out in Hyro's quality system
and processes.

Mr Calavassy's employment contract contains a performance review
process and a right for the company to terminate the contract with cause
for poor performance.

BACKGROUND
**********

Hyro Ltd, formerly BMCMedia Ltd, listed on the Australian Stock
Exchange on December 3, 1999.

The company provides high-quality strategic solutions and
services which bridge the gap between advertising and marketing and the
business systems of its clients.

Hyro works with its clients to make sure that their technology
systems and solutions integrate seamlessly to their marketing,
advertising and customer management programs and deliver commercial
benefit to their business.

It utilises technology to deliver more sales, better service and
more profits.

With a global headquarters in Sydney, the company has significant
strategic, creative, and technological resources distributed across six
major centres in Australia and South-East Asia.

ENDS

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I don't hold HYO