Yes half year not pretty. An even more alarming comparison is...

Yes half year not pretty. An even more alarming comparison is their total comprehensive income for the period down from $5.4m Dec 2010 to $3.3m Dec 2011 - that is a drop of 39% !! I have previously commented on price paid for an acquisition which contributed nothing to earnings ( wonder if they hide its contribution within existing segmental reporting going forward). They will have to test the carrying value of the acquisition at year end and it may be hard to maintain its carrying value. On the R&D capitalised versus R&D amortised, at least we appear to have reached an equilibrium point were the amounts are similar, which should now mean that cashflows approximate reported profit. But point taken that they have a deficiency in net tangible assets now.

A holder should be more fearful of what they have not told us in this report, that is the currency hedging position, and the average FX rates achieved for the period. I note that they provided this detail in a half year presentation last year, but didn't do one this year. That's ominous in my book, perhaps they are seeking to ignore the elephant in the room. I note that they still have some $1.3m of derivative value on balance sheet, showing that they have some in the money hedges remaining. However this is down from $2m at June 2011, and from $3.8m at December 2010. This indicates that they are getting low on in the money hedges. What the comprehensive income statement shows us is the underlying profit of the business netting out hedges ( i.e. on the basis they did not hedge currency).

So I suspect that when we get into FY13, unless their is a major near term currency correction, we are going to see what the real profitability of Infomedia is like, virtually naked of FX hedging profits. possibly quite alarming.

Appears that Chairman Graham has been futile in arresting the long term profit decline in this business. He's been numero uno for 2 years, in all reality probability for ever, and the company keeps slip slipping away! Just goes to show that we should not be enticed by the dividend yield if the business cannot maintain, let alone grow, the earnings.

As said previously their will be a time for this one, which will be either when the earnings reach their natural spot fx rate lows, or when the AUD tanks.

Keep your powder dry.