Hyro posts poor half year earnings

Continuing to manage outstanding ATO tax debt

Digital services provider, Hyro Limited (ASX:HYO), has posted a 50 per cent loss in total revenue for the half year to 30 June 2010, as it seeks to manage the repayment of an $11.4 million accumulated debt with the Australian Taxation Office (ATO).

Hyro’s financial results, released to the ASX, indicate a loss in earnings before interest, taxes, depreciation and amortisation (EBITDA) of $514 million for the half year to 30 June 2010.

Net profits after tax also dropped from $4.1 million in the half year to 30 June 2009, to a loss of $1.4 million in the half year to 30 June 2010.

Throughout the six month period, the company has incurred a negative cash flow of $61,000 and has posted cash and other assets to the value of $10.6 million. It also noted current liabilities of $18.8 million, which includes leave entitlements and $11.4 under arrangement with the ATO.

In a company statement to the ASX, Hyro said it entered into an agreement with the ATO in May 2009 to repay debts, which stood at $9.5 million at the time, for which the ATO agreed to waive interest charges and penalties up to 30 June 2009.

According to the company, the ATO issued a letter on 30 July 2010 to the company stating that while it has not fully complied with the agreement, the ATO will continue to refrain from enforcing the breaches and as a consequence, Hyro is in compliance with the agreement. This resulted in zero provisions in the half year financial results to 30 June 2010 for ATO interest and penalty charges.

“At this stage, while the consolidated Group does not have sufficient cash resources to repay its ATO liabilities within the timeframe under the current ATO agreement, the directors believe that the consolidated Group has sufficient current assets to meet its liabilities as and when they fall due,” the statement reads.

“The group has been developing new software for which costs have been incurred and capitalised, without significant revenues expected until this product is fully commercialised.”

Software-related revenues were up just slightly to $13.1 million for the half year to 30 June 2010, from $12.9 million at 30 June 2009, while a growth in projects exceeding $500,000 throughout the first six months of 2010 has been attributed to the company’s increased focus on enterprise level.

Despite overall losses recorded, the company has continued to invest in commercialising its Idaptive Product Suite, the latest version of which was released in Q1 of 2010, and maintains it is “well positioned to capitalise on this significant and growing market place”.

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