The half yearly report for Hyro is out and I have had a brief...

The half yearly report for Hyro is out and I have had a brief chance to digest it, shake the tea leaves a little and even consult the sharmans (or 'sharmen'??) to try and get a clearer picture of what this all means.

My first observation is that I think it is important to look past the headline numbers and to focus on a few of the details and the trends.

My view is that this report is a turn-around story wrapped up in the complexities of the accounting treatment required for the structural changes made in the business. I note that this result doesn't include any (positive) adjustments for the settlement of the Lehman's note (which happened after the end of the half and should be significant), but I do note that there is a $1.75m positive adjustment for interest and penalties waived by the ATO on the agreement regarding outstanding taxes. There are also adjustments for the disposal and discontinuation of businesses here and overseas, and these need to be taken into consideration when reviewing these results.

I also encourage a review of the cash flow, with particular attention to what is NOT there.... no "proceeds from the sale of businesses" and significant reduction (more than $2.5m) in both interest expense and the amount of money spent on capex items. I suspect that there is more cash floating around now than this report reflects, given that the first installment for the sale of Synergy was due either just before or just after the end of the period, notwithstanding that the Lehamns Note has now been settled.

My final scorecard is that I think that this is a very good result given where the company has come from. I read this as a company which seems to be very focused on what it does and where it is going, it seems to have a very good grip on costs and cash flow and on generating revenue (I note the comment in the report that the number of ontract >$500K in this half have tripled in this half compared to the corresponding period in 2009).

So, well done to Bill Votsaris and his management team. I think the market was a little hard on you today to mark the shares down, but hopefully there will be new supporters out there to take up the running on the stock...

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These are the ramblings of an uninformed and misguided fool.... do not rely on them and do your own research.